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



by Adam Smith





Contents


 INTRODUCTION AND PLAN OF THE WORK.

 BOOK I. OF THE CAUSES OF IMPROVEMENT IN THE PRODUCTIVE
POWERS OF LABOUR, AND OF THE ORDER ACCORDING TO WHICH ITS PRODUCE IS NATURALLY
DISTRIBUTED AMONG THE DIFFERENT RANKS OF THE PEOPLE. 
 CHAPTER I. OF THE DIVISION OF LABOUR.
 CHAPTER II. OF THE PRINCIPLE WHICH GIVES OCCASION TO THE
DIVISION OF LABOUR.
 CHAPTER III. THAT THE DIVISION OF LABOUR IS LIMITED BY
THE EXTENT OF THE MARKET.
 CHAPTER IV. OF THE ORIGIN AND USE OF MONEY.
 CHAPTER V. OF THE REAL AND NOMINAL PRICE OF
COMMODITIES, OR OF THEIR PRICE IN LABOUR, AND THEIR PRICE IN MONEY.
 CHAPTER VI. OF THE COMPONENT PART OF THE PRICE OF COMMODITIES.
 CHAPTER VII. OF THE NATURAL AND MARKET PRICE OF COMMODITIES.
 CHAPTER VIII. OF THE WAGES OF LABOUR.
 CHAPTER IX. OF THE PROFITS OF STOCK.
 CHAPTER X. OF WAGES AND PROFIT IN THE DIFFERENT
EMPLOYMENTS OF LABOUR AND STOCK.
 CHAPTER XI. OF THE RENT OF LAND.

 BOOK II. OF THE NATURE, ACCUMULATION, AND
EMPLOYMENT OF STOCK.
 CHAPTER I. OF THE DIVISION OF STOCK.
 CHAPTER II. OF MONEY, CONSIDERED AS A PARTICULAR BRANCH
OF THE GENERAL STOCK OF THE SOCIETY, OR OF THE EXPENSE OF MAINTAINING THE
NATIONAL CAPITAL.
 CHAPTER III. OF THE ACCUMULATION OF CAPITAL, OR OF
PRODUCTIVE AND UNPRODUCTIVE LABOUR.
 CHAPTER IV. OF STOCK LENT AT INTEREST.
 CHAPTER V. OF THE DIFFERENT EMPLOYMENTS OF
        CAPITALS.

 BOOK III. OF THE DIFFERENT PROGRESS OF OPULENCE IN
DIFFERENT NATIONS
 CHAPTER I. OF THE NATURAL PROGRESS OF OPULENCE.
 CHAPTER II. OF THE DISCOURAGEMENT OF AGRICULTURE IN THE
ANCIENT STATE OF EUROPE, AFTER THE FALL OF THE ROMAN EMPIRE.
 CHAPTER III. OF THE RISE AND PROGRESS OF CITIES AND
TOWNS, AFTER THE FALL OF THE ROMAN EMPIRE.
 CHAPTER IV. HOW THE COMMERCE OF TOWNS CONTRIBUTED TO THE
IMPROVEMENT OF THE COUNTRY.

 BOOK IV. OF SYSTEMS OF POLITICAL ECONOMY.
 CHAPTER I. OF THE PRINCIPLE OF THE COMMERCIAL OR
MERCANTILE SYSTEM.
 CHAPTER II. OF RESTRAINTS UPON IMPORTATION FROM FOREIGN
COUNTRIES OF SUCH GOODS AS CAN BE PRODUCED AT HOME.
 CHAPTER III. OF THE EXTRAORDINARY RESTRAINTS UPON THE
IMPORTATION OF GOODS OF ALMOST ALL KINDS, FROM THOSE COUNTRIES WITH WHICH THE
BALANCE IS SUPPOSED TO BE DISADVANTAGEOUS.
 CHAPTER IV. OF DRAWBACKS.
 CHAPTER V. OF BOUNTIES.
 CHAPTER VI. OF TREATIES OF COMMERCE.
 CHAPTER VII. OF COLONIES.
 CHAPTER VIII. CONCLUSION OF THE MERCANTILE SYSTEM.
 CHAPTER IX. OF THE AGRICULTURAL SYSTEMS, OR OF THOSE
SYSTEMS OF POLITICAL ECONOMY WHICH REPRESENT THE PRODUCE OF LAND, AS EITHER
THE SOLE OR THE PRINCIPAL SOURCE OF THE REVENUE AND WEALTH OF EVERY COUNTRY.

 BOOK V. OF THE REVENUE OF THE SOVEREIGN OR COMMONWEALTH
 CHAPTER I. OF THE EXPENSES OF THE SOVEREIGN OR COMMONWEALTH.
 CHAPTER II. OF THE SOURCES OF THE GENERAL OR PUBLIC
REVENUE OF THE SOCIETY.
 CHAPTER III. OF PUBLIC DEBTS.



INTRODUCTION AND PLAN OF THE WORK.

    

      The annual labour of every nation is the fund which originally supplies it
      with all the necessaries and conveniencies of life which it annually
      consumes, and which consist always either in the immediate produce of that
      labour, or in what is purchased with that produce from other nations.
    
      According, therefore, as this produce, or what is purchased with it, bears
      a greater or smaller proportion to the number of those who are to consume
      it, the nation will be better or worse supplied with all the necessaries
      and conveniencies for which it has occasion.
    
      But this proportion must in every nation be regulated by two different
      circumstances: first, by the skill, dexterity, and judgment with which its
      labour is generally applied; and, secondly, by the proportion between the
      number of those who are employed in useful labour, and that of those who
      are not so employed. Whatever be the soil, climate, or extent of territory
      of any particular nation, the abundance or scantiness of its annual supply
      must, in that particular situation, depend upon those two circumstances.
    
      The abundance or scantiness of this supply, too, seems to depend more upon
      the former of those two circumstances than upon the latter. Among the
      savage nations of hunters and fishers, every individual who is able to
      work is more or less employed in useful labour, and endeavours to provide,
      as well as he can, the necessaries and conveniencies of life, for himself,
      and such of his family or tribe as are either too old, or too young, or
      too infirm, to go a-hunting and fishing. Such nations, however, are so
      miserably poor, that, from mere want, they are frequently reduced, or at
      least think themselves reduced, to the necessity sometimes of directly
      destroying, and sometimes of abandoning their infants, their old people,
      and those afflicted with lingering diseases, to perish with hunger, or to
      be devoured by wild beasts. Among civilized and thriving nations, on the
      contrary, though a great number of people do not labour at all, many of
      whom consume the produce of ten times, frequently of a hundred times, more
      labour than the greater part of those who work; yet the produce of the
      whole labour of the society is so great, that all are often abundantly
      supplied; and a workman, even of the lowest and poorest order, if he is
      frugal and industrious, may enjoy a greater share of the necessaries and
      conveniencies of life than it is possible for any savage to acquire.
    
      The causes of this improvement in the productive powers of labour, and the
      order according to which its produce is naturally distributed among the
      different ranks and conditions of men in the society, make the subject of
      the first book of this Inquiry.
    
      Whatever be the actual state of the skill, dexterity, and judgment, with
      which labour is applied in any nation, the abundance or scantiness of its
      annual supply must depend, during the continuance of that state, upon the
      proportion between the number of those who are annually employed in useful
      labour, and that of those who are not so employed. The number of useful
      and productive labourers, it will hereafter appear, is everywhere in
      proportion to the quantity of capital stock which is employed in setting
      them to work, and to the particular way in which it is so employed. The
      second book, therefore, treats of the nature of capital stock, of the
      manner in which it is gradually accumulated, and of the different
      quantities of labour which it puts into motion, according to the different
      ways in which it is employed.
    
      Nations tolerably well advanced as to skill, dexterity, and judgment, in
      the application of labour, have followed very different plans in the
      general conduct or direction of it; and those plans have not all been
      equally favourable to the greatness of its produce. The policy of some
      nations has given extraordinary encouragement to the industry of the
      country; that of others to the industry of towns. Scarce any nation has
      dealt equally and impartially with every sort of industry. Since the
      down-fall of the Roman empire, the policy of Europe has been more
      favourable to arts, manufactures, and commerce, the industry of towns,
      than to agriculture, the Industry of the country. The circumstances which
      seem to have introduced and established this policy are explained in the
      third book.
    
      Though those different plans were, perhaps, first introduced by the
      private interests and prejudices of particular orders of men, without any
      regard to, or foresight of, their consequences upon the general welfare of
      the society; yet they have given occasion to very different theories of
      political economy; of which some magnify the importance of that industry
      which is carried on in towns, others of that which is carried on in the
      country. Those theories have had a considerable influence, not only upon
      the opinions of men of learning, but upon the public conduct of princes
      and sovereign states. I have endeavoured, in the fourth book, to explain
      as fully and distinctly as I can those different theories, and the
      principal effects which they have produced in different ages and nations.
    
      To explain in what has consisted the revenue of the great body of the
      people, or what has been the nature of those funds, which, in different
      ages and nations, have supplied their annual consumption, is the object of
      these four first books. The fifth and last book treats of the revenue of
      the sovereign, or commonwealth. In this book I have endeavoured to shew,
      first, what are the necessary expenses of the sovereign, or commonwealth;
      which of those expenses ought to be defrayed by the general contribution
      of the whole society, and which of them, by that of some particular part
      only, or of some particular members of it: secondly, what are the
      different methods in which the whole society may be made to contribute
      towards defraying the expenses incumbent on the whole society, and what
      are the principal advantages and inconveniencies of each of those methods;
      and, thirdly and lastly, what are the reasons and causes which have
      induced almost all modern governments to mortgage some part of this
      revenue, or to contract debts; and what have been the effects of those
      debts upon the real wealth, the annual produce of the land and labour of
      the society.
    


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


CHAPTER I.
OF THE DIVISION OF LABOUR.


    
      The greatest improvements in the productive powers of labour, and the
      greater part of the skill, dexterity, and judgment, with which it is
      anywhere directed, or applied, seem to have been the effects of the
      division of labour. The effects of the division of labour, in the general
      business of society, will be more easily understood, by considering in
      what manner it operates in some particular manufactures. It is commonly
      supposed to be carried furthest in some very trifling ones; not perhaps
      that it really is carried further in them than in others of more
      importance: but in those trifling manufactures which are destined to
      supply the small wants of but a small number of people, the whole number
      of workmen must necessarily be small; and those employed in every
      different branch of the work can often be collected into the same
      workhouse, and placed at once under the view of the spectator.
    
      In those great manufactures, on the contrary, which are destined to supply
      the great wants of the great body of the people, every different branch of
      the work employs so great a number of workmen, that it is impossible to
      collect them all into the same workhouse. We can seldom see more, at one
      time, than those employed in one single branch. Though in such
      manufactures, therefore, the work may really be divided into a much
      greater number of parts, than in those of a more trifling nature, the
      division is not near so obvious, and has accordingly been much less
      observed.
    
      To take an example, therefore, from a very trifling manufacture, but one
      in which the division of labour has been very often taken notice of, the
      trade of a pin-maker: a workman not educated to this business (which the
      division of labour has rendered a distinct trade), nor acquainted with the
      use of the machinery employed in it (to the invention of which the same
      division of labour has probably given occasion), could scarce, perhaps,
      with his utmost industry, make one pin in a day, and certainly could not
      make twenty. But in the way in which this business is now carried on, not
      only the whole work is a peculiar trade, but it is divided into a number
      of branches, of which the greater part are likewise peculiar trades. One
      man draws out the wire; another straights it; a third cuts it; a fourth
      points it; a fifth grinds it at the top for receiving the head; to make
      the head requires two or three distinct operations; to put it on is a
      peculiar business; to whiten the pins is another; it is even a trade by
      itself to put them into the paper; and the important business of making a
      pin is, in this manner, divided into about eighteen distinct operations,
      which, in some manufactories, are all performed by distinct hands, though
      in others the same man will sometimes perform two or three of them. I have
      seen a small manufactory of this kind, where ten men only were employed,
      and where some of them consequently performed two or three distinct
      operations. But though they were very poor, and therefore but
      indifferently accommodated with the necessary machinery, they could, when
      they exerted themselves, make among them about twelve pounds of pins in a
      day. There are in a pound upwards of four thousand pins of a middling
      size. Those ten persons, therefore, could make among them upwards of
      forty-eight thousand pins in a day. Each person, therefore, making a tenth
      part of forty-eight thousand pins, might be considered as making four
      thousand eight hundred pins in a day. But if they had all wrought
      separately and independently, and without any of them having been educated
      to this peculiar business, they certainly could not each of them have made
      twenty, perhaps not one pin in a day; that is, certainly, not the two
      hundred and fortieth, perhaps not the four thousand eight hundredth, part
      of what they are at present capable of performing, in consequence of a
      proper division and combination of their different operations.
    
      In every other art and manufacture, the effects of the division of labour
      are similar to what they are in this very trifling one, though, in many of
      them, the labour can neither be so much subdivided, nor reduced to so
      great a simplicity of operation. The division of labour, however, so far
      as it can be introduced, occasions, in every art, a proportionable
      increase of the productive powers of labour. The separation of different
      trades and employments from one another, seems to have taken place in
      consequence of this advantage. This separation, too, is generally carried
      furthest in those countries which enjoy the highest degree of industry and
      improvement; what is the work of one man, in a rude state of society,
      being generally that of several in an improved one. In every improved
      society, the farmer is generally nothing but a farmer; the manufacturer,
      nothing but a manufacturer. The labour, too, which is necessary to produce
      any one complete manufacture, is almost always divided among a great
      number of hands. How many different trades are employed in each branch of
      the linen and woollen manufactures, from the growers of the flax and the
      wool, to the bleachers and smoothers of the linen, or to the dyers and
      dressers of the cloth! The nature of agriculture, indeed, does not admit
      of so many subdivisions of labour, nor of so complete a separation of one
      business from another, as manufactures. It is impossible to separate so
      entirely the business of the grazier from that of the corn-farmer, as the
      trade of the carpenter is commonly separated from that of the smith. The
      spinner is almost always a distinct person from the weaver; but the
      ploughman, the harrower, the sower of the seed, and the reaper of the
      corn, are often the same. The occasions for those different sorts of
      labour returning with the different seasons of the year, it is impossible
      that one man should be constantly employed in any one of them. This
      impossibility of making so complete and entire a separation of all the
      different branches of labour employed in agriculture, is perhaps the
      reason why the improvement of the productive powers of labour, in this
      art, does not always keep pace with their improvement in manufactures. The
      most opulent nations, indeed, generally excel all their neighbours in
      agriculture as well as in manufactures; but they are commonly more
      distinguished by their superiority in the latter than in the former. Their
      lands are in general better cultivated, and having more labour and expense
      bestowed upon them, produce more in proportion to the extent and natural
      fertility of the ground. But this superiority of produce is seldom much
      more than in proportion to the superiority of labour and expense. In
      agriculture, the labour of the rich country is not always much more
      productive than that of the poor; or, at least, it is never so much more
      productive, as it commonly is in manufactures. The corn of the rich
      country, therefore, will not always, in the same degree of goodness, come
      cheaper to market than that of the poor. The corn of Poland, in the same
      degree of goodness, is as cheap as that of France, notwithstanding the
      superior opulence and improvement of the latter country. The corn of
      France is, in the corn-provinces, fully as good, and in most years nearly
      about the same price with the corn of England, though, in opulence and
      improvement, France is perhaps inferior to England. The corn-lands of
      England, however, are better cultivated than those of France, and the
      corn-lands of France are said to be much better cultivated than those of
      Poland. But though the poor country, notwithstanding the inferiority of
      its cultivation, can, in some measure, rival the rich in the cheapness and
      goodness of its corn, it can pretend to no such competition in its
      manufactures, at least if those manufactures suit the soil, climate, and
      situation, of the rich country. The silks of France are better and cheaper
      than those of England, because the silk manufacture, at least under the
      present high duties upon the importation of raw silk, does not so well
      suit the climate of England as that of France. But the hardware and the
      coarse woollens of England are beyond all comparison superior to those of
      France, and much cheaper, too, in the same degree of goodness. In Poland
      there are said to be scarce any manufactures of any kind, a few of those
      coarser household manufactures excepted, without which no country can well
      subsist.
    
      This great increase in the quantity of work, which, in consequence of the
      division of labour, the same number of people are capable of performing,
      is owing to three different circumstances; first, to the increase of
      dexterity in every particular workman; secondly, to the saving of the time
      which is commonly lost in passing from one species of work to another;
      and, lastly, to the invention of a great number of machines which
      facilitate and abridge labour, and enable one man to do the work of many.
    
      First, the improvement of the dexterity of the workmen, necessarily
      increases the quantity of the work he can perform; and the division of
      labour, by reducing every man’s business to some one simple operation, and
      by making this operation the sole employment of his life, necessarily
      increases very much the dexterity of the workman. A common smith, who,
      though accustomed to handle the hammer, has never been used to make nails,
      if, upon some particular occasion, he is obliged to attempt it, will
      scarce, I am assured, be able to make above two or three hundred nails in
      a day, and those, too, very bad ones. A smith who has been accustomed to
      make nails, but whose sole or principal business has not been that of a
      nailer, can seldom, with his utmost diligence, make more than eight
      hundred or a thousand nails in a day. I have seen several boys, under
      twenty years of age, who had never exercised any other trade but that of
      making nails, and who, when they exerted themselves, could make, each of
      them, upwards of two thousand three hundred nails in a day. The making of
      a nail, however, is by no means one of the simplest operations. The same
      person blows the bellows, stirs or mends the fire as there is occasion,
      heats the iron, and forges every part of the nail: in forging the head,
      too, he is obliged to change his tools. The different operations into
      which the making of a pin, or of a metal button, is subdivided, are all of
      them much more simple, and the dexterity of the person, of whose life it
      has been the sole business to perform them, is usually much greater. The
      rapidity with which some of the operations of those manufactures are
      performed, exceeds what the human hand could, by those who had never seen
      them, be supposed capable of acquiring.
    
      Secondly, the advantage which is gained by saving the time commonly lost
      in passing from one sort of work to another, is much greater than we
      should at first view be apt to imagine it. It is impossible to pass very
      quickly from one kind of work to another, that is carried on in a
      different place, and with quite different tools. A country weaver, who
      cultivates a small farm, must 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 carried on in the same workhouse, the loss of time is, no doubt,
      much less. It is, even in this case, however, very considerable. A man
      commonly saunters a little in turning his hand from one sort of employment
      to another. When he first begins the new work, he is seldom very keen and
      hearty; his mind, as they say, does not go to it, and for some time he
      rather trifles than applies to good purpose. The habit of sauntering, and
      of indolent careless application, which is naturally, or rather
      necessarily, acquired by every country workman who is obliged to change
      his work and his tools every half hour, and to apply his hand in twenty
      different ways almost every day of his life, renders him almost always
      slothful and lazy, and incapable of any vigorous application, even on the
      most pressing occasions. Independent, therefore, of his deficiency in
      point of dexterity, this cause alone must always reduce considerably the
      quantity of work which he is capable of performing.
    
      Thirdly, and lastly, everybody must be sensible how much labour is
      facilitated and abridged by the application of proper machinery. It is
      unnecessary to give any example. I shall only observe, therefore, that the
      invention of all those machines by which labour is so much facilitated and
      abridged, seems to have been originally owing to the division of labour.
      Men are much more likely to discover easier and readier methods of
      attaining any object, when the whole attention of their minds is directed
      towards that single object, than when it is dissipated among a great
      variety of things. But, in consequence of the division of labour, the
      whole of every man’s attention comes naturally to be directed towards some
      one very simple object. It is naturally to be expected, therefore, that
      some one or other of those who are employed in each particular branch of
      labour should soon find out easier and readier methods of performing their
      own particular work, whenever the nature of it admits of such improvement.
      A great part of the machines made use of in those manufactures in which
      labour is most subdivided, were originally the invention of common
      workmen, who, being each of them employed in some very simple operation,
      naturally turned their thoughts towards finding out easier and readier
      methods of performing it. Whoever has been much accustomed to visit such
      manufactures, must frequently have been shewn very pretty machines, which
      were the inventions of such workmen, in order to facilitate and quicken
      their own particular part of the work. In the first fire engines {this was
      the current designation for steam engines}, a boy was constantly employed
      to open and shut alternately the communication between the boiler and the
      cylinder, according as the piston either ascended or descended. One of
      those boys, who loved to play with his companions, observed that, by tying
      a string from the handle of the valve which opened this communication to
      another part of the machine, the valve would open and shut without his
      assistance, and leave him at liberty to divert himself with his
      play-fellows. One of the greatest improvements that has been made upon
      this machine, since it was first invented, was in this manner the
      discovery of a boy who wanted to save his own labour.
    
      All the improvements in machinery, however, have by no means been the
      inventions of those who had occasion to use the machines. Many
      improvements have been made by the ingenuity of the makers of the
      machines, when to make them became the business of a peculiar trade; and
      some by that of those who are called philosophers, or men of speculation,
      whose trade it is not to do any thing, but to observe every thing, and
      who, upon that account, are often capable of combining together the powers
      of the most distant and dissimilar objects in the progress of society,
      philosophy or speculation becomes, like every other employment, the
      principal or sole trade and occupation of a particular class of citizens.
      Like every other employment, too, it is subdivided into a great number of
      different branches, each of which affords occupation to a peculiar tribe
      or class of philosophers; and this subdivision of employment in
      philosophy, as well as in every other business, improves dexterity, and
      saves time. Each individual becomes more expert in his own peculiar
      branch, more work is done upon the whole, and the quantity of science is
      considerably increased by it.
    
      It is the great multiplication of the productions of all the different
      arts, in consequence of the division of labour, which occasions, in a
      well-governed society, that universal opulence which extends itself to the
      lowest ranks of the people. Every workman has a great quantity of his own
      work to dispose of beyond what he himself has occasion for; and every
      other workman being exactly in the same situation, he is enabled to
      exchange a great quantity of his own goods for a great quantity or, what
      comes to the same thing, for the price of a great quantity of theirs. He
      supplies them abundantly with what they have occasion for, and they
      accommodate him as amply with what he has occasion for, and a general
      plenty diffuses itself through all the different ranks of the society.
    
      Observe the accommodation of the most common artificer or daylabourer in a
      civilized and thriving country, and you will perceive that the number of
      people, of whose industry a part, though but a small part, has been
      employed in procuring him this accommodation, exceeds all computation. The
      woollen coat, for example, which covers the day-labourer, as coarse and
      rough as it may appear, is the produce of the joint labour of a great
      multitude of workmen. The shepherd, the sorter of the wool, the
      wool-comber or carder, the dyer, the scribbler, the spinner, the weaver,
      the fuller, the dresser, with many others, must all join their different
      arts in order to complete even this homely production. How many merchants
      and carriers, besides, must have been employed in transporting the
      materials from some of those workmen to others who often live in a very
      distant part of the country? How much commerce and navigation in
      particular, how many ship-builders, sailors, sail-makers, rope-makers,
      must have been employed in order to bring together the different drugs
      made use of by the dyer, which often come from the remotest corners of the
      world? What a variety of labour, too, is necessary in order to produce the
      tools of the meanest of those workmen! To say nothing of such complicated
      machines as the ship of the sailor, the mill of the fuller, or even the
      loom of the weaver, let us consider only what a variety of labour is
      requisite in order to form that very simple machine, the shears with which
      the shepherd clips the wool. The miner, the builder of the furnace for
      smelting the ore, the feller of the timber, the burner of the charcoal to
      be made use of in the smelting-house, the brickmaker, the bricklayer, the
      workmen who attend the furnace, the millwright, the forger, the smith,
      must all of them join their different arts in order to produce them. Were
      we to examine, in the same manner, all the different parts of his dress
      and household furniture, the coarse linen shirt which he wears next his
      skin, the shoes which cover his feet, the bed which he lies on, and all
      the different parts which compose it, the kitchen-grate at which he
      prepares his victuals, the coals which he makes use of for that purpose,
      dug from the bowels of the earth, and brought to him, perhaps, by a long
      sea and a long land-carriage, all the other utensils of his kitchen, all
      the furniture of his table, the knives and forks, the earthen or pewter
      plates upon which he serves up and divides his victuals, the different
      hands employed in preparing his bread and his beer, the glass window which
      lets in the heat and the light, and keeps out the wind and the rain, with
      all the knowledge and art requisite for preparing that beautiful and happy
      invention, without which these northern parts of the world could scarce
      have afforded a very comfortable habitation, together with the tools of
      all the different workmen employed in producing those different
      conveniencies; if we examine, I say, all these things, and consider what a
      variety of labour is employed about each of them, we shall be sensible
      that, without the assistance and co-operation of many thousands, the very
      meanest person in a civilized country could not be provided, even
      according to, what we very falsely imagine, the easy and simple manner in
      which he is commonly accommodated. Compared, indeed, with the more
      extravagant luxury of the great, his accommodation must no doubt appear
      extremely simple and easy; and yet it may be true, perhaps, that the
      accommodation of an European prince does not always so much exceed that of
      an industrious and frugal peasant, as the accommodation of the latter
      exceeds that of many an African king, the absolute masters of the lives
      and liberties of ten thousand naked savages.
    


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


    
      This division of labour, from which so many advantages are derived, is not
      originally the effect of any human wisdom, which foresees and intends that
      general opulence to which it gives occasion. It is the necessary, though
      very slow and gradual, consequence of a certain propensity in human
      nature, which has in view no such extensive utility; the propensity to
      truck, barter, and exchange one thing for another.
    
      Whether this propensity be one of those original principles in human
      nature, of which no further account can be given, or whether, as seems
      more probable, it be the necessary consequence of the faculties of reason
      and speech, it belongs not to our present subject to inquire. It is common
      to all men, and to be found in no other race of animals, which seem to
      know neither this nor any other species of contracts. Two greyhounds, in
      running down the same hare, have sometimes the appearance of acting in
      some sort of concert. Each turns her towards his companion, or endeavours
      to intercept her when his companion turns her towards himself. This,
      however, is not the effect of any contract, but of the accidental
      concurrence of their passions in the same object at that particular time.
      Nobody ever saw a dog make a fair and deliberate exchange of one bone for
      another with another dog. Nobody ever saw one animal, by its gestures and
      natural cries signify to another, this is mine, that yours; I am willing
      to give this for that. When an animal wants to obtain something either of
      a man, or of another animal, it has no other means of persuasion, but to
      gain the favour of those whose service it requires. A puppy fawns upon its
      dam, and a spaniel endeavours, by a thousand attractions, to engage the
      attention of its master who is at dinner, when it wants to be fed by him.
      Man sometimes uses the same arts with his brethren, and when he has no
      other means of engaging them to act according to his inclinations,
      endeavours by every servile and fawning attention to obtain their good
      will. He has not time, however, to do this upon every occasion. In
      civilized society he stands at all times in need of the co-operation and
      assistance of great multitudes, while his whole life is scarce sufficient
      to gain the friendship of a few persons. In almost every other race of
      animals, each individual, when it is grown up to maturity, is entirely
      independent, and in its natural state has occasion for the assistance of
      no other living creature. But man has almost constant occasion for the
      help of his brethren, and it is in vain for him to expect it from their
      benevolence only. He will be more likely to prevail if he can interest
      their self-love in his favour, and shew them that it is for their own
      advantage to do for him what he requires of them. Whoever offers to
      another a bargain of any kind, proposes to do this. Give me that which I
      want, and you shall have this which you want, is the meaning of every such
      offer; and it is in this manner that we obtain from one another the far
      greater part of those good offices which we stand in need of. It is not
      from the benevolence of the butcher, the brewer, or the baker that we
      expect our dinner, but from their regard to their own interest. We address
      ourselves, not to their humanity, but to their self-love, and never talk
      to them of our own necessities, but of their advantages. Nobody but a
      beggar chooses to depend chiefly upon the benevolence of his
      fellow-citizens. Even a beggar does not depend upon it entirely. The
      charity of well-disposed people, indeed, supplies him with the whole fund
      of his subsistence. But though this principle ultimately provides him with
      all the necessaries of life which he has occasion for, it neither does nor
      can provide him with them as he has occasion for them. The greater part of
      his occasional wants are supplied in the same manner as those of other
      people, by treaty, by barter, and by purchase. With the money which one
      man gives him he purchases food. The old clothes which another bestows
      upon him he exchanges for other clothes which suit him better, or for
      lodging, or for food, or for money, with which he can buy either food,
      clothes, or lodging, as he has occasion.
    
      As it is by treaty, by barter, and by purchase, that we obtain from one
      another the greater part of those mutual good offices which we stand in
      need of, so it is this same trucking disposition which originally gives
      occasion to the division of labour. In a tribe of hunters or shepherds, a
      particular person makes bows and arrows, for example, with more readiness
      and dexterity than any other. He frequently exchanges them for cattle or
      for venison, with his companions; and he finds at last that he can, in
      this manner, get more cattle and venison, than if he himself went to the
      field to catch them. From a regard to his own interest, therefore, the
      making of bows and arrows grows to be his chief business, and he becomes a
      sort of armourer. Another excels in making the frames and covers of their
      little huts or moveable houses. He is accustomed to be of use in this way
      to his neighbours, who reward him in the same manner with cattle and with
      venison, till at last he finds it his interest to dedicate himself
      entirely to this employment, and to become a sort of house-carpenter. In
      the same manner a third becomes a smith or a brazier; a fourth, a tanner
      or dresser of hides or skins, the principal part of the clothing of
      savages. And thus the certainty of being able to exchange all that surplus
      part of the produce of his own labour, which is over and above his own
      consumption, for such parts of the produce of other men’s labour as he may
      have occasion for, encourages every man to apply himself to a particular
      occupation, and to cultivate and bring to perfection whatever talent of
      genius he may possess for that particular species of business.
    
      The difference of natural talents in different men, is, in reality, much
      less than we are aware of; and the very different genius which appears to
      distinguish men of different professions, when grown up to maturity, is
      not upon many occasions so much the cause, as the effect of the division
      of labour. The difference between the most dissimilar characters, between
      a philosopher and a common street porter, for example, seems to arise not
      so much from nature, as from habit, custom, and education. When they came
      in to the world, and for the first six or eight years of their existence,
      they were, perhaps, very much alike, and neither their parents nor
      play-fellows could perceive any remarkable difference. About that age, or
      soon after, they come to be employed in very different occupations. The
      difference of talents comes then to be taken notice of, and widens by
      degrees, till at last the vanity of the philosopher is willing to
      acknowledge scarce any resemblance. But without the disposition to truck,
      barter, and exchange, every man must have procured to himself every
      necessary and conveniency of life which he wanted. All must have had the
      same duties to perform, and the same work to do, and there could have been
      no such difference of employment as could alone give occasion to any great
      difference of talents.
    
      As it is this disposition which forms that difference of talents, so
      remarkable among men of different professions, so it is this same
      disposition which renders that difference useful. Many tribes of animals,
      acknowledged to be all of the same species, derive from nature a much more
      remarkable distinction of genius, than what, antecedent to custom and
      education, appears to take place among men. By nature a philosopher is not
      in genius and disposition half so different from a street porter, as a
      mastiff is from a grey-hound, or a grey-hound from a spaniel, or this last
      from a shepherd’s dog. Those different tribes of animals, however, though
      all of the same species are of scarce any use to one another. The strength
      of the mastiff is not in the least supported either by the swiftness of
      the greyhound, or by the sagacity of the spaniel, or by the docility of
      the shepherd’s dog. The effects of those different geniuses and talents,
      for want of the power or disposition to barter and exchange, cannot be
      brought into a common stock, and do not in the least contribute to the
      better accommodation and conveniency of the species. Each animal is still
      obliged to support and defend itself, separately and independently, and
      derives no sort of advantage from that variety of talents with which
      nature has distinguished its fellows. Among men, on the contrary, the most
      dissimilar geniuses are of use to one another; the different produces of
      their respective talents, by the general disposition to truck, barter, and
      exchange, being brought, as it were, into a common stock, where every man
      may purchase whatever part of the produce of other men’s talents he has
      occasion for.
    


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


    
      As it is the power of exchanging that gives occasion to the division of
      labour, so the extent of this division must always be limited by the
      extent of that power, or, in other words, by the extent of the market.
      When the market is very small, no person can have any encouragement to
      dedicate himself entirely to one employment, for want of the power to
      exchange all that surplus part of the produce of his own labour, which is
      over and above his own consumption, for such parts of the produce of other
      men’s labour as he has occasion for.
    
      There are some sorts of industry, even of the lowest kind, which can be
      carried on nowhere but in a great town. A porter, for example, can find
      employment and subsistence in no other place. A village is by much too
      narrow a sphere for him; even an ordinary market-town is scarce large
      enough to afford him constant occupation. In the lone houses and very
      small villages which are scattered about in so desert a country as the
      highlands of Scotland, every farmer must be butcher, baker, and brewer,
      for his own family. In such situations we can scarce expect to find even a
      smith, a carpenter, or a mason, within less than twenty miles of another
      of the same trade. The scattered families that live at eight or ten miles
      distance from the nearest of them, must learn to perform themselves a
      great number of little pieces of work, for which, in more populous
      countries, they would call in the assistance of those workmen. Country
      workmen are almost everywhere obliged to apply themselves to all the
      different branches of industry that have so much affinity to one another
      as to be employed about the same sort of materials. A country carpenter
      deals in every sort of work that is made of wood; a country smith in every
      sort of work that is made of iron. The former is not only a carpenter, but
      a joiner, a cabinet-maker, and even a carver in wood, as well as a
      wheel-wright, a plough-wright, a cart and waggon-maker. The employments of
      the latter are still more various. It is impossible there should be such a
      trade as even that of a nailer in the remote and inland parts of the
      highlands of Scotland. Such a workman at the rate of a thousand nails
      a-day, and three hundred working days in the year, will make three hundred
      thousand nails in the year. But in such a situation it would be impossible
      to dispose of one thousand, that is, of one day’s work in the year. As by
      means of water-carriage, a more extensive market is opened to every sort
      of industry than what land-carriage alone can afford it, so it is upon the
      sea-coast, and along the banks of navigable rivers, that industry of every
      kind naturally begins to subdivide and improve itself, and it is
      frequently not till a long time after that those improvements extend
      themselves to the inland parts of the country. A broad-wheeled waggon,
      attended by two men, and drawn by eight horses, in about six weeks time,
      carries and brings back between London and Edinburgh near four ton weight
      of goods. In about the same time a ship navigated by six or eight men, and
      sailing between the ports of London and Leith, frequently carries and
      brings back two hundred ton weight of goods. Six or eight men, therefore,
      by the help of water-carriage, can carry and bring back, in the same time,
      the same quantity of goods between London and Edinburgh as fifty
      broad-wheeled waggons, attended by a hundred men, and drawn by four
      hundred horses. Upon two hundred tons of goods, therefore, carried by the
      cheapest land-carriage from London to Edinburgh, there must be charged the
      maintenance of a hundred men for three weeks, and both the maintenance and
      what is nearly equal to maintenance the wear and tear of four hundred
      horses, as well as of fifty great waggons. Whereas, upon the same quantity
      of goods carried by water, there is to be charged only the maintenance of
      six or eight men, and the wear and tear of a ship of two hundred tons
      burthen, together with the value of the superior risk, or the difference
      of the insurance between land and water-carriage. Were there no other
      communication between those two places, therefore, but by land-carriage,
      as no goods could be transported from the one to the other, except such
      whose price was very considerable in proportion to their weight, they
      could carry on but a small part of that commerce which at present subsists
      between them, and consequently could give but a small part of that
      encouragement which they at present mutually afford to each other’s
      industry. There could be little or no commerce of any kind between the
      distant parts of the world. What goods could bear the expense of
      land-carriage between London and Calcutta? Or if there were any so
      precious as to be able to support this expense, with what safety could
      they be transported through the territories of so many barbarous nations?
      Those two cities, however, at present carry on a very considerable
      commerce with each other, and by mutually affording a market, give a good
      deal of encouragement to each other’s industry.
    
      Since such, therefore, are the advantages of water-carriage, it is natural
      that the first improvements of art and industry should be made where this
      conveniency opens the whole world for a market to the produce of every
      sort of labour, and that they should always be much later in extending
      themselves into the inland parts of the country. The inland parts of the
      country can for a long time have no other market for the greater part of
      their goods, but the country which lies round about them, and separates
      them from the sea-coast, and the great navigable rivers. The extent of the
      market, therefore, must for a long time be in proportion to the riches and
      populousness of that country, and consequently their improvement must
      always be posterior to the improvement of that country. In our North
      American colonies, the plantations have constantly followed either the
      sea-coast or the banks of the navigable rivers, and have scarce anywhere
      extended themselves to any considerable distance from both.
    
      The nations that, according to the best authenticated history, appear to
      have been first civilized, were those that dwelt round the coast of the
      Mediterranean sea. That sea, by far the greatest inlet that is known in
      the world, having no tides, nor consequently any waves, except such as are
      caused by the wind only, was, by the smoothness of its surface, as well as
      by the multitude of its islands, and the proximity of its neighbouring
      shores, extremely favourable to the infant navigation of the world; when,
      from their ignorance of the compass, men were afraid to quit the view of
      the coast, and from the imperfection of the art of ship-building, to
      abandon themselves to the boisterous waves of the ocean. To pass beyond
      the pillars of Hercules, that is, to sail out of the straits of Gibraltar,
      was, in the ancient world, long considered as a most wonderful and
      dangerous exploit of navigation. It was late before even the Phoenicians
      and Carthaginians, the most skilful navigators and ship-builders of those
      old times, attempted it; and they were, for a long time, the only nations
      that did attempt it.
    
      Of all the countries on the coast of the Mediterranean sea, Egypt seems to
      have been the first in which either agriculture or manufactures were
      cultivated and improved to any considerable degree. Upper Egypt extends
      itself nowhere above a few miles from the Nile; and in Lower Egypt, that
      great river breaks itself into many different canals, which, with the
      assistance of a little art, seem to have afforded a communication by
      water-carriage, not only between all the great towns, but between all the
      considerable villages, and even to many farm-houses in the country, nearly
      in the same manner as the Rhine and the Maese do in Holland at present.
      The extent and easiness of this inland navigation was probably one of the
      principal causes of the early improvement of Egypt.
    
      The improvements in agriculture and manufactures seem likewise to have
      been of very great antiquity in the provinces of Bengal, in the East
      Indies, and in some of the eastern provinces of China, though the great
      extent of this antiquity is not authenticated by any histories of whose
      authority we, in this part of the world, are well assured. In Bengal, the
      Ganges, and several other great rivers, form a great number of navigable
      canals, in the same manner as the Nile does in Egypt. In the eastern
      provinces of China, too, several great rivers form, by their different
      branches, a multitude of canals, and, by communicating with one another,
      afford an inland navigation much more extensive than that either of the
      Nile or the Ganges, or, perhaps, than both of them put together. It is
      remarkable, that neither the ancient Egyptians, nor the Indians, nor the
      Chinese, encouraged foreign commerce, but seem all to have derived their
      great opulence from this inland navigation.
    
      All the inland parts of Africa, and all that part of Asia which lies any
      considerable way north of the Euxine and Caspian seas, the ancient
      Scythia, the modern Tartary and Siberia, seem, in all ages of the world,
      to have been in the same barbarous and uncivilized state in which we find
      them at present. The sea of Tartary is the frozen ocean, which admits of
      no navigation; and though some of the greatest rivers in the world run
      through that country, they are at too great a distance from one another to
      carry commerce and communication through the greater part of it. There are
      in Africa none of those great inlets, such as the Baltic and Adriatic seas
      in Europe, the Mediterranean and Euxine seas in both Europe and Asia, and
      the gulfs of Arabia, Persia, India, Bengal, and Siam, in Asia, to carry
      maritime commerce into the interior parts of that great continent; and the
      great rivers of Africa are at too great a distance from one another to
      give occasion to any considerable inland navigation. The commerce,
      besides, which any nation can carry on by means of a river which does not
      break itself into any great number of branches or canals, and which runs
      into another territory before it reaches the sea, can never be very
      considerable, because it is always in the power of the nations who possess
      that other territory to obstruct the communication between the upper
      country and the sea. The navigation of the Danube is of very little use to
      the different states of Bavaria, Austria, and Hungary, in comparison of
      what it would be, if any of them possessed the whole of its course, till
      it falls into the Black sea.
    


CHAPTER IV.
OF THE ORIGIN AND USE OF MONEY.


    
      When the division of labour has been once thoroughly established, it is
      but a very small part of a man’s wants which the produce of his own labour
      can supply. He supplies the far greater part of them by exchanging that
      surplus part of the produce of his own labour, which is over and above his
      own consumption, for such parts of the produce of other men’s labour as he
      has occasion for. Every man thus lives by exchanging, or becomes, in some
      measure, a merchant, and the society itself grows to be what is properly a
      commercial society.
    
      But when the division of labour first began to take place, this power of
      exchanging must frequently have been very much clogged and embarrassed in
      its operations. One man, we shall suppose, has more of a certain commodity
      than he himself has occasion for, while another has less. The former,
      consequently, would be glad to dispose of; and the latter to purchase, a
      part of this superfluity. But if this latter should chance to have nothing
      that the former stands in need of, no exchange can be made between them.
      The butcher has more meat in his shop than he himself can consume, and the
      brewer and the baker would each of them be willing to purchase a part of
      it. But they have nothing to offer in exchange, except the different
      productions of their respective trades, and the butcher is already
      provided with all the bread and beer which he has immediate occasion for.
      No exchange can, in this case, be made between them. He cannot be their
      merchant, nor they his customers; and they are all of them thus mutually
      less serviceable to one another. In order to avoid the inconveniency of
      such situations, every prudent man in every period of society, after the
      first establishment of the division of labour, must naturally have
      endeavoured to manage his affairs in such a manner, as to have at all
      times by him, besides the peculiar produce of his own industry, a certain
      quantity of some one commodity or other, such as he imagined few people
      would be likely to refuse in exchange for the produce of their industry.
      Many different commodities, it is probable, were successively both thought
      of and employed for this purpose. In the rude ages of society, cattle are
      said to have been the common instrument of commerce; and, though they must
      have been a most inconvenient one, yet, in old times, we find things were
      frequently valued according to the number of cattle which had been given
      in exchange for them. The armour of Diomede, says Homer, cost only nine
      oxen; but that of Glaucus cost a hundred oxen. Salt is said to be the
      common instrument of commerce and exchanges in Abyssinia; a species of
      shells in some parts of the coast of India; dried cod at Newfoundland;
      tobacco in Virginia; sugar in some of our West India colonies; hides or
      dressed leather in some other countries; and there is at this day a
      village in Scotland, where it is not uncommon, I am told, for a workman to
      carry nails instead of money to the baker’s shop or the ale-house.
    
      In all countries, however, men seem at last to have been determined by
      irresistible reasons to give the preference, for this employment, to
      metals above every other commodity. Metals can not only be kept with as
      little loss as any other commodity, scarce any thing being less perishable
      than they are, but they can likewise, without any loss, be divided into
      any number of parts, as by fusion those parts can easily be re-united
      again; a quality which no other equally durable commodities possess, and
      which, more than any other quality, renders them fit to be the instruments
      of commerce and circulation. The man who wanted to buy salt, for example,
      and had nothing but cattle to give in exchange for it, must have been
      obliged to buy salt to the value of a whole ox, or a whole sheep, at a
      time. He could seldom buy less than this, because what he was to give for
      it could seldom be divided without loss; and if he had a mind to buy more,
      he must, for the same reasons, have been obliged to buy double or triple
      the quantity, the value, to wit, of two or three oxen, or of two or three
      sheep. If, on the contrary, instead of sheep or oxen, he had metals to
      give in exchange for it, he could easily proportion the quantity of the
      metal to the precise quantity of the commodity which he had immediate
      occasion for.
    
      Different metals have been made use of by different nations for this
      purpose. Iron was the common instrument of commerce among the ancient
      Spartans, copper among the ancient Romans, and gold and silver among all
      rich and commercial nations.
    
      Those metals seem originally to have been made use of for this purpose in
      rude bars, without any stamp or coinage. Thus we are told by Pliny (Plin.
      Hist Nat. lib. 33, cap. 3), upon the authority of Timaeus, an ancient
      historian, that, till the time of Servius Tullius, the Romans had no
      coined money, but made use of unstamped bars of copper, to purchase
      whatever they had occasion for. These rude bars, therefore, performed at
      this time the function of money.
    
      The use of metals in this rude state was attended with two very
      considerable inconveniences; first, with the trouble of weighing, and
      secondly, with that of assaying them. In the precious metals, where a
      small difference in the quantity makes a great difference in the value,
      even the business of weighing, with proper exactness, requires at least
      very accurate weights and scales. The weighing of gold, in particular, is
      an operation of some nicety in the coarser metals, indeed, where a small
      error would be of little consequence, less accuracy would, no doubt, be
      necessary. Yet we should find it excessively troublesome if every time a
      poor man had occasion either to buy or sell a farthing’s worth of goods,
      he was obliged to weigh the farthing. The operation of assaying is still
      more difficult, still more tedious; and, unless a part of the metal is
      fairly melted in the crucible, with proper dissolvents, any conclusion
      that can be drawn from it is extremely uncertain. Before the institution
      of coined money, however, unless they went through this tedious and
      difficult operation, people must always have been liable to the grossest
      frauds and impositions; and instead of a pound weight of pure silver, or
      pure copper, might receive, in exchange for their goods, an adulterated
      composition of the coarsest and cheapest materials, which had, however, in
      their outward appearance, been made to resemble those metals. To prevent
      such abuses, to facilitate exchanges, and thereby to encourage all sorts
      of industry and commerce, it has been found necessary, in all countries
      that have made any considerable advances towards improvement, to affix a
      public stamp upon certain quantities of such particular metals, as were in
      those countries commonly made use of to purchase goods. Hence the origin
      of coined money, and of those public offices called mints; institutions
      exactly of the same nature with those of the aulnagers and stamp-masters
      of woollen and linen cloth. All of them are equally meant to ascertain, by
      means of a public stamp, the quantity and uniform goodness of those
      different commodities when brought to market.
    
      The first public stamps of this kind that were affixed to the current
      metals, seem in many cases to have been intended to ascertain, what it was
      both most difficult and most important to ascertain, the goodness or
      fineness of the metal, and to have resembled the sterling mark which is at
      present affixed to plate and bars of silver, or the Spanish mark which is
      sometimes affixed to ingots of gold, and which, being struck only upon one
      side of the piece, and not covering the whole surface, ascertains the
      fineness, but not the weight of the metal. Abraham weighs to Ephron the
      four hundred shekels of silver which he had agreed to pay for the field of
      Machpelah. They are said, however, to be the current money of the
      merchant, and yet are received by weight, and not by tale, in the same
      manner as ingots of gold and bars of silver are at present. The revenues
      of the ancient Saxon kings of England are said to have been paid, not in
      money, but in kind, that is, in victuals and provisions of all sorts.
      William the Conqueror introduced the custom of paying them in money. This
      money, however, was for a long time, received at the exchequer, by weight,
      and not by tale.
    
      The inconveniency and difficulty of weighing those metals with exactness,
      gave occasion to the institution of coins, of which the stamp, covering
      entirely both sides of the piece, and sometimes the edges too, was
      supposed to ascertain not only the fineness, but the weight of the metal.
      Such coins, therefore, were received by tale, as at present, without the
      trouble of weighing.
    
      The denominations of those coins seem originally to have expressed the
      weight or quantity of metal contained in them. In the time of Servius
      Tullius, who first coined money at Rome, the Roman as or pondo contained a
      Roman pound of good copper. It was divided, in the same manner as our
      Troyes pound, into twelve ounces, each of which contained a real ounce of
      good copper. The English pound sterling, in the time of Edward I.
      contained a pound, Tower weight, of silver of a known fineness. The Tower
      pound seems to have been something more than the Roman pound, and
      something less than the Troyes pound. This last was not introduced into
      the mint of England till the 18th of Henry the VIII. The French livre
      contained, in the time of Charlemagne, a pound, Troyes weight, of silver
      of a known fineness. The fair of Troyes in Champaign was at that time
      frequented by all the nations of Europe, and the weights and measures of
      so famous a market were generally known and esteemed. The Scots money
      pound contained, from the time of Alexander the First to that of Robert
      Bruce, a pound of silver of the same weight and fineness with the English
      pound sterling. English, French, and Scots pennies, too, contained all of
      them originally a real penny-weight of silver, the twentieth part of an
      ounce, and the two hundred-and-fortieth part of a pound. The shilling,
      too, seems originally to have been the denomination of a weight. “When
      wheat is at twelve shillings the quarter,” says an ancient statute of
      Henry III. “then wastel bread of a farthing shall weigh eleven shillings
      and fourpence”. The proportion, however, between the shilling, and either
      the penny on the one hand, or the pound on the other, seems not to have
      been so constant and uniform as that between the penny and the pound.
      During the first race of the kings of France, the French sou or shilling
      appears upon different occasions to have contained five, twelve, twenty,
      and forty pennies. Among the ancient Saxons, a shilling appears at one
      time to have contained only five pennies, and it is not improbable that it
      may have been as variable among them as among their neighbours, the
      ancient Franks. From the time of Charlemagne among the French, and from
      that of William the Conqueror among the English, the proportion between
      the pound, the shilling, and the penny, seems to have been uniformly the
      same as at present, though the value of each has been very different; for
      in every country of the world, I believe, the avarice and injustice of
      princes and sovereign states, abusing the confidence of their subjects,
      have by degrees diminished the real quantity of metal, which had been
      originally contained in their coins. The Roman as, in the latter ages of
      the republic, was reduced to the twenty-fourth part of its original value,
      and, instead of weighing a pound, came to weigh only half an ounce. The
      English pound and penny contain at present about a third only; the Scots
      pound and penny about a thirty-sixth; and the French pound and penny about
      a sixty-sixth part of their original value. By means of those operations,
      the princes and sovereign states which performed them were enabled, in
      appearance, to pay their debts and fulfil their engagements with a smaller
      quantity of silver than would otherwise have been requisite. It was indeed
      in appearance only; for their creditors were really defrauded of a part of
      what was due to them. All other debtors in the state were allowed the same
      privilege, and might pay with the same nominal sum of the new and debased
      coin whatever they had borrowed in the old. Such operations, therefore,
      have always proved favourable to the debtor, and ruinous to the creditor,
      and have sometimes produced a greater and more universal revolution in the
      fortunes of private persons, than could have been occasioned by a very
      great public calamity.
    
      It is in this manner that money has become, in all civilized nations, the
      universal instrument of commerce, by the intervention of which goods of
      all kinds are bought and sold, or exchanged for one another.
    
      What are the rules which men naturally observe, in exchanging them either
      for money, or for one another, I shall now proceed to examine. These rules
      determine what may be called the relative or exchangeable value of goods.
    
      The word VALUE, it is to be observed, has two different meanings, and
      sometimes expresses the utility of some particular object, and sometimes
      the power of purchasing other goods which the possession of that object
      conveys. The one may be called ‘value in use;’ the other, ‘value in
      exchange.’ The things which have the greatest value in use have frequently
      little or no value in exchange; and, on the contrary, those which have the
      greatest value in exchange have frequently little or no value in use.
      Nothing is more useful than water; but it will purchase scarce any thing;
      scarce any thing can be had in exchange for it. A diamond, on the
      contrary, has scarce any value in use; but a very great quantity of other
      goods may frequently be had in exchange for it.
    
      In order to investigate the principles which regulate the exchangeable
      value of commodities, I shall endeavour to shew,
    
      First, what is the real measure of this exchangeable value; or wherein
      consists the real price of all commodities.
    
      Secondly, what are the different parts of which this real price is
      composed or made up.
    
      And, lastly, what are the different circumstances which sometimes raise
      some or all of these different parts of price above, and sometimes sink
      them below, their natural or ordinary rate; or, what are the causes which
      sometimes hinder the market price, that is, the actual price of
      commodities, from coinciding exactly with what may be called their natural
      price.
    
      I shall endeavour to explain, as fully and distinctly as I can, those
      three subjects in the three following chapters, for which I must very
      earnestly entreat both the patience and attention of the reader: his
      patience, in order to examine a detail which may, perhaps, in some places,
      appear unnecessarily tedious; and his attention, in order to understand
      what may perhaps, after the fullest explication which I am capable of
      giving it, appear still in some degree obscure. I am always willing to run
      some hazard of being tedious, in order to be sure that I am perspicuous;
      and, after taking the utmost pains that I can to be perspicuous, some
      obscurity may still appear to remain upon a subject, in its own nature
      extremely abstracted.
    


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


    
      Every man is rich or poor according to the degree in which he can afford
      to enjoy the necessaries, conveniencies, and amusements of human life. But
      after the division of labour has once thoroughly taken place, it is but a
      very small part of these with which a man’s own labour can supply him. The
      far greater part of them he must derive from the labour of other people,
      and he must be rich or poor according to the quantity of that labour which
      he can command, or which he can afford to purchase. The value of any
      commodity, therefore, to the person who possesses it, and who means not to
      use or consume it himself, but to exchange it for other commodities, is
      equal to the quantity of labour which it enables him to purchase or
      command. Labour therefore, is the real measure of the exchangeable value
      of all commodities.
    
      The real price of every thing, what every thing really costs to the man
      who wants to acquire it, is the toil and trouble of acquiring it. What
      every thing is really worth to the man who has acquired it and who wants
      to dispose of it, or exchange it for something else, is the toil and
      trouble which it can save to himself, and which it can impose upon other
      people. What is bought with money, or with goods, is purchased by labour,
      as much as what we acquire by the toil of our own body. That money, or
      those goods, indeed, save us this toil. They contain the value of a
      certain quantity of labour, which we exchange for what is supposed at the
      time to contain the value of an equal quantity. Labour was the first
      price, the original purchase money that was paid for all things. It was
      not by gold or by silver, but by labour, that all the wealth of the world
      was originally purchased; and its value, to those who possess it, and who
      want to exchange it for some new productions, is precisely equal to the
      quantity of labour which it can enable them to purchase or command.
    
      Wealth, as Mr Hobbes says, is power. But the person who either acquires,
      or succeeds to a great fortune, does not necessarily acquire or succeed to
      any political power, either civil or military. His fortune may, perhaps,
      afford him the means of acquiring both; but the mere possession of that
      fortune does not necessarily convey to him either. The power which that
      possession immediately and directly conveys to him, is the power of
      purchasing a certain command over all the labour, or over all the produce
      of labour which is then in the market. His fortune is greater or less,
      precisely in proportion to the extent of this power, or to the quantity
      either of other men’s labour, or, what is the same thing, of the produce
      of other men’s labour, which it enables him to purchase or command. The
      exchangeable value of every thing must always be precisely equal to the
      extent of this power which it conveys to its owner.
    
      But though labour be the real measure of the exchangeable value of all
      commodities, it is not that by which their value is commonly estimated. It
      is often difficult to ascertain the proportion between two different
      quantities of labour. The time spent in two different sorts of work will
      not always alone determine this proportion. The different degrees of
      hardship endured, and of ingenuity exercised, must likewise be taken into
      account. There may be more labour in an hour’s hard work, than in two
      hours easy business; or in an hour’s application to a trade which it cost
      ten years labour to learn, than in a month’s industry, at an ordinary and
      obvious employment. But it is not easy to find any accurate measure either
      of hardship or ingenuity. In exchanging, indeed, the different productions
      of different sorts of labour for one another, some allowance is commonly
      made for both. It is adjusted, however, not by any accurate measure, but
      by the higgling and bargaining of the market, according to that sort of
      rough equality which, though not exact, is sufficient for carrying on the
      business of common life.
    
      Every commodity, besides, is more frequently exchanged for, and thereby
      compared with, other commodities, than with labour. It is more natural,
      therefore, to estimate its exchangeable value by the quantity of some
      other commodity, than by that of the labour which it can produce. The
      greater part of people, too, understand better what is meant by a quantity
      of a particular commodity, than by a quantity of labour. The one is a
      plain palpable object; the other an abstract notion, which though it can
      be made sufficiently intelligible, is not altogether so natural and
      obvious.
    
      But when barter ceases, and money has become the common instrument of
      commerce, every particular commodity is more frequently exchanged for
      money than for any other commodity. The butcher seldom carries his beef or
      his mutton to the baker or the brewer, in order to exchange them for bread
      or for beer; but he carries them to the market, where he exchanges them
      for money, and afterwards exchanges that money for bread and for beer. The
      quantity of money which he gets for them regulates, too, the quantity of
      bread and beer which he can afterwards purchase. It is more natural and
      obvious to him, therefore, to estimate their value by the quantity of
      money, the commodity for which he immediately exchanges them, than by that
      of bread and beer, the commodities for which he can exchange them only by
      the intervention of another commodity; and rather to say that his
      butcher’s meat is worth three-pence or fourpence a-pound, than that it is
      worth three or four pounds of bread, or three or four quarts of small
      beer. Hence it comes to pass, that the exchangeable value of every
      commodity is more frequently estimated by the quantity of money, than by
      the quantity either of labour or of any other commodity which can be had
      in exchange for it.
    
      Gold and silver, however, like every other commodity, vary in their value;
      are sometimes cheaper and sometimes dearer, sometimes of easier and
      sometimes of more difficult purchase. The quantity of labour which any
      particular quantity of them can purchase or command, or the quantity of
      other goods which it will exchange for, depends always upon the fertility
      or barrenness of the mines which happen to be known about the time when
      such exchanges are made. The discovery of the abundant mines of America,
      reduced, in the sixteenth century, the value of gold and silver in Europe
      to about a third of what it had been before. As it cost less labour to
      bring those metals from the mine to the market, so, when they were brought
      thither, they could purchase or command less labour; and this revolution
      in their value, though perhaps the greatest, is by no means the only one
      of which history gives some account. But as a measure of quantity, such as
      the natural foot, fathom, or handful, which is continually varying in its
      own quantity, can never be an accurate measure of the quantity of other
      things; so a commodity which is itself continually varying in its own
      value, can never be an accurate measure of the value of other commodities.
      Equal quantities of labour, at all times and places, may be said to be of
      equal value to the labourer. In his ordinary state of health, strength,
      and spirits; in the ordinary degree of his skill and dexterity, he must
      always lay down the same portion of his ease, his liberty, and his
      happiness. The price which he pays must always be the same, whatever may
      be the quantity of goods which he receives in return for it. Of these,
      indeed, it may sometimes purchase a greater and sometimes a smaller
      quantity; but it is their value which varies, not that of the labour which
      purchases them. At all times and places, that is dear which it is
      difficult to come at, or which it costs much labour to acquire; and that
      cheap which is to be had easily, or with very little labour. Labour alone,
      therefore, never varying in its own value, is alone the ultimate and real
      standard by which the value of all commodities can at all times and places
      be estimated and compared. It is their real price; money is their nominal
      price only.
    
      But though equal quantities of labour are always of equal value to the
      labourer, yet to the person who employs him they appear sometimes to be of
      greater, and sometimes of smaller value. He purchases them sometimes with
      a greater, and sometimes with a smaller quantity of goods, and to him the
      price of labour seems to vary like that of all other things. It appears to
      him dear in the one case, and cheap in the other. In reality, however, it
      is the goods which are cheap in the one case, and dear in the other.
    
      In this popular sense, therefore, labour, like commodities, may be said to
      have a real and a nominal price. Its real price may be said to consist in
      the quantity of the necessaries and conveniencies of life which are given
      for it; its nominal price, in the quantity of money. The labourer is rich
      or poor, is well or ill rewarded, in proportion to the real, not to the
      nominal price of his labour.
    
      The distinction between the real and the nominal price of commodities and
      labour is not a matter of mere speculation, but may sometimes be of
      considerable use in practice. The same real price is always of the same
      value; but on account of the variations in the value of gold and silver,
      the same nominal price is sometimes of very different values. When a
      landed estate, therefore, is sold with a reservation of a perpetual rent,
      if it is intended that this rent should always be of the same value, it is
      of importance to the family in whose favour it is reserved, that it should
      not consist in a particular sum of money. Its value would in this case be
      liable to variations of two different kinds: first, to those which arise
      from the different quantities of gold and silver which are contained at
      different times in coin of the same denomination; and, secondly, to those
      which arise from the different values of equal quantities of gold and
      silver at different times.
    
      Princes and sovereign states have frequently fancied that they had a
      temporary interest to diminish the quantity of pure metal contained in
      their coins; but they seldom have fancied that they had any to augment it.
      The quantity of metal contained in the coins, I believe of all nations,
      has accordingly been almost continually diminishing, and hardly ever
      augmenting. Such variations, therefore, tend almost always to diminish the
      value of a money rent.
    
      The discovery of the mines of America diminished the value of gold and
      silver in Europe. This diminution, it is commonly supposed, though I
      apprehend without any certain proof, is still going on gradually, and is
      likely to continue to do so for a long time. Upon this supposition,
      therefore, such variations are more likely to diminish than to augment the
      value of a money rent, even though it should be stipulated to be paid, not
      in such a quantity of coined money of such a denomination (in so many
      pounds sterling, for example), but in so many ounces, either of pure
      silver, or of silver of a certain standard.
    
      The rents which have been reserved in corn, have preserved their value
      much better than those which have been reserved in money, even where the
      denomination of the coin has not been altered. By the 18th of Elizabeth,
      it was enacted, that a third of the rent of all college leases should be
      reserved in corn, to be paid either in kind, or according to the current
      prices at the nearest public market. The money arising from this corn
      rent, though originally but a third of the whole, is, in the present
      times, according to Dr. Blackstone, commonly near double of what arises
      from the other two-thirds. The old money rents of colleges must, according
      to this account, have sunk almost to a fourth part of their ancient value,
      or are worth little more than a fourth part of the corn which they were
      formerly worth. But since the reign of Philip and Mary, the denomination
      of the English coin has undergone little or no alteration, and the same
      number of pounds, shillings, and pence, have contained very nearly the
      same quantity of pure silver. This degradation, therefore, in the value of
      the money rents of colleges, has arisen altogether from the degradation in
      the price of silver.
    
      When the degradation in the value of silver is combined with the
      diminution of the quantity of it contained in the coin of the same
      denomination, the loss is frequently still greater. In Scotland, where the
      denomination of the coin has undergone much greater alterations than it
      ever did in England, and in France, where it has undergone still greater
      than it ever did in Scotland, some ancient rents, originally of
      considerable value, have, in this manner, been reduced almost to nothing.
    
      Equal quantities of labour will, at distant times, be purchased more
      nearly with equal quantities of corn, the subsistence of the labourer,
      than with equal quantities of gold and silver, or, perhaps, of any other
      commodity. Equal quantities of corn, therefore, will, at distant times, be
      more nearly of the same real value, or enable the possessor to purchase or
      command more nearly the same quantity of the labour of other people. They
      will do this, I say, more nearly than equal quantities of almost any other
      commodity; for even equal quantities of corn will not do it exactly. The
      subsistence of the labourer, or the real price of labour, as I shall
      endeavour to shew hereafter, is very different upon different occasions;
      more liberal in a society advancing to opulence, than in one that is
      standing still, and in one that is standing still, than in one that is
      going backwards. Every other commodity, however, will, at any particular
      time, purchase a greater or smaller quantity of labour, in proportion to
      the quantity of subsistence which it can purchase at that time. A rent,
      therefore, reserved in corn, is liable only to the variations in the
      quantity of labour which a certain quantity of corn can purchase. But a
      rent reserved in any other commodity is liable, not only to the variations
      in the quantity of labour which any particular quantity of corn can
      purchase, but to the variations in the quantity of corn which can be
      purchased by any particular quantity of that commodity.
    
      Though the real value of a corn rent, it is to be observed, however,
      varies much less from century to century than that of a money rent, it
      varies much more from year to year. The money price of labour, as I shall
      endeavour to shew hereafter, does not fluctuate from year to year with the
      money price of corn, but seems to be everywhere accommodated, not to the
      temporary or occasional, but to the average or ordinary price of that
      necessary of life. The average or ordinary price of corn, again is
      regulated, as I shall likewise endeavour to shew hereafter, by the value
      of silver, by the richness or barrenness of the mines which supply the
      market with that metal, or by the quantity of labour which must be
      employed, and consequently of corn which must be consumed, in order to
      bring any particular quantity of silver from the mine to the market. But
      the value of silver, though it sometimes varies greatly from century to
      century, seldom varies much from year to year, but frequently continues
      the same, or very nearly the same, for half a century or a century
      together. The ordinary or average money price of corn, therefore, may,
      during so long a period, continue the same, or very nearly the same, too,
      and along with it the money price of labour, provided, at least, the
      society continues, in other respects, in the same, or nearly in the same,
      condition. In the mean time, the temporary and occasional price of corn
      may frequently be double one year of what it had been the year before, or
      fluctuate, for example, from five-and-twenty to fifty shillings the
      quarter. But when corn is at the latter price, not only the nominal, but
      the real value of a corn rent, will be double of what it is when at the
      former, or will command double the quantity either of labour, or of the
      greater part of other commodities; the money price of labour, and along
      with it that of most other things, continuing the same during all these
      fluctuations.
    
      Labour, therefore, it appears evidently, is the only universal, as well as
      the only accurate, measure of value, or the only standard by which we can
      compare the values of different commodities, at all times, and at all
      places. We cannot estimate, it is allowed, the real value of different
      commodities from century to century by the quantities of silver which were
      given for them. We cannot estimate it from year to year by the quantities
      of corn. By the quantities of labour, we can, with the greatest accuracy,
      estimate it, both from century to century, and from year to year. From
      century to century, corn is a better measure than silver, because, from
      century to century, equal quantities of corn will command the same
      quantity of labour more nearly than equal quantities of silver. From year
      to year, on the contrary, silver is a better measure than corn, because
      equal quantities of it will more nearly command the same quantity of
      labour.
    
      But though, in establishing perpetual rents, or even in letting very long
      leases, it may be of use to distinguish between real and nominal price; it
      is of none in buying and selling, the more common and ordinary
      transactions of human life.
    
      At the same time and place, the real and the nominal price of all
      commodities are exactly in proportion to one another. The more or less
      money you get for any commodity, in the London market, for example, the
      more or less labour it will at that time and place enable you to purchase
      or command. At the same time and place, therefore, money is the exact
      measure of the real exchangeable value of all commodities. It is so,
      however, at the same time and place only.
    
      Though at distant places there is no regular proportion between the real
      and the money price of commodities, yet the merchant who carries goods
      from the one to the other, has nothing to consider but the money price, or
      the difference between the quantity of silver for which he buys them, and
      that for which he is likely to sell them. Half an ounce of silver at
      Canton in China may command a greater quantity both of labour and of the
      necessaries and conveniencies of life, than an ounce at London. A
      commodity, therefore, which sells for half an ounce of silver at Canton,
      may there be really dearer, of more real importance to the man who
      possesses it there, than a commodity which sells for an ounce at London is
      to the man who possesses it at London. If a London merchant, however, can
      buy at Canton, for half an ounce of silver, a commodity which he can
      afterwards sell at London for an ounce, he gains a hundred per cent. by
      the bargain, just as much as if an ounce of silver was at London exactly
      of the same value as at Canton. It is of no importance to him that half an
      ounce of silver at Canton would have given him the command of more labour,
      and of a greater quantity of the necessaries and conveniencies of life
      than an ounce can do at London. An ounce at London will always give him
      the command of double the quantity of all these, which half an ounce could
      have done there, and this is precisely what he wants.
    
      As it is the nominal or money price of goods, therefore, which finally
      determines the prudence or imprudence of all purchases and sales, and
      thereby regulates almost the whole business of common life in which price
      is concerned, we cannot wonder that it should have been so much more
      attended to than the real price.
    
      In such a work as this, however, it may sometimes be of use to compare the
      different real values of a particular commodity at different times and
      places, or the different degrees of power over the labour of other people
      which it may, upon different occasions, have given to those who possessed
      it. We must in this case compare, not so much the different quantities of
      silver for which it was commonly sold, as the different quantities or
      labour which those different quantities of silver could have purchased.
      But the current prices of labour, at distant times and places, can scarce
      ever be known with any degree of exactness. Those of corn, though they
      have in few places been regularly recorded, are in general better known,
      and have been more frequently taken notice of by historians and other
      writers. We must generally, therefore, content ourselves with them, not as
      being always exactly in the same proportion as the current prices of
      labour, but as being the nearest approximation which can commonly be had
      to that proportion. I shall hereafter have occasion to make several
      comparisons of this kind.
    
      In the progress of industry, commercial nations have found it convenient
      to coin several different metals into money; gold for larger payments,
      silver for purchases of moderate value, and copper, or some other coarse
      metal, for those of still smaller consideration, They have always,
      however, considered one of those metals as more peculiarly the measure of
      value than any of the other two; and this preference seems generally to
      have been given to the metal which they happen first to make use of as the
      instrument of commerce. Having once begun to use it as their standard,
      which they must have done when they had no other money, they have
      generally continued to do so even when the necessity was not the same.
    
      The Romans are said to have had nothing but copper money till within five
      years before the first Punic war (Pliny, lib. xxxiii. cap. 3), when they
      first began to coin silver. Copper, therefore, appears to have continued
      always the measure of value in that republic. At Rome all accounts appear
      to have been kept, and the value of all estates to have been computed,
      either in asses or in sestertii. The as was always the denomination of a
      copper coin. The word sestertius signifies two asses and a half. Though
      the sestertius, therefore, was originally a silver coin, its value was
      estimated in copper. At Rome, one who owed a great deal of money was said
      to have a great deal of other people’s copper.
    
      The northern nations who established themselves upon the ruins of the
      Roman empire, seem to have had silver money from the first beginning of
      their settlements, and not to have known either gold or copper coins for
      several ages thereafter. There were silver coins in England in the time of
      the Saxons; but there was little gold coined till the time of Edward III
      nor any copper till that of James I. of Great Britain. In England,
      therefore, and for the same reason, I believe, in all other modern nations
      of Europe, all accounts are kept, and the value of all goods and of all
      estates is generally computed, in silver: and when we mean to express the
      amount of a person’s fortune, we seldom mention the number of guineas, but
      the number of pounds sterling which we suppose would be given for it.
    
      Originally, in all countries, I believe, a legal tender of payment could
      be made only in the coin of that metal which was peculiarly considered as
      the standard or measure of value. In England, gold was not considered as a
      legal tender for a long time after it was coined into money. The
      proportion between the values of gold and silver money was not fixed by
      any public law or proclamation, but was left to be settled by the market.
      If a debtor offered payment in gold, the creditor might either reject such
      payment altogether, or accept of it at such a valuation of the gold as he
      and his debtor could agree upon. Copper is not at present a legal tender,
      except in the change of the smaller silver coins.
    
      In this state of things, the distinction between the metal which was the
      standard, and that which was not the standard, was something more than a
      nominal distinction.
    
      In process of time, and as people became gradually more familiar with the
      use of the different metals in coin, and consequently better acquainted
      with the proportion between their respective values, it has, in most
      countries, I believe, been found convenient to ascertain this proportion,
      and to declare by a public law, that a guinea, for example, of such a
      weight and fineness, should exchange for one-and-twenty shillings, or be a
      legal tender for a debt of that amount. In this state of things, and
      during the continuance of any one regulated proportion of this kind, the
      distinction between the metal, which is the standard, and that which is
      not the standard, becomes little more than a nominal distinction.
    
      In consequence of any change, however, in this regulated proportion, this
      distinction becomes, or at least seems to become, something more than
      nominal again. If the regulated value of a guinea, for example, was either
      reduced to twenty, or raised to two-and-twenty shillings, all accounts
      being kept, and almost all obligations for debt being expressed, in silver
      money, the greater part of payments could in either case be made with the
      same quantity of silver money as before; but would require very different
      quantities of gold money; a greater in the one case, and a smaller in the
      other. Silver would appear to be more invariable in its value than gold.
      Silver would appear to measure the value of gold, and gold would not
      appear to measure the value of silver. The value of gold would seem to
      depend upon the quantity of silver which it would exchange for, and the
      value of silver would not seem to depend upon the quantity of gold which
      it would exchange for. This difference, however, would be altogether owing
      to the custom of keeping accounts, and of expressing the amount of all
      great and small sums rather in silver than in gold money. One of Mr
      Drummond’s notes for five-and-twenty or fifty guineas would, after an
      alteration of this kind, be still payable with five-and-twenty or fifty
      guineas, in the same manner as before. It would, after such an alteration,
      be payable with the same quantity of gold as before, but with very
      different quantities of silver. In the payment of such a note, gold would
      appear to be more invariable in its value than silver. Gold would appear
      to measure the value of silver, and silver would not appear to measure the
      value of gold. If the custom of keeping accounts, and of expressing
      promissory-notes and other obligations for money, in this manner should
      ever become general, gold, and not silver, would be considered as the
      metal which was peculiarly the standard or measure of value.
    
      In reality, during the continuance of any one regulated proportion between
      the respective values of the different metals in coin, the value of the
      most precious metal regulates the value of the whole coin. Twelve copper
      pence contain half a pound avoirdupois of copper, of not the best quality,
      which, before it is coined, is seldom worth seven-pence in silver. But as,
      by the regulation, twelve such pence are ordered to exchange for a
      shilling, they are in the market considered as worth a shilling, and a
      shilling can at any time be had for them. Even before the late reformation
      of the gold coin of Great Britain, the gold, that part of it at least
      which circulated in London and its neighbourhood, was in general less
      degraded below its standard weight than the greater part of the silver.
      One-and-twenty worn and defaced shillings, however, were considered as
      equivalent to a guinea, which, perhaps, indeed, was worn and defaced too,
      but seldom so much so. The late regulations have brought the gold coin as
      near, perhaps, to its standard weight as it is possible to bring the
      current coin of any nation; and the order to receive no gold at the public
      offices but by weight, is likely to preserve it so, as long as that order
      is enforced. The silver coin still continues in the same worn and degraded
      state as before the reformation of the cold coin. In the market, however,
      one-and-twenty shillings of this degraded silver coin are still considered
      as worth a guinea of this excellent gold coin.
    
      The reformation of the gold coin has evidently raised the value of the
      silver coin which can be exchanged for it.
    
      In the English mint, a pound weight of gold is coined into forty-four
      guineas and a half, which at one-and-twenty shillings the guinea, is equal
      to forty-six pounds fourteen shillings and sixpence. An ounce of such gold
      coin, therefore, is worth £ 3:17:10½ in silver. In England, no duty or
      seignorage is paid upon the coinage, and he who carries a pound weight or
      an ounce weight of standard gold bullion to the mint, gets back a pound
      weight or an ounce weight of gold in coin, without any deduction. Three
      pounds seventeen shillings and tenpence halfpenny an ounce, therefore, is
      said to be the mint price of gold in England, or the quantity of gold coin
      which the mint gives in return for standard gold bullion.
    
      Before the reformation of the gold coin, the price of standard gold
      bullion in the market had, for many years, been upwards of £3:18s.
      sometimes £ 3:19s, and very frequently £4 an ounce; that sum, it is
      probable, in the worn and degraded gold coin, seldom containing more than
      an ounce of standard gold. Since the reformation of the gold coin, the
      market price of standard gold bullion seldom exceeds £ 3:17:7 an ounce.
      Before the reformation of the gold coin, the market price was always more
      or less above the mint price. Since that reformation, the market price has
      been constantly below the mint price. But that market price is the same
      whether it is paid in gold or in silver coin. The late reformation of the
      gold coin, therefore, has raised not only the value of the gold coin, but
      likewise that of the silver coin in proportion to gold bullion, and
      probably, too, in proportion to all other commodities; though the price of
      the greater part of other commodities being influenced by so many other
      causes, the rise in the value of either gold or silver coin in proportion
      to them may not be so distinct and sensible.
    
      In the English mint, a pound weight of standard silver bullion is coined
      into sixty-two shillings, containing, in the same manner, a pound weight
      of standard silver. Five shillings and twopence an ounce, therefore, is
      said to be the mint price of silver in England, or the quantity of silver
      coin which the mint gives in return for standard silver bullion. Before
      the reformation of the gold coin, the market price of standard silver
      bullion was, upon different occasions, five shillings and fourpence, five
      shillings and fivepence, five shillings and sixpence, five shillings and
      sevenpence, and very often five shillings and eightpence an ounce. Five
      shillings and sevenpence, however, seems to have been the most common
      price. Since the reformation of the gold coin, the market price of
      standard silver bullion has fallen occasionally to five shillings and
      threepence, five shillings and fourpence, and five shillings and fivepence
      an ounce, which last price it has scarce ever exceeded. Though the market
      price of silver bullion has fallen considerably since the reformation of
      the gold coin, it has not fallen so low as the mint price.
    
      In the proportion between the different metals in the English coin, as
      copper is rated very much above its real value, so silver is rated
      somewhat below it. In the market of Europe, in the French coin and in the
      Dutch coin, an ounce of fine gold exchanges for about fourteen ounces of
      fine silver. In the English coin, it exchanges for about fifteen ounces,
      that is, for more silver than it is worth, according to the common
      estimation of Europe. But as the price of copper in bars is not, even in
      England, raised by the high price of copper in English coin, so the price
      of silver in bullion is not sunk by the low rate of silver in English
      coin. Silver in bullion still preserves its proper proportion to gold, for
      the same reason that copper in bars preserves its proper proportion to
      silver.
    
      Upon the reformation of the silver coin, in the reign of William III., the
      price of silver bullion still continued to be somewhat above the mint
      price. Mr Locke imputed this high price to the permission of exporting
      silver bullion, and to the prohibition of exporting silver coin. This
      permission of exporting, he said, rendered the demand for silver bullion
      greater than the demand for silver coin. But the number of people who want
      silver coin for the common uses of buying and selling at home, is surely
      much greater than that of those who want silver bullion either for the use
      of exportation or for any other use. There subsists at present a like
      permission of exporting gold bullion, and a like prohibition of exporting
      gold coin; and yet the price of gold bullion has fallen below the mint
      price. But in the English coin, silver was then, in the same manner as
      now, under-rated in proportion to gold; and the gold coin (which at that
      time, too, was not supposed to require any reformation) regulated then, as
      well as now, the real value of the whole coin. As the reformation of the
      silver coin did not then reduce the price of silver bullion to the mint
      price, it is not very probable that a like reformation will do so now.
    
      Were the silver coin brought back as near to its standard weight as the
      gold, a guinea, it is probable, would, according to the present
      proportion, exchange for more silver in coin than it would purchase in
      bullion. The silver coin containing its full standard weight, there would
      in this case, be a profit in melting it down, in order, first to sell the
      bullion for gold coin, and afterwards to exchange this gold coin for
      silver coin, to be melted down in the same manner. Some alteration in the
      present proportion seems to be the only method of preventing this
      inconveniency.
    
      The inconveniency, perhaps, would be less, if silver was rated in the coin
      as much above its proper proportion to gold as it is at present rated
      below it, provided it was at the same time enacted, that silver should not
      be a legal tender for more than the change of a guinea, in the same manner
      as copper is not a legal tender for more than the change of a shilling. No
      creditor could, in this case, be cheated in consequence of the high
      valuation of silver in coin; as no creditor can at present be cheated in
      consequence of the high valuation of copper. The bankers only would suffer
      by this regulation. When a run comes upon them, they sometimes endeavour
      to gain time, by paying in sixpences, and they would be precluded by this
      regulation from this discreditable method of evading immediate payment.
      They would be obliged, in consequence, to keep at all times in their
      coffers a greater quantity of cash than at present; and though this might,
      no doubt, be a considerable inconveniency to them, it would, at the same
      time, be a considerable security to their creditors.
    
      Three pounds seventeen shillings and tenpence halfpenny (the mint price of
      gold) certainly does not contain, even in our present excellent gold coin,
      more than an ounce of standard gold, and it may be thought, therefore,
      should not purchase more standard bullion. But gold in coin is more
      convenient than gold in bullion; and though, in England, the coinage is
      free, yet the gold which is carried in bullion to the mint, can seldom be
      returned in coin to the owner till after a delay of several weeks. In the
      present hurry of the mint, it could not be returned till after a delay of
      several months. This delay is equivalent to a small duty, and renders gold
      in coin somewhat more valuable than an equal quantity of gold in bullion.
      If, in the English coin, silver was rated according to its proper
      proportion to gold, the price of silver bullion would probably fall below
      the mint price, even without any reformation of the silver coin; the value
      even of the present worn and defaced silver coin being regulated by the
      value of the excellent gold coin for which it can be changed.
    
      A small seignorage or duty upon the coinage of both gold and silver, would
      probably increase still more the superiority of those metals in coin above
      an equal quantity of either of them in bullion. The coinage would, in this
      case, increase the value of the metal coined in proportion to the extent
      of this small duty, for the same reason that the fashion increases the
      value of plate in proportion to the price of that fashion. The superiority
      of coin above bullion would prevent the melting down of the coin, and
      would discourage its exportation. If, upon any public exigency, it should
      become necessary to export the coin, the greater part of it would soon
      return again, of its own accord. Abroad, it could sell only for its weight
      in bullion. At home, it would buy more than that weight. There would be a
      profit, therefore, in bringing it home again. In France, a seignorage of
      about eight per cent. is imposed upon the coinage, and the French coin,
      when exported, is said to return home again, of its own accord.
    
      The occasional fluctuations in the market price of gold and silver bullion
      arise from the same causes as the like fluctuations in that of all other
      commodities. The frequent loss of those metals from various accidents by
      sea and by land, the continual waste of them in gilding and plating, in
      lace and embroidery, in the wear and tear of coin, and in that of plate,
      require, in all countries which possess no mines of their own, a continual
      importation, in order to repair this loss and this waste. The merchant
      importers, like all other merchants, we may believe, endeavour, as well as
      they can, to suit their occasional importations to what they judge is
      likely to be the immediate demand. With all their attention, however, they
      sometimes overdo the business, and sometimes underdo it. When they import
      more bullion than is wanted, rather than incur the risk and trouble of
      exporting it again, they are sometimes willing to sell a part of it for
      something less than the ordinary or average price. When, on the other
      hand, they import less than is wanted, they get something more than this
      price. But when, under all those occasional fluctuations, the market price
      either of gold or silver bullion continues for several years together
      steadily and constantly, either more or less above, or more or less below
      the mint price, we may be assured that this steady and constant, either
      superiority or inferiority of price, is the effect of something in the
      state of the coin, which, at that time, renders a certain quantity of coin
      either of more value or of less value than the precise quantity of bullion
      which it ought to contain. The constancy and steadiness of the effect
      supposes a proportionable constancy and steadiness in the cause.
    
      The money of any particular country is, at any particular time and place,
      more or less an accurate measure or value, according as the current coin
      is more or less exactly agreeable to its standard, or contains more or
      less exactly the precise quantity of pure gold or pure silver which it
      ought to contain. If in England, for example, forty-four guineas and a
      half contained exactly a pound weight of standard gold, or eleven ounces
      of fine gold, and one ounce of alloy, the gold coin of England would be as
      accurate a measure of the actual value of goods at any particular time and
      place as the nature of the thing would admit. But if, by rubbing and
      wearing, forty-four guineas and a half generally contain less than a pound
      weight of standard gold, the diminution, however, being greater in some
      pieces than in others, the measure of value comes to be liable to the same
      sort of uncertainty to which all other weights and measures are commonly
      exposed. As it rarely happens that these are exactly agreeable to their
      standard, the merchant adjusts the price of his goods as well as he can,
      not to what those weights and measures ought to be, but to what, upon an
      average, he finds, by experience, they actually are. In consequence of a
      like disorder in the coin, the price of goods comes, in the same manner,
      to be adjusted, not to the quantity of pure gold or silver which the coin
      ought to contain, but to that which, upon an average, it is found, by
      experience, it actually does contain.
    
      By the money price of goods, it is to be observed, I understand always the
      quantity of pure gold or silver for which they are sold, without any
      regard to the denomination of the coin. Six shillings and eight pence, for
      example, in the time of Edward I., I consider as the same money price with
      a pound sterling in the present times, because it contained, as nearly as
      we can judge, the same quantity of pure silver.
    


CHAPTER VI.
OF THE COMPONENT PART OF THE PRICE OF COMMODITIES.


    
      In that early and rude state of society which precedes both the
      accumulation of stock and the appropriation of land, the proportion
      between the quantities of labour necessary for acquiring different
      objects, seems to be the only circumstance which can afford any rule for
      exchanging them for one another. If among a nation of hunters, for
      example, it usually costs twice the labour to kill a beaver which it does
      to kill a deer, one beaver should naturally exchange for or be worth two
      deer. It is natural that what is usually the produce of two days or two
      hours labour, should be worth double of what is usually the produce of one
      day’s or one hour’s labour.
    
      If the one species of labour should be more severe than the other, some
      allowance will naturally be made for this superior hardship; and the
      produce of one hour’s labour in the one way may frequently exchange for
      that of two hour’s labour in the other.
    
      Or if the one species of labour requires an uncommon degree of dexterity
      and ingenuity, the esteem which men have for such talents, will naturally
      give a value to their produce, superior to what would be due to the time
      employed about it. Such talents can seldom be acquired but in consequence
      of long application, and the superior value of their produce may
      frequently be no more than a reasonable compensation for the time and
      labour which must be spent in acquiring them. In the advanced state of
      society, allowances of this kind, for superior hardship and superior
      skill, are commonly made in the wages of labour; and something of the same
      kind must probably have taken place in its earliest and rudest period.
    
      In this state of things, the whole produce of labour belongs to the
      labourer; and the quantity of labour commonly employed in acquiring or
      producing any commodity, is the only circumstance which can regulate the
      quantity of labour which it ought commonly to purchase, command, or
      exchange for.
    
      As soon as stock has accumulated in the hands of particular persons, some
      of them will naturally employ it in setting to work industrious people,
      whom they will supply with materials and subsistence, in order to make a
      profit by the sale of their work, or by what their labour adds to the
      value of the materials. In exchanging the complete manufacture either for
      money, for labour, or for other goods, over and above what may be
      sufficient to pay the price of the materials, and the wages of the
      workmen, something must be given for the profits of the undertaker of the
      work, who hazards his stock in this adventure. The value which the workmen
      add to the materials, therefore, resolves itself in this case into two
      parts, of which the one pays their wages, the other the profits of their
      employer upon the whole stock of materials and wages which he advanced. He
      could have no interest to employ them, unless he expected from the sale of
      their work something more than what was sufficient to replace his stock to
      him; and he could have no interest to employ a great stock rather than a
      small one, unless his profits were to bear some proportion to the extent
      of his stock.
    
      The profits of stock, it may perhaps be thought, are only a different name
      for the wages of a particular sort of labour, the labour of inspection and
      direction. They are, however, altogether different, are regulated by quite
      different principles, and bear no proportion to the quantity, the
      hardship, or the ingenuity of this supposed labour of inspection and
      direction. They are regulated altogether by the value of the stock
      employed, and are greater or smaller in proportion to the extent of this
      stock. Let us suppose, for example, that in some particular place, where
      the common annual profits of manufacturing stock are ten per cent. there
      are two different manufactures, in each of which twenty workmen are
      employed, at the rate of fifteen pounds a year each, or at the expense of
      three hundred a-year in each manufactory. Let us suppose, too, that the
      coarse materials annually wrought up in the one cost only seven hundred
      pounds, while the finer materials in the other cost seven thousand. The
      capital annually employed in the one will, in this case, amount only to
      one thousand pounds; whereas that employed in the other will amount to
      seven thousand three hundred pounds. At the rate of ten per cent.
      therefore, the undertaker of the one will expect a yearly profit of about
      one hundred pounds only; while that of the other will expect about seven
      hundred and thirty pounds. But though their profits are so very different,
      their labour of inspection and direction may be either altogether or very
      nearly the same. In many great works, almost the whole labour of this kind
      is committed to some principal clerk. His wages properly express the value
      of this labour of inspection and direction. Though in settling them some
      regard is had commonly, not only to his labour and skill, but to the trust
      which is reposed in him, yet they never bear any regular proportion to the
      capital of which he oversees the management; and the owner of this
      capital, though he is thus discharged of almost all labour, still expects
      that his profit should bear a regular proportion to his capital. In the
      price of commodities, therefore, the profits of stock constitute a
      component part altogether different from the wages of labour, and
      regulated by quite different principles.
    
      In this state of things, the whole produce of labour does not always
      belong to the labourer. He must in most cases share it with the owner of
      the stock which employs him. Neither is the quantity of labour commonly
      employed in acquiring or producing any commodity, the only circumstance
      which can regulate the quantity which it ought commonly to purchase,
      command or exchange for. An additional quantity, it is evident, must be
      due for the profits of the stock which advanced the wages and furnished
      the materials of that labour.
    
      As soon as the land of any country has all become private property, the
      landlords, like all other men, love to reap where they never sowed, and
      demand a rent even for its natural produce. The wood of the forest, the
      grass of the field, and all the natural fruits of the earth, which, when
      land was in common, cost the labourer only the trouble of gathering them,
      come, even to him, to have an additional price fixed upon them. He must
      then pay for the licence to gather them, and must give up to the landlord
      a portion of what his labour either collects or produces. This portion,
      or, what comes to the same thing, the price of this portion, constitutes
      the rent of land, and in the price of the greater part of commodities,
      makes a third component part.
    
      The real value of all the different component parts of price, it must be
      observed, is measured by the quantity of labour which they can, each of
      them, purchase or command. Labour measures the value, not only of that
      part of price which resolves itself into labour, but of that which
      resolves itself into rent, and of that which resolves itself into profit.
    
      In every society, the price of every commodity finally resolves itself
      into some one or other, or all of those three parts; and in every improved
      society, all the three enter, more or less, as component parts, into the
      price of the far greater part of commodities.
    
      In the price of corn, for example, one part pays the rent of the landlord,
      another pays the wages or maintenance of the labourers and labouring
      cattle employed in producing it, and the third pays the profit of the
      farmer. These three parts seem either immediately or ultimately to make up
      the whole price of corn. A fourth part, it may perhaps be thought is
      necessary for replacing the stock of the farmer, or for compensating the
      wear and tear of his labouring cattle, and other instruments of husbandry.
      But it must be considered, that the price of any instrument of husbandry,
      such as a labouring horse, is itself made up of the same time parts; the
      rent of the land upon which he is reared, the labour of tending and
      rearing him, and the profits of the farmer, who advances both the rent of
      this land, and the wages of this labour. Though the price of the corn,
      therefore, may pay the price as well as the maintenance of the horse, the
      whole price still resolves itself, either immediately or ultimately, into
      the same three parts of rent, labour, and profit.
    
      In the price of flour or meal, we must add to the price of the corn, the
      profits of the miller, and the wages of his servants; in the price of
      bread, the profits of the baker, and the wages of his servants; and in the
      price of both, the labour of transporting the corn from the house of the
      farmer to that of the miller, and from that of the miller to that of the
      baker, together with the profits of those who advance the wages of that
      labour.
    
      The price of flax resolves itself into the same three parts as that of
      corn. In the price of linen we must add to this price the wages of the
      flax-dresser, of the spinner, of the weaver, of the bleacher, etc.
      together with the profits of their respective employers.
    
      As any particular commodity comes to be more manufactured, that part of
      the price which resolves itself into wages and profit, comes to be greater
      in proportion to that which resolves itself into rent. In the progress of
      the manufacture, not only the number of profits increase, but every
      subsequent profit is greater than the foregoing; because the capital from
      which it is derived must always be greater. The capital which employs the
      weavers, for example, must be greater than that which employs the
      spinners; because it not only replaces that capital with its profits, but
      pays, besides, the wages of the weavers: and the profits must always bear
      some proportion to the capital.
    
      In the most improved societies, however, there are always a few
      commodities of which the price resolves itself into two parts only: the
      wages of labour, and the profits of stock; and a still smaller number, in
      which it consists altogether in the wages of labour. In the price of
      sea-fish, for example, one part pays the labour of the fisherman, and the
      other the profits of the capital employed in the fishery. Rent very seldom
      makes any part of it, though it does sometimes, as I shall shew hereafter.
      It is otherwise, at least through the greater part of Europe, in river
      fisheries. A salmon fishery pays a rent; and rent, though it cannot well
      be called the rent of land, makes a part of the price of a salmon, as well
      as wares and profit. In some parts of Scotland, a few poor people make a
      trade of gathering, along the sea-shore, those little variegated stones
      commonly known by the name of Scotch pebbles. The price which is paid to
      them by the stone-cutter, is altogether the wages of their labour; neither
      rent nor profit makes an part of it.
    
      But the whole price of any commodity must still finally resolve itself
      into some one or other or all of those three parts; as whatever part of it
      remains after paying the rent of the land, and the price of the whole
      labour employed in raising, manufacturing, and bringing it to market, must
      necessarily be profit to somebody.
    
      As the price or exchangeable value of every particular commodity, taken
      separately, resolves itself into some one or other, or all of those three
      parts; so that of all the commodities which compose the whole annual
      produce of the labour of every country, taken complexly, must resolve
      itself into the same three parts, and be parcelled out among different
      inhabitants of the country, either as the wages of their labour, the
      profits of their stock, or the rent of their land. The whole of what is
      annually either collected or produced by the labour of every society, or,
      what comes to the same thing, the whole price of it, is in this manner
      originally distributed among some of its different members. Wages, profit,
      and rent, are the three original sources of all revenue, as well as of all
      exchangeable value. All other revenue is ultimately derived from some one
      or other of these.
    
      Whoever derives his revenue from a fund which is his own, must draw it
      either from his labour, from his stock, or from his land. The revenue
      derived from labour is called wages; that derived from stock, by the
      person who manages or employs it, is called profit; that derived from it
      by the person who does not employ it himself, but lends it to another, is
      called the interest or the use of money. It is the compensation which the
      borrower pays to the lender, for the profit which he has an opportunity of
      making by the use of the money. Part of that profit naturally belongs to
      the borrower, who runs the risk and takes the trouble of employing it, and
      part to the lender, who affords him the opportunity of making this profit.
      The interest of money is always a derivative revenue, which, if it is not
      paid from the profit which is made by the use of the money, must be paid
      from some other source of revenue, unless perhaps the borrower is a
      spendthrift, who contracts a second debt in order to pay the interest of
      the first. The revenue which proceeds altogether from land, is called
      rent, and belongs to the landlord. The revenue of the farmer is derived
      partly from his labour, and partly from his stock. To him, land is only
      the instrument which enables him to earn the wages of this labour, and to
      make the profits of this stock. All taxes, and all the revenue which is
      founded upon them, all salaries, pensions, and annuities of every kind,
      are ultimately derived from some one or other of those three original
      sources of revenue, and are paid either immediately or mediately from the
      wages of labour, the profits of stock, or the rent of land.
    
      When those three different sorts of revenue belong to different persons,
      they are readily distinguished; but when they belong to the same, they are
      sometimes confounded with one another, at least in common language.
    
      A gentleman who farms a part of his own estate, after paying the expense
      of cultivation, should gain both the rent of the landlord and the profit
      of the farmer. He is apt to denominate, however, his whole gain, profit,
      and thus confounds rent with profit, at least in common language. The
      greater part of our North American and West Indian planters are in this
      situation. They farm, the greater part of them, their own estates: and
      accordingly we seldom hear of the rent of a plantation, but frequently of
      its profit.
    
      Common farmers seldom employ any overseer to direct the general operations
      of the farm. They generally, too, work a good deal with their own hands,
      as ploughmen, harrowers, etc. What remains of the crop, after paying the
      rent, therefore, should not only replace to them their stock employed in
      cultivation, together with its ordinary profits, but pay them the wages
      which are due to them, both as labourers and overseers. Whatever remains,
      however, after paying the rent and keeping up the stock, is called profit.
      But wages evidently make a part of it. The farmer, by saving these wages,
      must necessarily gain them. Wages, therefore, are in this case confounded
      with profit.
    
      An independent manufacturer, who has stock enough both to purchase
      materials, and to maintain himself till he can carry his work to market,
      should gain both the wages of a journeyman who works under a master, and
      the profit which that master makes by the sale of that journeyman’s work.
      His whole gains, however, are commonly called profit, and wages are, in
      this case, too, confounded with profit.
    
      A gardener who cultivates his own garden with his own hands, unites in his
      own person the three different characters, of landlord, farmer, and
      labourer. His produce, therefore, should pay him the rent of the first,
      the profit of the second, and the wages of the third. The whole, however,
      is commonly considered as the earnings of his labour. Both rent and profit
      are, in this case, confounded with wages.
    
      As in a civilized country there are but few commodities of which the
      exchangeable value arises from labour only, rent and profit contributing
      largely to that of the far greater part of them, so the annual produce of
      its labour will always be sufficient to purchase or command a much greater
      quantity of labour than what was employed in raising, preparing, and
      bringing that produce to market. If the society were annually to employ
      all the labour which it can annually purchase, as the quantity of labour
      would increase greatly every year, so the produce of every succeeding year
      would be of vastly greater value than that of the foregoing. But there is
      no country in which the whole annual produce is employed in maintaining
      the industrious. The idle everywhere consume a great part of it; and,
      according to the different proportions in which it is annually divided
      between those two different orders of people, its ordinary or average
      value must either annually increase or diminish, or continue the same from
      one year to another.
    


CHAPTER VII.
OF THE NATURAL AND MARKET PRICE OF COMMODITIES.


    
      There is in every society or neighbourhood an ordinary or average rate,
      both of wages and profit, in every different employment of labour and
      stock. This rate is naturally regulated, as I shall shew hereafter, partly
      by the general circumstances of the society, their riches or poverty,
      their advancing, stationary, or declining condition, and partly by the
      particular nature of each employment.
    
      There is likewise in every society or neighbourhood an ordinary or average
      rate of rent, which is regulated, too, as I shall shew hereafter, partly
      by the general circumstances of the society or neighbourhood in which the
      land is situated, and partly by the natural or improved fertility of the
      land.
    
      These ordinary or average rates may be called the natural rates of wages,
      profit and rent, at the time and place in which they commonly prevail.
    
      When the price of any commodity is neither more nor less than what is
      sufficient to pay the rent of the land, the wages of the labour, and the
      profits of the stock employed in raising, preparing, and bringing it to
      market, according to their natural rates, the commodity is then sold for
      what may be called its natural price.
    
      The commodity is then sold precisely for what it is worth, or for what it
      really costs the person who brings it to market; for though, in common
      language, what is called the prime cost of any commodity does not
      comprehend the profit of the person who is to sell it again, yet, if he
      sells it at a price which does not allow him the ordinary rate of profit
      in his neighbourhood, he is evidently a loser by the trade; since, by
      employing his stock in some other way, he might have made that profit. His
      profit, besides, is his revenue, the proper fund of his subsistence. As,
      while he is preparing and bringing the goods to market, he advances to his
      workmen their wages, or their subsistence; so he advances to himself, in
      the same manner, his own subsistence, which is generally suitable to the
      profit which he may reasonably expect from the sale of his goods. Unless
      they yield him this profit, therefore, they do not repay him what they may
      very properly be said to have really cost him.
    
      Though the price, therefore, which leaves him this profit, is not always
      the lowest at which a dealer may sometimes sell his goods, it is the
      lowest at which he is likely to sell them for any considerable time; at
      least where there is perfect liberty, or where he may change his trade as
      often as he pleases.
    
      The actual price at which any commodity is commonly sold, is called its
      market price. It may either be above, or below, or exactly the same with
      its natural price.
    
      The market price of every particular commodity is regulated by the
      proportion between the quantity which is actually brought to market, and
      the demand of those who are willing to pay the natural price of the
      commodity, or the whole value of the rent, labour, and profit, which must
      be paid in order to bring it thither. Such people may be called the
      effectual demanders, and their demand the effectual demand; since it maybe
      sufficient to effectuate the bringing of the commodity to market. It is
      different from the absolute demand. A very poor man may be said, in some
      sense, to have a demand for a coach and six; he might like to have it; but
      his demand is not an effectual demand, as the commodity can never be
      brought to market in order to satisfy it.
    
      When the quantity of any commodity which is brought to market falls short
      of the effectual demand, all those who are willing to pay the whole value
      of the rent, wages, and profit, which must be paid in order to bring it
      thither, cannot be supplied with the quantity which they want. Rather than
      want it altogether, some of them will be willing to give more. A
      competition will immediately begin among them, and the market price will
      rise more or less above the natural price, according as either the
      greatness of the deficiency, or the wealth and wanton luxury of the
      competitors, happen to animate more or less the eagerness of the
      competition. Among competitors of equal wealth and luxury, the same
      deficiency will generally occasion a more or less eager competition,
      according as the acquisition of the commodity happens to be of more or
      less importance to them. Hence the exorbitant price of the necessaries of
      life during the blockade of a town, or in a famine.
    
      When the quantity brought to market exceeds the effectual demand, it
      cannot be all sold to those who are willing to pay the whole value of the
      rent, wages, and profit, which must be paid in order to bring it thither.
      Some part must be sold to those who are willing to pay less, and the low
      price which they give for it must reduce the price of the whole. The
      market price will sink more or less below the natural price, according as
      the greatness of the excess increases more or less the competition of the
      sellers, or according as it happens to be more or less important to them
      to get immediately rid of the commodity. The same excess in the
      importation of perishable, will occasion a much greater competition than
      in that of durable commodities; in the importation of oranges, for
      example, than in that of old iron.
    
      When the quantity brought to market is just sufficient to supply the
      effectual demand, and no more, the market price naturally comes to be
      either exactly, or as nearly as can be judged of, the same with the
      natural price. The whole quantity upon hand can be disposed of for this
      price, and can not be disposed of for more. The competition of the
      different dealers obliges them all to accept of this price, but does not
      oblige them to accept of less.
    
      The quantity of every commodity brought to market naturally suits itself
      to the effectual demand. It is the interest of all those who employ their
      land, labour, or stock, in bringing any commodity to market, that the
      quantity never should exceed the effectual demand; and it is the interest
      of all other people that it never should fall short of that demand.
    
      If at any time it exceeds the effectual demand, some of the component
      parts of its price must be paid below their natural rate. If it is rent,
      the interest of the landlords will immediately prompt them to withdraw a
      part of their land; and if it is wages or profit, the interest of the
      labourers in the one case, and of their employers in the other, will
      prompt them to withdraw a part of their labour or stock, from this
      employment. The quantity brought to market will soon be no more than
      sufficient to supply the effectual demand. All the different parts of its
      price will rise to their natural rate, and the whole price to its natural
      price.
    
      If, on the contrary, the quantity brought to market should at any time
      fall short of the effectual demand, some of the component parts of its
      price must rise above their natural rate. If it is rent, the interest of
      all other landlords will naturally prompt them to prepare more land for
      the raising of this commodity; if it is wages or profit, the interest of
      all other labourers and dealers will soon prompt them to employ more
      labour and stock in preparing and bringing it to market. The quantity
      brought thither will soon be sufficient to supply the effectual demand.
      All the different parts of its price will soon sink to their natural rate,
      and the whole price to its natural price.
    
      The natural price, therefore, is, as it were, the central price, to which
      the prices of all commodities are continually gravitating. Different
      accidents may sometimes keep them suspended a good deal above it, and
      sometimes force them down even somewhat below it. But whatever may be the
      obstacles which hinder them from settling in this centre of repose and
      continuance, they are constantly tending towards it.
    
      The whole quantity of industry annually employed in order to bring any
      commodity to market, naturally suits itself in this manner to the
      effectual demand. It naturally aims at bringing always that precise
      quantity thither which may be sufficient to supply, and no more than
      supply, that demand.
    
      But, in some employments, the same quantity of industry will, in different
      years, produce very different quantities of commodities; while, in others,
      it will produce always the same, or very nearly the same. The same number
      of labourers in husbandry will, in different years, produce very different
      quantities of corn, wine, oil, hops, etc. But the same number of spinners
      or weavers will every year produce the same, or very nearly the same,
      quantity of linen and woollen cloth. It is only the average produce of the
      one species of industry which can be suited, in any respect, to the
      effectual demand; and as its actual produce is frequently much greater,
      and frequently much less, than its average produce, the quantity of the
      commodities brought to market will sometimes exceed a good deal, and
      sometimes fall short a good deal, of the effectual demand. Even though
      that demand, therefore, should continue always the same, their market
      price will be liable to great fluctuations, will sometimes fall a good
      deal below, and sometimes rise a good deal above, their natural price. In
      the other species of industry, the produce of equal quantities of labour
      being always the same, or very nearly the same, it can be more exactly
      suited to the effectual demand. While that demand continues the same,
      therefore, the market price of the commodities is likely to do so too, and
      to be either altogether, or as nearly as can be judged of, the same with
      the natural price. That the price of linen and woollen cloth is liable
      neither to such frequent, nor to such great variations, as the price of
      corn, every man’s experience will inform him. The price of the one species
      of commodities varies only with the variations in the demand; that of the
      other varies not only with the variations in the demand, but with the much
      greater, and more frequent, variations in the quantity of what is brought
      to market, in order to supply that demand.
    
      The occasional and temporary fluctuations in the market price of any
      commodity fall chiefly upon those parts of its price which resolve
      themselves into wages and profit. That part which resolves itself into
      rent is less affected by them. A rent certain in money is not in the least
      affected by them, either in its rate or in its value. A rent which
      consists either in a certain proportion, or in a certain quantity, of the
      rude produce, is no doubt affected in its yearly value by all the
      occasional and temporary fluctuations in the market price of that rude
      produce; but it is seldom affected by them in its yearly rate. In settling
      the terms of the lease, the landlord and farmer endeavour, according to
      their best judgment, to adjust that rate, not to the temporary and
      occasional, but to the average and ordinary price of the produce.
    
      Such fluctuations affect both the value and the rate, either of wages or
      of profit, according as the market happens to be either overstocked or
      understocked with commodities or with labour, with work done, or with work
      to be done. A public mourning raises the price of black cloth (with which
      the market is almost always understocked upon such occasions), and
      augments the profits of the merchants who possess any considerable
      quantity of it. It has no effect upon the wages of the weavers. The market
      is understocked with commodities, not with labour, with work done, not
      with work to be done. It raises the wages of journeymen tailors. The
      market is here understocked with labour. There is an effectual demand for
      more labour, for more work to be done, than can be had. It sinks the price
      of coloured silks and cloths, and thereby reduces the profits of the
      merchants who have any considerable quantity of them upon hand. It sinks,
      too, the wages of the workmen employed in preparing such commodities, for
      which all demand is stopped for six months, perhaps for a twelvemonth. The
      market is here overstocked both with commodities and with labour.
    
      But though the market price of every particular commodity is in this
      manner continually gravitating, if one may say so, towards the natural
      price; yet sometimes particular accidents, sometimes natural causes, and
      sometimes particular regulations of policy, may, in many commodities, keep
      up the market price, for a long time together, a good deal above the
      natural price.
    
      When, by an increase in the effectual demand, the market price of some
      particular commodity happens to rise a good deal above the natural price,
      those who employ their stocks in supplying that market, are generally
      careful to conceal this change. If it was commonly known, their great
      profit would tempt so many new rivals to employ their stocks in the same
      way, that, the effectual demand being fully supplied, the market price
      would soon be reduced to the natural price, and, perhaps, for some time
      even below it. If the market is at a great distance from the residence of
      those who supply it, they may sometimes be able to keep the secret for
      several years together, and may so long enjoy their extraordinary profits
      without any new rivals. Secrets of this kind, however, it must be
      acknowledged, can seldom be long kept; and the extraordinary profit can
      last very little longer than they are kept.
    
      Secrets in manufactures are capable of being longer kept than secrets in
      trade. A dyer who has found the means of producing a particular colour
      with materials which cost only half the price of those commonly made use
      of, may, with good management, enjoy the advantage of his discovery as
      long as he lives, and even leave it as a legacy to his posterity. His
      extraordinary gains arise from the high price which is paid for his
      private labour. They properly consist in the high wages of that labour.
      But as they are repeated upon every part of his stock, and as their whole
      amount bears, upon that account, a regular proportion to it, they are
      commonly considered as extraordinary profits of stock.
    
      Such enhancements of the market price are evidently the effects of
      particular accidents, of which, however, the operation may sometimes last
      for many years together.
    
      Some natural productions require such a singularity of soil and situation,
      that all the land in a great country, which is fit for producing them, may
      not be sufficient to supply the effectual demand. The whole quantity
      brought to market, therefore, may be disposed of to those who are willing
      to give more than what is sufficient to pay the rent of the land which
      produced them, together with the wages of the labour and the profits of
      the stock which were employed in preparing and bringing them to market,
      according to their natural rates. Such commodities may continue for whole
      centuries together to be sold at this high price; and that part of it
      which resolves itself into the rent of land, is in this case the part
      which is generally paid above its natural rate. The rent of the land which
      affords such singular and esteemed productions, like the rent of some
      vineyards in France of a peculiarly happy soil and situation, bears no
      regular proportion to the rent of other equally fertile and equally well
      cultivated land in its neighbourhood. The wages of the labour, and the
      profits of the stock employed in bringing such commodities to market, on
      the contrary, are seldom out of their natural proportion to those of the
      other employments of labour and stock in their neighbourhood.
    
      Such enhancements of the market price are evidently the effect of natural
      causes, which may hinder the effectual demand from ever being fully
      supplied, and which may continue, therefore, to operate for ever.
    
      A monopoly granted either to an individual or to a trading company, has
      the same effect as a secret in trade or manufactures. The monopolists, by
      keeping the market constantly understocked by never fully supplying the
      effectual demand, sell their commodities much above the natural price, and
      raise their emoluments, whether they consist in wages or profit, greatly
      above their natural rate.
    
      The price of monopoly is upon every occasion the highest which can be got.
      The natural price, or the price of free competition, on the contrary, is
      the lowest which can be taken, not upon every occasion indeed, but for any
      considerable time together. The one is upon every occasion the highest
      which can be squeezed out of the buyers, or which it is supposed they will
      consent to give; the other is the lowest which the sellers can commonly
      afford to take, and at the same time continue their business.
    
      The exclusive privileges of corporations, statutes of apprenticeship, and
      all those laws which restrain in particular employments, the competition
      to a smaller number than might otherwise go into them, have the same
      tendency, though in a less degree. They are a sort of enlarged monopolies,
      and may frequently, for ages together, and in whole classes of
      employments, keep up the market price of particular commodities above the
      natural price, and maintain both the wages of the labour and the profits
      of the stock employed about them somewhat above their natural rate.
    
      Such enhancements of the market price may last as long as the regulations
      of policy which give occasion to them.
    
      The market price of any particular commodity, though it may continue long
      above, can seldom continue long below, its natural price. Whatever part of
      it was paid below the natural rate, the persons whose interest it affected
      would immediately feel the loss, and would immediately withdraw either so
      much land or 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 naturally suit itself to the effectual demand.
      The policy must be as violent as that of Indostan or ancient Egypt (where
      every man was bound by a principle of religion to follow the occupation of
      his father, and was supposed to commit the most horrid sacrilege if he
      changed it for another), which can in any particular employment, and for
      several generations together, sink either the wages of labour or the
      profits of stock below their natural rate.
    
      This is all that I think necessary to be observed at present concerning
      the deviations, whether occasional or permanent, of the market price of
      commodities from the natural price.
    
      The natural price itself varies with the natural rate of each of its
      component parts, of wages, profit, and rent; and in every society this
      rate varies according to their circumstances, according to their riches or
      poverty, their advancing, stationary, or declining condition. I shall, in
      the four following chapters, endeavour to explain, as fully and distinctly
      as I can, the causes of those different variations.
    
      First, I shall endeavour to explain what are the circumstances which
      naturally determine the rate of wages, and in what manner those
      circumstances are affected by the riches or poverty, by the advancing,
      stationary, or declining state of the society.
    
      Secondly, I shall endeavour to shew what are the circumstances which
      naturally determine the rate of profit; and in what manner, too, those
      circumstances are affected by the like variations in the state of the
      society.
    
      Though pecuniary wages and profit are very different in the different
      employments of labour and stock; yet a certain proportion seems commonly
      to take place between both the pecuniary wages in all the different
      employments of labour, and the pecuniary profits in all the different
      employments of stock. This proportion, it will appear hereafter, depends
      partly upon the nature of the different employments, and partly upon the
      different laws and policy of the society in which they are carried on. But
      though in many respects dependent upon the laws and policy, this
      proportion seems to be little affected by the riches or poverty of that
      society, by its advancing, stationary, or declining condition, but to
      remain the same, or very nearly the same, in all those different states. I
      shall, in the third place, endeavour to explain all the different
      circumstances which regulate this proportion.
    
      In the fourth and last place, I shall endeavour to shew what are the
      circumstances which regulate the rent of land, and which either raise or
      lower the real price of all the different substances which it produces.
    


CHAPTER VIII.
OF THE WAGES OF LABOUR.


    
      The produce of labour constitutes the natural recompence or wages of
      labour. In that original state of things which precedes both the
      appropriation of land and the accumulation of stock, the whole produce of
      labour belongs to the labourer. He has neither landlord nor master to
      share with him.
    
      Had this state continued, the wages of labour would have augmented with
      all those improvements in its productive powers, to which the division of
      labour gives occasion. All things would gradually have become cheaper.
      They would have been produced by a smaller quantity of labour; and as the
      commodities produced by equal quantities of labour would naturally in this
      state of things be exchanged for one another, they would have been
      purchased likewise with the produce of a smaller quantity.
    
      But though all things would have become cheaper in reality, in appearance
      many things might have become dearer, than before, or have been exchanged
      for a greater quantity of other goods. Let us suppose, for example, that
      in the greater part of employments the productive powers of labour had
      been improved to tenfold, or that a day’s labour could produce ten times
      the quantity of work which it had done originally; but that in a
      particular employment they had been improved only to double, or that a
      day’s labour could produce only twice the quantity of work which it had
      done before. In exchanging the produce of a day’s labour in the greater
      part of employments for that of a day’s labour in this particular one, ten
      times the original quantity of work in them would purchase only twice the
      original quantity in it. Any particular quantity in it, therefore, a pound
      weight, for example, would appear to be five times dearer than before. In
      reality, however, it would be twice as cheap. Though it required five
      times the quantity of other goods to purchase it, it would require only
      half the quantity of labour either to purchase or to produce it. The
      acquisition, therefore, would be twice as easy as before.
    
      But this original state of things, in which the labourer enjoyed the whole
      produce of his own labour, could not last beyond the first introduction of
      the appropriation of land and the accumulation of stock. It was at an end,
      therefore, long before the most considerable improvements were made in the
      productive powers of labour; and it would be to no purpose to trace
      further what might have been its effects upon the recompence or wages of
      labour.
    
      As soon as land becomes private property, the landlord demands a share of
      almost all the produce which the labourer can either raise or collect from
      it. His rent makes the first deduction from the produce of the labour
      which is employed upon land.
    
      It seldom happens that the person who tills the ground has wherewithal to
      maintain himself till he reaps the harvest. His maintenance is generally
      advanced to him from the stock of a master, the farmer who employs him,
      and who would have no interest to employ him, unless he was to share in
      the produce of his labour, or unless his stock was to be replaced to him
      with a profit. This profit makes a second deduction from the produce of
      the labour which is employed upon land.
    
      The produce of almost all other labour is liable to the like deduction of
      profit. In all arts and manufactures, the greater part of the workmen
      stand in need of a master, to advance them the materials of their work,
      and their wages and maintenance, till it be completed. He shares in the
      produce of their labour, or in the value which it adds to the materials
      upon which it is bestowed; and in this share consists his profit.
    
      It sometimes happens, indeed, that a single independent workman has stock
      sufficient both to purchase the materials of his work, and to maintain
      himself till it be completed. He is both master and workman, and enjoys
      the whole produce of his own labour, or the whole value which it adds to
      the materials upon which it is bestowed. It includes what are usually two
      distinct revenues, belonging to two distinct persons, the profits of
      stock, and the wages of labour.
    
      Such cases, however, are not very frequent; and in every part of Europe
      twenty workmen serve under a master for one that is independent, and the
      wages of labour are everywhere understood to be, what they usually are,
      when the labourer is one person, and the owner of the stock which employs
      him another.
    
      What are the common wages of labour, depends everywhere upon the contract
      usually made between those two parties, whose interests are by no means
      the same. The workmen desire to get as much, the masters to give as
      little, as possible. The former are disposed to combine in order to raise,
      the latter in order to lower, the wages of labour.
    
      It is not, however, difficult to foresee which of the two parties must,
      upon all ordinary occasions, have the advantage in the dispute, and force
      the other into a compliance with their terms. The masters, being fewer in
      number, can combine much more easily: and the law, besides, authorises, or
      at least does not prohibit, their combinations, while it prohibits those
      of the workmen. We have no acts of parliament against combining to lower
      the price of work, but many against combining to raise it. In all such
      disputes, the masters can hold out much longer. A landlord, a farmer, a
      master manufacturer, or merchant, though they did not employ a single
      workman, could generally live a year or two upon the stocks, which they
      have already acquired. Many workmen could not subsist a week, few could
      subsist a month, and scarce any a year, without employment. In the long
      run, the workman may be as necessary to his master as his master is to
      him; but the necessity is not so immediate.
    
      We rarely hear, it has been said, of the combinations of masters, though
      frequently of those of workmen. But whoever imagines, upon this account,
      that masters rarely combine, is as ignorant of the world as of the
      subject. Masters are always and everywhere in a sort of tacit, but
      constant and uniform, combination, not to raise the wages of labour above
      their actual rate. To violate this combination is everywhere a most
      unpopular action, and a sort of reproach to a master among his neighbours
      and equals. We seldom, indeed, hear of this combination, because it is the
      usual, and, one may say, the natural state of things, which nobody ever
      hears of. Masters, too, sometimes enter into particular combinations to
      sink the wages of labour even below this rate. These are always conducted
      with the utmost silence and secrecy till the moment of execution; and when
      the workmen yield, as they sometimes do without resistance, though
      severely felt by them, they are never heard of by other people. Such
      combinations, however, are frequently resisted by a contrary defensive
      combination of the workmen, who sometimes, too, without any provocation of
      this kind, combine, of their own accord, to raise the price of their
      labour. Their usual pretences are, sometimes the high price of provisions,
      sometimes the great profit which their masters make by their work. But
      whether their combinations be offensive or defensive, they are always
      abundantly heard of. In order to bring the point to a speedy decision,
      they have always recourse to the loudest clamour, and sometimes to the
      most shocking violence and outrage. They are desperate, and act with the
      folly and extravagance of desperate men, who must either starve, or
      frighten their masters into an immediate compliance with their demands.
      The masters, upon these occasions, are just as clamorous upon the other
      side, and never cease to call aloud for the assistance of the civil
      magistrate, and the rigorous execution of those laws which have been
      enacted with so much severity against the combination of servants,
      labourers, and journeymen. The workmen, accordingly, very seldom derive
      any advantage from the violence of those tumultuous combinations, which,
      partly from the interposition of the civil magistrate, partly from the
      superior steadiness of the masters, partly from the necessity which the
      greater part of the workmen are under of submitting for the sake of
      present subsistence, generally end in nothing but the punishment or ruin
      of the ringleaders.
    
      But though, in disputes with their workmen, masters must generally have
      the advantage, there is, however, a certain rate, below which it seems
      impossible to reduce, for any considerable time, the ordinary wages even
      of the lowest species of labour.
    
      A man must always live by his work, and his wages must at least be
      sufficient to maintain him. They must even upon most occasions be somewhat
      more, otherwise it would be impossible for him to bring up a family, and
      the race of such workmen could not last beyond the first generation. Mr
      Cantillon seems, upon this account, to suppose that the lowest species of
      common labourers must everywhere earn at least double their own
      maintenance, in order that, one with another, they may be enabled to bring
      up two children; the labour of the wife, on account of her necessary
      attendance on the children, being supposed no more than sufficient to
      provide for herself: But one half the children born, it is computed, die
      before the age of manhood. The poorest labourers, therefore, according to
      this account, must, one with another, attempt to rear at least four
      children, in order that two may have an equal chance of living to that
      age. But the necessary maintenance of four children, it is supposed, may
      be nearly equal to that of one man. The labour of an able-bodied slave,
      the same author adds, is computed to be worth double his maintenance; and
      that of the meanest labourer, he thinks, cannot be worth less than that of
      an able-bodied slave. Thus far at least seems certain, that, in order to
      bring up a family, the labour of the husband and wife together must, even
      in the lowest species of common labour, be able to earn something more
      than what is precisely necessary for their own maintenance; but in what
      proportion, whether in that above-mentioned, or many other, I shall not
      take upon me to determine.
    
      There are certain circumstances, however, which sometimes give the
      labourers an advantage, and enable them to raise their wages considerably
      above this rate, evidently the lowest which is consistent with common
      humanity.
    
      When in any country the demand for those who live by wages, labourers,
      journeymen, servants of every kind, is continually increasing; when every
      year furnishes employment for a greater number than had been employed the
      year before, the workmen have no occasion to combine in order to raise
      their wages. The scarcity of hands occasions a competition among masters,
      who bid against one another in order to get workmen, and thus voluntarily
      break through the natural combination of masters not to raise wages. The
      demand for those who live by wages, it is evident, cannot increase but in
      proportion to the increase of the funds which are destined to the payment
      of wages. These funds are of two kinds, first, the revenue which is over
      and above what is necessary for the maintenance; and, secondly, the stock
      which is over and above what is necessary for the employment of their
      masters.
    
      When the landlord, annuitant, or monied man, has a greater revenue than
      what he judges sufficient to maintain his own family, he employs either
      the whole or a part of the surplus in maintaining one or more menial
      servants. Increase this surplus, and he will naturally increase the number
      of those servants.
    
      When an independent workman, such as a weaver or shoemaker, has got more
      stock than what is sufficient to purchase the materials of his own work,
      and to maintain himself till he can dispose of it, he naturally employs
      one or more journeymen with the surplus, in order to make a profit by
      their work. Increase this surplus, and he will naturally increase the
      number of his journeymen.
    
      The demand for those who live by wages, therefore, necessarily increases
      with the increase of the revenue and stock of every country, and cannot
      possibly increase without it. The increase of revenue and stock is the
      increase of national wealth. The demand for those who live by wages,
      therefore, naturally increases with the increase of national wealth, and
      cannot possibly increase without it.
    
      It is not the actual greatness of national wealth, but its continual
      increase, which occasions a rise in the wages of labour. It is not,
      accordingly, in the richest countries, but in the most thriving, or in
      those which are growing rich the fastest, that the wages of labour are
      highest. England is certainly, in the present times, a much richer country
      than any part of North America. The wages of labour, however, are much
      higher in North America than in any part of England. In the province of
      New York, common labourers earned in 1773, before the commencement of the
      late disturbances, three shillings and sixpence currency, equal to two
      shillings sterling, a-day; ship-carpenters, ten shillings and sixpence
      currency, with a pint of rum, worth sixpence sterling, equal in all to six
      shillings and sixpence sterling; house-carpenters and bricklayers, eight
      shillings currency, equal to four shillings and sixpence sterling;
      journeymen tailors, five shillings currency, equal to about two shillings
      and tenpence sterling. These prices are all above the London price; and
      wages are said to be as high in the other colonies as in New York. The
      price of provisions is everywhere in North America much lower than in
      England. A dearth has never been known there. In the worst seasons they
      have always had a sufficiency for themselves, though less for exportation.
      If the money price of labour, therefore, be higher than it is anywhere in
      the mother-country, its real price, the real command of the necessaries
      and conveniencies of life which it conveys to the labourer, must be higher
      in a still greater proportion.
    
      But though North America is not yet so rich as England, it is much more
      thriving, and advancing with much greater rapidity to the further
      acquisition of riches. The most decisive mark of the prosperity of any
      country is the increase of the number of its inhabitants. In Great
      Britain, and most other European countries, they are not supposed to
      double in less than five hundred years. In the British colonies in North
      America, it has been found that they double in twenty or five-and-twenty
      years. Nor in the present times is this increase principally owing to the
      continual importation of new inhabitants, but to the great multiplication
      of the species. Those who live to old age, it is said, frequently see
      there from fifty to a hundred, and sometimes many more, descendants from
      their own body. Labour is there so well rewarded, that a numerous family
      of children, instead of being a burden, is a source of opulence and
      prosperity to the parents. The labour of each child, before it can leave
      their house, is computed to be worth a hundred pounds clear gain to them.
      A young widow with four or five young children, who, among the middling or
      inferior ranks of people in Europe, would have so little chance for a
      second husband, is there frequently courted as a sort of fortune. The
      value of children is the greatest of all encouragements to marriage. We
      cannot, therefore, wonder that the people in North America should
      generally marry very young. Notwithstanding the great increase occasioned
      by such early marriages, there is a continual complaint of the scarcity of
      hands in North America. The demand for labourers, the funds destined for
      maintaining them increase, it seems, still faster than they can find
      labourers to employ.
    
      Though the wealth of a country should be very great, yet if it has been
      long stationary, we must not expect to find the wages of labour very high
      in it. The funds destined for the payment of wages, the revenue and stock
      of its inhabitants, may be of the greatest extent; but if they have
      continued for several centuries of the same, or very nearly of the same
      extent, the number of labourers employed every year could easily supply,
      and even more than supply, the number wanted the following year. There
      could seldom be any scarcity of hands, nor could the masters be obliged to
      bid against one another in order to get them. The hands, on the contrary,
      would, in this case, naturally multiply beyond their employment. There
      would be a constant scarcity of employment, and the labourers would be
      obliged to bid against one another in order to get it. If in such a
      country the wages of labour had ever been more than sufficient to
      maintain the labourer, and to enable him to bring up a family, the
      competition of the labourers and the interest of the masters would soon
      reduce them to the lowest rate which is consistent with common humanity.
      China has been long one of the richest, that is, one of the most fertile,
      best cultivated, most industrious, and most populous, countries in the
      world. It seems, however, to have been long stationary. Marco Polo, who
      visited it more than five hundred years ago, describes its cultivation,
      industry, and populousness, almost in the same terms in which they are
      described by travellers in the present times. It had, perhaps, even long
      before his time, acquired that full complement of riches which the nature
      of its laws and institutions permits it to acquire. The accounts of all
      travellers, inconsistent in many other respects, agree in the low wages of
      labour, and in the difficulty which a labourer finds in bringing up a
      family in China. If by digging the ground a whole day he can get what will
      purchase a small quantity of rice in the evening, he is contented. The
      condition of artificers is, if possible, still worse. Instead of waiting
      indolently in their work-houses for the calls of their customers, as in
      Europe, they are continually running about the streets with the tools of
      their respective trades, offering their services, and, as it were, begging
      employment. The poverty of the lower ranks of people in China far
      surpasses that of the most beggarly nations in Europe. In the
      neighbourhood of Canton, many hundred, it is commonly said, many thousand
      families have no habitation on the land, but live constantly in little
      fishing-boats upon the rivers and canals. The subsistence which they find
      there is so scanty, that they are eager to fish up the nastiest garbage
      thrown overboard from any European ship. Any carrion, the carcase of a
      dead dog or cat, for example, though half putrid and stinking, is as
      welcome to them as the most wholesome food to the people of other
      countries. Marriage is encouraged in China, not by the profitableness of
      children, but by the liberty of destroying them. In all great towns,
      several are every night exposed in the street, or drowned like puppies in
      the water. The performance of this horrid office is even said to be the
      avowed business by which some people earn their subsistence.
    
      China, however, though it may, perhaps, stand still, does not seem to go
      backwards. Its towns are nowhere deserted by their inhabitants. The lands
      which had once been cultivated, are nowhere neglected. The same, or very
      nearly the same, annual labour, must, therefore, continue to be performed,
      and the funds destined for maintaining it must not, consequently, be
      sensibly diminished. The lowest class of labourers, therefore,
      notwithstanding their scanty subsistence, must some way or another make
      shift to continue their race so far as to keep up their usual numbers.
    
      But it would be otherwise in a country where the funds destined for the
      maintenance of labour were sensibly decaying. Every year the demand for
      servants and labourers would, in all the different classes of employments,
      be less than it had been the year before. Many who had been bred in the
      superior classes, not being able to find employment in their own business,
      would be glad to seek it in the lowest. The lowest class being not only
      overstocked with its own workmen, but with the overflowings of all the
      other classes, the competition for employment would be so great in it, as
      to reduce the wages of labour to the most miserable and scanty subsistence
      of the labourer. Many would not be able to find employment even upon these
      hard terms, but would either starve, or be driven to seek a subsistence,
      either by begging, or by the perpetration perhaps, of the greatest
      enormities. Want, famine, and mortality, would immediately prevail in that
      class, and from thence extend themselves to all the superior classes, till
      the number of inhabitants in the country was reduced to what could easily
      be maintained by the revenue and stock which remained in it, and which had
      escaped either the tyranny or calamity which had destroyed the rest. This,
      perhaps, is nearly the present state of Bengal, and of some other of the
      English settlements in the East Indies. In a fertile country, which had
      before been much depopulated, where subsistence, consequently, should not
      be very difficult, and where, notwithstanding, three or four hundred
      thousand people die of hunger in one year, we may be assured that the funds
      destined for the maintenance of the labouring poor are fast decaying. The
      difference between the genius of the British constitution, which protects
      and governs North America, and that of the mercantile company which
      oppresses and domineers in the East Indies, cannot, perhaps, be better
      illustrated than by the different state of those countries.
    
      The liberal reward of labour, therefore, as it is the necessary effect, so
      it is the natural symptom of increasing national wealth. The scanty
      maintenance of the labouring poor, on the other hand, is the natural
      symptom that things are at a stand, and their starving condition, that
      they are going fast backwards.
    
      In Great Britain, the wages of labour seem, in the present times, to be
      evidently more than what is precisely necessary to enable the labourer to
      bring up a family. In order to satisfy ourselves upon this point, it will
      not be necessary to enter into any tedious or doubtful calculation of what
      may be the lowest sum upon which it is possible to do this. There are many
      plain symptoms, that the wages of labour are nowhere in this country
      regulated by this lowest rate, which is consistent with common humanity.
    
      First, in almost every part of Great Britain there is a distinction, even
      in the lowest species of labour, between summer and winter wages. Summer
      wages are always highest. But, on account of the extraordinary expense of
      fuel, the maintenance of a family is most expensive in winter. Wages,
      therefore, being highest when this expense is lowest, it seems evident
      that they are not regulated by what is necessary for this expense, but by
      the quantity and supposed value of the work. A labourer, it may be said,
      indeed, ought to save part of his summer wages, in order to defray his
      winter expense; and that, through the whole year, they do not exceed what
      is necessary to maintain his family through the whole year. A slave,
      however, or one absolutely dependent on us for immediate subsistence,
      would not be treated in this manner. His daily subsistence would be
      proportioned to his daily necessities.
    
      Secondly, the wages of labour do not, in Great Britain, fluctuate with the
      price of provisions. These vary everywhere from year to year, frequently
      from month to month. But in many places, the money price of labour remains
      uniformly the same, sometimes for half a century together. If, in these
      places, therefore, the labouring poor can maintain their families in dear
      years, they must be at their ease in times of moderate plenty, and in
      affluence in those of extraordinary cheapness. The high price of
      provisions during these ten years past, has not, in many parts of the
      kingdom, been accompanied with any sensible rise in the money price of
      labour. It has, indeed, in some; owing, probably, more to the increase of
      the demand for labour, than to that of the price of provisions.
    
      Thirdly, as the price of provisions varies more from year to year than the
      wages of labour, so, on the other hand, the wages of labour vary more from
      place to place than the price of provisions. The prices of bread and
      butchers’ meat are generally the same, or very nearly the same, through
      the greater part of the united kingdom. These, and most other things which
      are sold by retail, the way in which the labouring poor buy all things,
      are generally fully as cheap, or cheaper, in great towns than in the
      remoter parts of the country, for reasons which I shall have occasion to
      explain hereafter. But the wages of labour in a great town and its
      neighbourhood are frequently a fourth or a fifth part, twenty or five-and—twenty
      per cent. higher than at a few miles distance. Eighteen pence a day may be
      reckoned the common price of labour in London and its neighbourhood. At a
      few miles distance, it falls to fourteen and fifteen pence. Tenpence may
      be reckoned its price in Edinburgh and its neighbourhood. At a few miles
      distance, it falls to eightpence, the usual price of common labour through
      the greater part of the low country of Scotland, where it varies a good
      deal less than in England. Such a difference of prices, which, it seems,
      is not always sufficient to transport a man from one parish to another,
      would necessarily occasion so great a transportation of the most bulky
      commodities, not only from one parish to another, but from one end of the
      kingdom, almost from one end of the world to the other, as would soon
      reduce them more nearly to a level. After all that has been said of the
      levity and inconstancy of human nature, it appears evidently from
      experience, that man is, of all sorts of luggage, the most difficult to be
      transported. If the labouring poor, therefore, can maintain their families
      in those parts of the kingdom where the price of labour is lowest, they
      must be in affluence where it is highest.
    
      Fourthly, the variations in the price of labour not only do not
      correspond, either in place or time, with those in the price of
      provisions, but they are frequently quite opposite.
    
      Grain, the food of the common people, is dearer in Scotland than in
      England, whence Scotland receives almost every year very large supplies.
      But English corn must be sold dearer in Scotland, the country to which it
      is brought, than in England, the country from which it comes; and in
      proportion to its quality it cannot be sold dearer in Scotland than the
      Scotch corn that comes to the same market in competition with it. The
      quality of grain depends chiefly upon the quantity of flour or meal which
      it yields at the mill; and, in this respect, English grain is so much
      superior to the Scotch, that though often dearer in appearance, or in
      proportion to the measure of its bulk, it is generally cheaper in reality,
      or in proportion to its quality, or even to the measure of its weight. The
      price of labour, on the contrary, is dearer in England than in Scotland.
      If the labouring poor, therefore, can maintain their families in the one
      part of the united kingdom, they must be in affluence in the other.
      Oatmeal, indeed, supplies the common people in Scotland with the greatest
      and the best part of their food, which is, in general, much inferior to
      that of their neighbours of the same rank in England. This difference,
      however, in the mode of their subsistence, is not the cause, but the
      effect, of the difference in their wages; though, by a strange
      misapprehension, I have frequently heard it represented as the cause. It
      is not because one man keeps a coach, while his neighbour walks a-foot,
      that the one is rich, and the other poor; but because the one is rich, he
      keeps a coach, and because the other is poor, he walks a-foot.
    
      During the course of the last century, taking one year with another, grain
      was dearer in both parts of the united kingdom than during that of the
      present. This is a matter of fact which cannot now admit of any reasonable
      doubt; and the proof of it is, if possible, still more decisive with
      regard to Scotland than with regard to England. It is in Scotland
      supported by the evidence of the public fiars, annual valuations made upon
      oath, according to the actual state of the markets, of all the different
      sorts of grain in every different county of Scotland. If such direct proof
      could require any collateral evidence to confirm it, I would observe, that
      this has likewise been the case in France, and probably in most other
      parts of Europe. With regard to France, there is the clearest proof. But
      though it is certain, that in both parts of the united kingdom grain was
      somewhat dearer in the last century than in the present, it is equally
      certain that labour was much cheaper. If the labouring poor, therefore,
      could bring up their families then, they must be much more at their ease
      now. In the last century, the most usual day-wages of common labour
      through the greater part of Scotland were sixpence in summer, and
      fivepence in winter. Three shillings a-week, the same price, very nearly
      still continues to be paid in some parts of the Highlands and Western
      islands. Through the greater part of the Low country, the most usual wages
      of common labour are now eight pence a-day; tenpence, sometimes a
      shilling, about Edinburgh, in the counties which border upon England,
      probably on account of that neighbourhood, and in a few other places where
      there has lately been a considerable rise in the demand for labour, about
      Glasgow, Carron, Ayrshire, etc. In England, the improvements of
      agriculture, manufactures, and commerce, began much earlier than in
      Scotland. The demand for labour, and consequently its price, must
      necessarily have increased with those improvements. In the last century,
      accordingly, as well as in the present, the wages of labour were higher in
      England than in Scotland. They have risen, too, considerably since that
      time, though, on account of the greater variety of wages paid there in
      different places, it is more difficult to ascertain how much. In 1614, the
      pay of a foot soldier was the same as in the present times, eightpence
      a-day. When it was first established, it would naturally be regulated by
      the usual wages of common labourers, the rank of people from which foot
      soldiers are commonly drawn. Lord-chief-justice Hales, who wrote in the
      time of Charles II. computes the necessary expense of a labourer’s family,
      consisting of six persons, the father and mother, two children able to do
      something, and two not able, at ten shillings a-week, or twenty-six pounds
      a-year. If they cannot earn this by their labour, they must make it up, he
      supposes, either by begging or stealing. He appears to have enquired very
      carefully into this subject {See his scheme for the maintenance of the
      poor, in Burn’s History of the Poor Laws.}. In 1688, Mr Gregory King,
      whose skill in political arithmetic is so much extolled by Dr Davenant,
      computed the ordinary income of labourers and out-servants to be fifteen
      pounds a-year to a family, which he supposed to consist, one with another,
      of three and a half persons. His calculation, therefore, though different
      in appearance, corresponds very nearly at bottom with that of Judge Hales.
      Both suppose the weekly expense of such families to be about twenty-pence
      a-head. Both the pecuniary income and expense of such families have
      increased considerably since that time through the greater part of the
      kingdom, in some places more, and in some less, though perhaps scarce
      anywhere so much as some exaggerated accounts of the present wages of
      labour have lately represented them to the public. The price of labour, it
      must be observed, cannot be ascertained very accurately anywhere,
      different prices being often paid at the same place and for the same sort
      of labour, not only according to the different abilities of the workman,
      but according to the easiness or hardness of the masters. Where wages are
      not regulated by law, all that we can pretend to determine is, what are
      the most usual; and experience seems to shew that law can never regulate
      them properly, though it has often pretended to do so.
    
      The real recompence of labour, the real quantity of the necessaries and
      conveniencies of life which it can procure to the labourer, has, during
      the course of the present century, increased perhaps in a still greater
      proportion than its money price. Not only grain has become somewhat
      cheaper, but many other things, from which the industrious poor derive an
      agreeable and wholesome variety of food, have become a great deal cheaper.
      Potatoes, for example, do not at present, through the greater part of the
      kingdom, cost half the price which they used to do thirty or forty years
      ago. The same thing may be said of turnips, carrots, cabbages; things
      which were formerly never raised but by the spade, but which are now
      commonly raised by the plough. All sort of garden stuff, too, has become
      cheaper. The greater part of the apples, and even of the onions, consumed
      in Great Britain, were, in the last century, imported from Flanders. The
      great improvements in the coarser manufactories of both linen and woollen
      cloth furnish the labourers with cheaper and better clothing; and those in
      the manufactories of the coarser metals, with cheaper and better
      instruments of trade, as well as with many agreeable and convenient pieces
      of household furniture. Soap, salt, candles, leather, and fermented
      liquors, have, indeed, become a good deal dearer, chiefly from the taxes
      which have been laid upon them. The quantity of these, however, which the
      labouring poor are under any necessity of consuming, is so very small, that
      the increase in their price does not compensate the diminution in that of
      so many other things. The common complaint, that luxury extends itself
      even to the lowest ranks of the people, and that the labouring poor will
      not now be contented with the same food, clothing, and lodging, which
      satisfied them in former times, may convince us that it is not the money
      price of labour only, but its real recompence, which has augmented.
    
      Is this improvement in the circumstances of the lower ranks of the people
      to be regarded as an advantage, or as an inconveniency, to the society?
      The answer seems at first abundantly plain. Servants, labourers, and
      workmen of different kinds, make up the far greater part of every great
      political society. But what improves the circumstances of the greater
      part, can never be regarded as any inconveniency to the whole. No society
      can surely be flourishing and happy, of which the far greater part of the
      members are poor and miserable. It is but equity, besides, that they who
      feed, clothe, and lodge the whole body of the people, should have such a
      share of the produce of their own labour as to be themselves tolerably
      well fed, clothed, and lodged.
    
      Poverty, though it no doubt discourages, does not always prevent,
      marriage. It seems even to be favourable to generation. A half-starved
      Highland woman frequently bears more than twenty children, while a
      pampered fine lady is often incapable of bearing any, and is generally
      exhausted by two or three. Barrenness, so frequent among women of fashion,
      is very rare among those of inferior station. Luxury, in the fair sex,
      while it inflames, perhaps, the passion for enjoyment, seems always to
      weaken, and frequently to destroy altogether, the powers of generation.
    
      But poverty, though it does not prevent the generation, is extremely
      unfavourable to the rearing of children. The tender plant is produced; but
      in so cold a soil, and so severe a climate, soon withers and dies. It is
      not uncommon, I have been frequently told, in the Highlands of Scotland,
      for a mother who has born twenty children not to have two alive. Several
      officers of great experience have assured me, that, so far from recruiting
      their regiment, they have never been able to supply it with drums and
      fifes, from all the soldiers’ children that were born in it. A greater
      number of fine children, however, is seldom seen anywhere than about a
      barrack of soldiers. Very few of them, it seems, arrive at the age of
      thirteen or fourteen. In some places, one half the children die before
      they are four years of age, in many places before they are seven, and in
      almost all places before they are nine or ten. This great mortality,
      however will everywhere be found chiefly among the children of the common
      people, who cannot afford to tend them with the same care as those of
      better station. Though their marriages are generally more fruitful than
      those of people of fashion, a smaller proportion of their children arrive
      at maturity. In foundling hospitals, and among the children brought up by
      parish charities, the mortality is still greater than among those of the
      common people.
    
      Every species of animals naturally multiplies in proportion to the means
      of their subsistence, and no species can ever multiply beyond it. But in
      civilized society, it is only among the inferior ranks of people that the
      scantiness of subsistence can set limits to the further multiplication of
      the human species; and it can do so in no other way than by destroying a
      great part of the children which their fruitful marriages produce.
    
      The liberal reward of labour, by enabling them to provide better for their
      children, and consequently to bring up a greater number, naturally tends
      to widen and extend those limits. It deserves to be remarked, too, that it
      necessarily does this as nearly as possible in the proportion which the
      demand for labour requires. If this demand is continually increasing, the
      reward of labour must necessarily encourage in such a manner the marriage
      and multiplication of labourers, as may enable them to supply that
      continually increasing demand by a continually increasing population. If
      the reward should at any time be less than what was requisite for this
      purpose, the deficiency of hands would soon raise it; and if it should at
      any time be more, their excessive multiplication would soon lower it to
      this necessary rate. The market would be so much understocked with labour
      in the one case, and so much overstocked in the other, as would soon force
      back its price to that proper rate which the circumstances of the society
      required. It is in this manner that the demand for men, like that for any
      other commodity, necessarily regulates the production of men, quickens it
      when it goes on too slowly, and stops it when it advances too fast. It is
      this demand which regulates and determines the state of propagation in all
      the different countries of the world; in North America, in Europe, and in
      China; which renders it rapidly progressive in the first, slow and gradual
      in the second, and altogether stationary in the last.
    
      The wear and tear of a slave, it has been said, is at the expense of his
      master; but that of a free servant is at his own expense. The wear and
      tear of the latter, however, is, in reality, as much at the expense of his
      master as that of the former. The wages paid to journeymen and servants of
      every kind must be such as may enable them, one with another to continue
      the race of journeymen and servants, according as the increasing,
      diminishing, or stationary demand of the society, may happen to require.
      But though the wear and tear of a free servant be equally at the expense
      of his master, it generally costs him much less than that of a slave. The
      fund destined for replacing or repairing, if I may say so, the wear and
      tear of the slave, is commonly managed by a negligent master or careless
      overseer. That destined for performing the same office with regard to the
      freeman is managed by the freeman himself. The disorders which generally
      prevail in the economy of the rich, naturally introduce themselves into
      the management of the former; the strict frugality and parsimonious
      attention of the poor as naturally establish themselves in that of the
      latter. Under such different management, the same purpose must require
      very different degrees of expense to execute it. It appears, accordingly,
      from the experience of all ages and nations, I believe, that the work done
      by freemen comes cheaper in the end than that performed by slaves. It is
      found to do so even at Boston, New-York, and Philadelphia, where the wages
      of common labour are so very high.
    
      The liberal reward of labour, therefore, as it is the effect of increasing
      wealth, so it is the cause of increasing population. To complain of it, is
      to lament over the necessary cause and effect of the greatest public
      prosperity.
    
      It deserves to be remarked, perhaps, that it is in the progressive state,
      while the society is advancing to the further acquisition, rather than
      when it has acquired its full complement of riches, that the condition of
      the labouring poor, of the great body of the people, seems to be the
      happiest and the most comfortable. It is hard in the stationary, and
      miserable in the declining state. The progressive state is, in reality,
      the cheerful and the hearty state to all the different orders of the
      society; the stationary is dull; the declining melancholy.
    
      The liberal reward of labour, as it encourages the propagation, so it
      increases the industry of the common people. The wages of labour are the
      encouragement of industry, which, like every other human quality, improves
      in proportion to the encouragement it receives. A plentiful subsistence
      increases the bodily strength of the labourer, and the comfortable hope of
      bettering his condition, and of ending his days, perhaps, in ease and
      plenty, animates him to exert that strength to the utmost. Where wages are
      high, accordingly, we shall always find the workmen more active, diligent,
      and expeditious, than where they are low; in England, for example, than in
      Scotland; in the neighbourhood of great towns, than in remote country
      places. Some workmen, indeed, when they can earn in four days what will
      maintain them through the week, will be idle the other three. This,
      however, is by no means the case with the greater part. Workmen, on the
      contrary, when they are liberally paid by the piece, are very apt to
      overwork themselves, and to ruin their health and constitution in a few
      years. A carpenter in London, and in some other places, is not supposed to
      last in his utmost vigour above eight years. Something of the same kind
      happens in many other trades, in which the workmen are paid by the piece;
      as they generally are in manufactures, and even in country labour,
      wherever wages are higher than ordinary. Almost every class of artificers
      is subject to some peculiar infirmity occasioned by excessive application
      to their peculiar species of work. Ramuzzini, an eminent Italian
      physician, has written a particular book concerning such diseases. We do
      not reckon our soldiers the most industrious set of people among us; yet
      when soldiers have been employed in some particular sorts of work, and
      liberally paid by the piece, their officers have frequently been obliged
      to stipulate with the undertaker, that they should not be allowed to earn
      above a certain sum every day, according to the rate at which they were
      paid. Till this stipulation was made, mutual emulation, and the desire of
      greater gain, frequently prompted them to overwork themselves, and to hurt
      their health by excessive labour. Excessive application, during four days
      of the week, is frequently the real cause of the idleness of the other
      three, so much and so loudly complained of. Great labour, either of mind
      or body, continued for several days together is, in most men, naturally
      followed by a great desire of relaxation, which, if not restrained by
      force, or by some strong necessity, is almost irresistible. It is the call
      of nature, which requires to be relieved by some indulgence, sometimes of
      ease only, but sometimes too of dissipation and diversion. If it is not
      complied with, the consequences are often dangerous and sometimes fatal,
      and such as almost always, sooner or later, bring on the peculiar
      infirmity of the trade. If masters would always listen to the dictates of
      reason and humanity, they have frequently occasion rather to moderate,
      than to animate the application of many of their workmen. It will be
      found, I believe, in every sort of trade, that the man who works so
      moderately, as to be able to work constantly, not only preserves his
      health the longest, but, in the course of the year, executes the greatest
      quantity of work.
    
      In cheap years it is pretended, workmen are generally more idle, and in
      dear times more industrious than ordinary. A plentiful subsistence,
      therefore, it has been concluded, relaxes, and a scanty one quickens their
      industry. That a little more plenty than ordinary may render some workmen
      idle, cannot be well doubted; but that it should have this effect upon the
      greater part, or that men in general should work better when they are ill
      fed, than when they are well fed, when they are disheartened than when
      they are in good spirits, when they are frequently sick than when they are
      generally in good health, seems not very probable. Years of dearth, it is
      to be observed, are generally among the common people years of sickness
      and mortality, which cannot fail to diminish the produce of their
      industry.
    
      In years of plenty, servants frequently leave their masters, and trust
      their subsistence to what they can make by their own industry. But the
      same cheapness of provisions, by increasing the fund which is destined for
      the maintenance of servants, encourages masters, farmers especially, to
      employ a greater number. Farmers, upon such occasions, expect more profit
      from their corn by maintaining a few more labouring servants, than by
      selling it at a low price in the market. The demand for servants
      increases, while the number of those who offer to supply that demand
      diminishes. The price of labour, therefore, frequently rises in cheap
      years.
    
      In years of scarcity, the difficulty and uncertainty of subsistence make
      all such people eager to return to service. But the high price of
      provisions, by diminishing the funds destined for the maintenance of
      servants, disposes masters rather to diminish than to increase the number
      of those they have. In dear years, too, poor independent workmen
      frequently consume the little stock with which they had used to supply
      themselves with the materials of their work, and are obliged to become
      journeymen for subsistence. More people want employment than easily get
      it; many are willing to take it upon lower terms than ordinary; and the
      wages of both servants and journeymen frequently sink in dear years.
    
      Masters of all sorts, therefore, frequently make better bargains with
      their servants in dear than in cheap years, and find them more humble and
      dependent in the former than in the latter. They naturally, therefore,
      commend the former as more favourable to industry. Landlords and farmers,
      besides, two of the largest classes of masters, have another reason for
      being pleased with dear years. The rents of the one, and the profits of
      the other, depend very much upon the price of provisions. Nothing can be
      more absurd, however, than to imagine that men in general should work less
      when they work for themselves, than when they work for other people. A
      poor independent workman will generally be more industrious than even a
      journeyman who works by the piece. The one enjoys the whole produce of his
      own industry, the other shares it with his master. The one, in his
      separate independent state, is less liable to the temptations of bad
      company, which, in large manufactories, so frequently ruin the morals of
      the other. The superiority of the independent workman over those servants
      who are hired by the month or by the year, and whose wages and maintenance
      are the same, whether they do much or do little, is likely to be still
      greater. Cheap years tend to increase the proportion of independent
      workmen to journeymen and servants of all kinds, and dear years to
      diminish it.
    
      A French author of great knowledge and ingenuity, Mr Messance, receiver of
      the tallies in the election of St Etienne, endeavours to shew that the
      poor do more work in cheap than in dear years, by comparing the quantity
      and value of the goods made upon those different occasions in three
      different manufactures; one of coarse woollens, carried on at Elbeuf; one
      of linen, and another of silk, both which extend through the whole
      generality of Rouen. It appears from his account, which is copied from the
      registers of the public offices, that the quantity and value of the goods
      made in all those three manufactories has generally been greater in cheap
      than in dear years, and that it has always been greatest in the cheapest,
      and least in the dearest years. All the three seem to be stationary
      manufactures, or which, though their produce may vary somewhat from year
      to year, are, upon the whole, neither going backwards nor forwards.
    
      The manufacture of linen in Scotland, and that of coarse woollens in the
      West Riding of Yorkshire, are growing manufactures, of which the produce
      is generally, though with some variations, increasing both in quantity and
      value. Upon examining, however, the accounts which have been published of
      their annual produce, I have not been able to observe that its variations
      have had any sensible connection with the dearness or cheapness of the
      seasons. In 1740, a year of great scarcity, both manufactures, indeed,
      appear to have declined very considerably. But in 1756, another year of
      great scarcity, the Scotch manufactures made more than ordinary advances.
      The Yorkshire manufacture, indeed, declined, and its produce did not rise
      to what it had been in 1755, till 1766, after the repeal of the American
      stamp act. In that and the following year, it greatly exceeded what it had
      ever been before, and it has continued to advance ever since.
    
      The produce of all great manufactures for distant sale must necessarily
      depend, not so much upon the dearness or cheapness of the seasons in the
      countries where they are carried on, as upon the circumstances which
      affect the demand in the countries where they are consumed; upon peace or
      war, upon the prosperity or declension of other rival manufactures and
      upon the good or bad humour of their principal customers. A great part of
      the extraordinary work, besides, which is probably done in cheap years,
      never enters the public registers of manufactures. The men-servants, who
      leave their masters, become independent labourers. The women return to
      their parents, and commonly spin, in order to make clothes for themselves
      and their families. Even the independent workmen do not always, work for
      public sale, but are employed by some of their neighbours in manufactures
      for family use. The produce of their labour, therefore, frequently makes
      no figure in those public registers, of which the records are sometimes
      published with so much parade, and from which our merchants and
      manufacturers would often vainly pretend to announce the prosperity or
      declension of the greatest empires.
    
      Though the variations in the price of labour not only do not always
      correspond with those in the price of provisions, but are frequently quite
      opposite, we must not, upon this account, imagine that the price of
      provisions has no influence upon that of labour. The money price of labour
      is necessarily regulated by two circumstances; the demand for labour, and
      the price of the necessaries and conveniencies of life. The demand for
      labour, according as it happens to be increasing, stationary, or
      declining, or to require an increasing, stationary, or declining
      population, determines the quantities of the necessaries and conveniencies
      of life which must be given to the labourer; and the money price of labour
      is determined by what is requisite for purchasing this quantity. Though
      the money price of labour, therefore, is sometimes high where the price of
      provisions is low, it would be still higher, the demand continuing the
      same, if the price of provisions was high.
    
      It is because the demand for labour increases in years of sudden and
      extraordinary plenty, and diminishes in those of sudden and extraordinary
      scarcity, that the money price of labour sometimes rises in the one, and
      sinks in the other.
    
      In a year of sudden and extraordinary plenty, there are funds in the hands
      of many of the employers of industry, sufficient to maintain and employ a
      greater number of industrious people than had been employed the year
      before; and this extraordinary number cannot always be had. Those masters,
      therefore, who want more workmen, bid against one another, in order to get
      them, which sometimes raises both the real and the money price of their
      labour.
    
      The contrary of this happens in a year of sudden and extraordinary
      scarcity. The funds destined for employing industry are less than they had
      been the year before. A considerable number of people are thrown out of
      employment, who bid one against another, in order to get it, which
      sometimes lowers both the real and the money price of labour. In 1740, a
      year of extraordinary scarcity, many people were willing to work for bare
      subsistence. In the succeeding years of plenty, it was more difficult to
      get labourers and servants. The scarcity of a dear year, by diminishing
      the demand for labour, tends to lower its price, as the high price of
      provisions tends to raise it. The plenty of a cheap year, on the contrary,
      by increasing the demand, tends to raise the price of labour, as the
      cheapness of provisions tends to lower it. In the ordinary variations of
      the prices of provisions, those two opposite causes seem to counterbalance
      one another, which is probably, in part, the reason why the wages of
      labour are everywhere so much more steady and permanent than the price of
      provisions.
    
      The increase in the wages of labour necessarily increases the price of
      many commodities, by increasing that part of it which resolves itself into
      wages, and so far tends to diminish their consumption, both at home and
      abroad. The same cause, however, which raises the wages of labour, the
      increase of stock, tends to increase its productive powers, and to make a
      smaller quantity of labour produce a greater quantity of work. The owner
      of the stock which employs a great number of labourers necessarily
      endeavours, for his own advantage, to make such a proper division and
      distribution of employment, that they may be enabled to produce the
      greatest quantity of work possible. For the same reason, he endeavours to
      supply them with the best machinery which either he or they can think of.
      What takes place among the labourers in a particular workhouse, takes
      place, for the same reason, among those of a great society. The greater
      their number, the more they naturally divide themselves into different
      classes and subdivisions of employments. More heads are occupied in
      inventing the most proper machinery for executing the work of each, and it
      is, therefore, more likely to be invented. There are many commodities,
      therefore, which, in consequence of these improvements, come to be
      produced by so much less labour than before, that the increase of its
      price is more than compensated by the diminution of its quantity.
    


CHAPTER IX.
OF THE PROFITS OF STOCK.


    
      The rise and fall in the profits of stock depend upon the same causes with
      the rise and fall in the wages of labour, the increasing or declining
      state of the wealth of the society; but those causes affect the one and
      the other very differently.
    
      The increase of stock, which raises wages, tends to lower profit. When the
      stocks of many rich merchants are turned into the same trade, their mutual
      competition naturally tends to lower its profit; and when there is a like
      increase of stock in all the different trades carried on in the same
      society, the same competition must produce the same effect in them all.
    
      It is not easy, it has already been observed, to ascertain what are the
      average wages of labour, even in a particular place, and at a particular
      time. We can, even in this case, seldom determine more than what are the
      most usual wages. But even this can seldom be done with regard to the
      profits of stock. Profit is so very fluctuating, that the person who
      carries on a particular trade, cannot always tell you himself what is the
      average of his annual profit. It is affected, not only by every variation
      of price in the commodities which he deals in, but by the good or bad
      fortune both of his rivals and of his customers, and by a thousand other
      accidents, to which goods, when carried either by sea or by land, or even
      when stored in a warehouse, are liable. It varies, therefore, not only
      from year to year, but from day to day, and almost from hour to hour. To
      ascertain what is the average profit of all the different trades carried
      on in a great kingdom, must be much more difficult; and to judge of what
      it may have been formerly, or in remote periods of time, with any degree
      of precision, must be altogether impossible.
    
      But though it may be impossible to determine, with any degree of
      precision, what are or were the average profits of stock, either in the
      present or in ancient times, some notion may be formed of them from the
      interest of money. It may be laid down as a maxim, that wherever a great
      deal can be made by the use of money, a great deal will commonly be given
      for the use of it; and that, wherever little can be made by it, less will
      commonly he given for it. Accordingly, therefore, as the usual market rate
      of interest varies in any country, we may be assured that the ordinary
      profits of stock must vary with it, must sink as it sinks, and rise as it
      rises. The progress of interest, therefore, may lead us to form some
      notion of the progress of profit.
    
      By the 37th of Henry VIII. all interest above ten per cent. was declared
      unlawful. More, it seems, had sometimes been taken before that. In the
      reign of Edward VI. religious zeal prohibited all interest. This
      prohibition, however, like all others of the same kind, is said to have
      produced no effect, and probably rather increased than diminished the evil
      of usury. The statute of Henry VIII. was revived by the 13th of Elizabeth,
      cap. 8. and ten per cent. continued to be the legal rate of interest till
      the 21st of James I. when it was restricted to eight per cent. It was
      reduced to six per cent. soon after the Restoration, and by the 12th of
      Queen Anne, to five per cent. All these different statutory regulations
      seem to have been made with great propriety. They seem to have followed,
      and not to have gone before, the market rate of interest, or the rate at
      which people of good credit usually borrowed. Since the time of Queen
      Anne, five per cent. seems to have been rather above than below the market
      rate. Before the late war, the government borrowed at three per cent.; and
      people of good credit in the capital, and in many other parts of the
      kingdom, at three and a-half, four, and four and a-half per cent.
    
      Since the time of Henry VIII. the wealth and revenue of the country have
      been continually advancing, and in the course of their progress, their
      pace seems rather to have been gradually accelerated than retarded. They
      seem not only to have been going on, but to have been going on faster and
      faster. The wages of labour have been continually increasing during the
      same period, and, in the greater part of the different branches of trade
      and manufactures, the profits of stock have been diminishing.
    
      It generally requires a greater stock to carry on any sort of trade in a
      great town than in a country village. The great stocks employed in every
      branch of trade, and the number of rich competitors, generally reduce the
      rate of profit in the former below what it is in the latter. But the wages
      of labour are generally higher in a great town than in a country village.
      In a thriving town, the people who have great stocks to employ, frequently
      cannot get the number of workmen they want, and therefore bid against one
      another, in order to get as many as they can, which raises the wages of
      labour, and lowers the profits of stock. In the remote parts of the
      country, there is frequently not stock sufficient to employ all the
      people, who therefore bid against one another, in order to get employment,
      which lowers the wages of labour, and raises the profits of stock.
    
      In Scotland, though the legal rate of interest is the same as in England,
      the market rate is rather higher. People of the best credit there seldom
      borrow under five per cent. Even private bankers in Edinburgh give four
      per cent. upon their promissory-notes, of which payment, either in whole
      or in part may be demanded at pleasure. Private bankers in London give no
      interest for the money which is deposited with them. There are few trades
      which cannot be carried on with a smaller stock in Scotland than in
      England. The common rate of profit, therefore, must be somewhat greater.
      The wages of labour, it has already been observed, are lower in Scotland
      than in England. The country, too, is not only much poorer, but the steps
      by which it advances to a better condition, for it is evidently advancing,
      seem to be much slower and more tardy. The legal rate of interest in
      France has not during the course of the present century, been always
      regulated by the market rate {See Denisart, Article Taux des Interests,
      tom. iii, p.13}. In 1720, interest was reduced from the twentieth to the
      fiftieth penny, or from five to two per cent. In 1724, it was raised to
      the thirtieth penny, or to three and a third per cent. In 1725, it was
      again raised to the twentieth penny, or to five per cent. In 1766, during
      the administration of Mr Laverdy, it was reduced to the twenty-fifth
      penny, or to four per cent. The Abbé Terray raised it afterwards to the
      old rate of five per cent. The supposed purpose of many of those violent
      reductions of interest was to prepare the way for reducing that of the
      public debts; a purpose which has sometimes been executed. France is,
      perhaps, in the present times, not so rich a country as England; and
      though the legal rate of interest has in France frequently been lower than
      in England, the market rate has generally been higher; for there, as in
      other countries, they have several very safe and easy methods of evading
      the law. The profits of trade, I have been assured by British merchants
      who had traded in both countries, are higher in France than in England;
      and it is no doubt upon this account, that many British subjects chuse
      rather to employ their capitals in a country where trade is in disgrace,
      than in one where it is highly respected. The wages of labour are lower in
      France than in England. When you go from Scotland to England, the
      difference which you may remark between the dress and countenance of the
      common people in the one country and in the other, sufficiently indicates
      the difference in their condition. The contrast is still greater when you
      return from France. France, though no doubt a richer country than
      Scotland, seems not to be going forward so fast. It is a common and even a
      popular opinion in the country, that it is going backwards; an opinion
      which I apprehend, is ill-founded, even with regard to France, but which
      nobody can possibly entertain with regard to Scotland, who sees the
      country now, and who saw it twenty or thirty years ago.
    
      The province of Holland, on the other hand, in proportion to the extent of
      its territory and the number of its people, is a richer country than
      England. The government there borrow at two per cent. and private people
      of good credit at three. The wages of labour are said to be higher in
      Holland than in England, and the Dutch, it is well known, trade upon lower
      profits than any people in Europe. The trade of Holland, it has been
      pretended by some people, is decaying, and it may perhaps be true that
      some particular branches of it are so; but these symptoms seem to indicate
      sufficiently that there is no general decay. When profit diminishes,
      merchants are very apt to complain that trade decays, though the
      diminution of profit is the natural effect of its prosperity, or of a
      greater stock being employed in it than before. During the late war, the
      Dutch gained the whole carrying trade of France, of which they still
      retain a very large share. The great property which they possess both in
      French and English funds, about forty millions, it is said in the latter
      (in which, I suspect, however, there is a considerable exaggeration ), the
      great sums which they lend to private people, in countries where the rate
      of interest is higher than in their own, are circumstances which no doubt
      demonstrate the redundancy of their stock, or that it has increased beyond
      what they can employ with tolerable profit in the proper business of their
      own country; but they do not demonstrate that that business has decreased.
      As the capital of a private man, though acquired by a particular trade,
      may increase beyond what he can employ in it, and yet that trade continue
      to increase too, so may likewise the capital of a great nation.
    
      In our North American and West Indian colonies, not only the wages of
      labour, but the interest of money, and consequently the profits of stock,
      are higher than in England. In the different colonies, both the legal and
      the market rate of interest run from six to eight percent. High wages of
      labour and high profits of stock, however, are things, perhaps, which
      scarce ever go together, except in the peculiar circumstances of new
      colonies. A new colony must always, for some time, be more understocked in
      proportion to the extent of its territory, and more underpeopled in
      proportion to the extent of its stock, than the greater part of other
      countries. They have more land than they have stock to cultivate. What
      they have, therefore, is applied to the cultivation only of what is most
      fertile and most favourably situated, the land near the sea-shore, and
      along the banks of navigable rivers. Such land, too, is frequently
      purchased at a price below the value even of its natural produce. Stock
      employed in the purchase and improvement of such lands, must yield a very
      large profit, and, consequently, afford to pay a very large interest. Its
      rapid accumulation in so profitable an employment enables the planter to
      increase the number of his hands faster than he can find them in a new
      settlement. Those whom he can find, therefore, are very liberally
      rewarded. As the colony increases, the profits of stock gradually
      diminish. When the most fertile and best situated lands have been all
      occupied, less profit can be made by the cultivation of what is inferior
      both in soil and situation, and less interest can be afforded for the
      stock which is so employed. In the greater part of our colonies,
      accordingly, both the legal and the market rate of interest have been
      considerably reduced during the course of the present century. As riches,
      improvement, and population, have increased, interest has declined. The
      wages of labour do not sink with the profits of stock. The demand for
      labour increases with the increase of stock, whatever be its profits; and
      after these are diminished, stock may not only continue to increase, but
      to increase much faster than before. It is with industrious nations, who
      are advancing in the acquisition of riches, as with industrious
      individuals. A great stock, though with small profits, generally increases
      faster than a small stock with great profits. Money, says the proverb,
      makes money. When you have got a little, it is often easy to get more. The
      great difficulty is to get that little. The connection between the
      increase of stock and that of industry, or of the demand for useful
      labour, has partly been explained already, but will be explained more
      fully hereafter, in treating of the accumulation of stock.
    
      The acquisition of new territory, or of new branches of trade, may
      sometimes raise the profits of stock, and with them the interest of money,
      even in a country which is fast advancing in the acquisition of riches.
      The stock of the country, not being sufficient for the whole accession of
      business which such acquisitions present to the different people among
      whom it is divided, is applied to those particular branches only which
      afford the greatest profit. Part of what had before been employed in other
      trades, is necessarily withdrawn from them, and turned into some of the
      new and more profitable ones. In all those old trades, therefore, the
      competition comes to be less than before. The market comes to be less
      fully supplied with many different sorts of goods. Their price necessarily
      rises more or less, and yields a greater profit to those who deal in them,
      who can, therefore, afford to borrow at a higher interest. For some time
      after the conclusion of the late war, not only private people of the best
      credit, but some of the greatest companies in London, commonly borrowed at
      five per cent. who, before that, had not been used to pay more than four,
      and four and a half per cent. The great accession both of territory and
      trade by our acquisitions in North America and the West Indies, will
      sufficiently account for this, without supposing any diminution in the
      capital stock of the society. So great an accession of new business to be
      carried on by the old stock, must necessarily have diminished the quantity
      employed in a great number of particular branches, in which the
      competition being less, the profits must have been greater. I shall
      hereafter have occasion to mention the reasons which dispose me to believe
      that the capital stock of Great Britain was not diminished, even by the
      enormous expense of the late war.
    
      The diminution of the capital stock of the society, or of the funds
      destined for the maintenance of industry, however, as it lowers the wages
      of labour, so it raises the profits of stock, and consequently the
      interest of money. By the wages of labour being lowered, the owners of
      what stock remains in the society can bring their goods at less expense to
      market than before; and less stock being employed in supplying the market
      than before, they can sell them dearer. Their goods cost them less, and
      they get more for them. Their profits, therefore, being augmented at both
      ends, can well afford a large interest. The great fortunes so suddenly and
      so easily acquired in Bengal and the other British settlements in the East
      Indies, may satisfy us, that as the wages of labour are very low, so the
      profits of stock are very high in those ruined countries. The interest of
      money is proportionably so. In Bengal, money is frequently lent to the
      farmers at forty, fifty, and sixty per cent. and the succeeding crop is
      mortgaged for the payment. As the profits which can afford such an
      interest must eat up almost the whole rent of the landlord, so such
      enormous usury must in its turn eat up the greater part of those profits.
      Before the fall of the Roman republic, a usury of the same kind seems to
      have been common in the provinces, under the ruinous administration of
      their proconsuls. The virtuous Brutus lent money in Cyprus at
      eight-and-forty per cent. as we learn from the letters of Cicero.
    
      In a country which had acquired that full complement of riches which the
      nature of its soil and climate, and its situation with respect to other
      countries, allowed it to acquire, which could, therefore, advance no
      further, and which was not going backwards, both the wages of labour and
      the profits of stock would probably be very low. In a country fully
      peopled in proportion to what either its territory could maintain, or its
      stock employ, the competition for employment would necessarily be so great
      as to reduce the wages of labour to what was barely sufficient to keep up
      the number of labourers, and the country being already fully peopled, that
      number could never be augmented. In a country fully stocked in proportion
      to all the business it had to transact, as great a quantity of stock would
      be employed in every particular branch as the nature and extent of the
      trade would admit. The competition, therefore, would everywhere be as
      great, and, consequently, the ordinary profit as low as possible.
    
      But, perhaps, no country has ever yet arrived at this degree of opulence.
      China seems to have been long stationary, and had, probably, long ago
      acquired that full complement of riches which is consistent with the
      nature of its laws and institutions. But this complement may be much
      inferior to what, with other laws and institutions, the nature of its
      soil, climate, and situation, might admit of. A country which neglects or
      despises foreign commerce, and which admits the vessel of foreign nations
      into one or two of its ports only, cannot transact the same quantity of
      business which it might do with different laws and institutions. In a
      country, too, where, though the rich, or the owners of large capitals,
      enjoy a good deal of security, the poor, or the owners of small capitals,
      enjoy scarce any, but are liable, under the pretence of justice, to be
      pillaged and plundered at any time by the inferior mandarins, the quantity
      of stock employed in all the different branches of business transacted
      within it, can never be equal to what the nature and extent of that
      business might admit. In every different branch, the oppression of the
      poor must establish the monopoly of the rich, who, by engrossing the whole
      trade to themselves, will be able to make very large profits. Twelve per
      cent. accordingly, is said to be the common interest of money in China,
      and the ordinary profits of stock must be sufficient to afford this large
      interest.
    
      A defect in the law may sometimes raise the rate of interest considerably
      above what the condition of the country, as to wealth or poverty, would
      require. When the law does not enforce the performance of contracts, it
      puts all borrowers nearly upon the same footing with bankrupts, or people
      of doubtful credit, in better regulated countries. The uncertainty of
      recovering his money makes the lender exact the same usurious interest
      which is usually required from bankrupts. Among the barbarous nations who
      overran the western provinces of the Roman empire, the performance of
      contracts was left for many ages to the faith of the contracting parties.
      The courts of justice of their kings seldom intermeddled in it. The high
      rate of interest which took place in those ancient times, may, perhaps, be
      partly accounted for from this cause.
    
      When the law prohibits interest altogether, it does not prevent it. Many
      people must borrow, and nobody will lend without such a consideration for
      the use of their money as is suitable, not only to what can be made by the
      use of it, but to the difficulty and danger of evading the law. The high
      rate of interest among all Mahometan nations is accounted for by M.
      Montesquieu, not from their poverty, but partly from this, and partly from
      the difficulty of recovering the money.
    
      The lowest ordinary rate of profit must always be something more than what
      is sufficient to compensate the occasional losses to which every
      employment of stock is exposed. It is this surplus only which is neat or
      clear profit. What is called gross profit, comprehends frequently not only
      this surplus, but what is retained for compensating such extraordinary
      losses. The interest which the borrower can afford to pay is in proportion
      to the clear profit only. The lowest ordinary rate of interest must, in
      the same manner, be something more than sufficient to compensate the
      occasional losses to which lending, even with tolerable prudence, is
      exposed. Were it not, mere charity or friendship could be the only motives
      for lending.
    
      In a country which had acquired its full complement of riches, where, in
      every particular branch of business, there was the greatest quantity of
      stock that could be employed in it, as the ordinary rate of clear profit
      would be very small, so the usual market rate of interest which could be
      afforded out of it would be so low as to render it impossible for any but
      the very wealthiest people to live upon the interest of their money. All
      people of small or middling fortunes would be obliged to superintend
      themselves the employment of their own stocks. It would be necessary that
      almost every man should be a man of business, or engage in some sort of
      trade. The province of Holland seems to be approaching near to this state.
      It is there unfashionable not to be a man of business. Necessity makes it
      usual for almost every man to be so, and custom everywhere regulates
      fashion. As it is ridiculous not to dress, so is it, in some measure, not
      to be employed like other people. As a man of a civil profession seems
      awkward in a camp or a garrison, and is even in some danger of being
      despised there, so does an idle man among men of business.
    
      The highest ordinary rate of profit may be such as, in the price of the
      greater part of commodities, eats up the whole of what should go to the
      rent of the land, and leaves only what is sufficient to pay the labour of
      preparing and bringing them to market, according to the lowest rate at
      which labour can anywhere be paid, the bare subsistence of the labourer.
      The workman must always have been fed in some way or other while he was
      about the work, but the landlord may not always have been paid. The
      profits of the trade which the servants of the East India Company carry on
      in Bengal may not, perhaps, be very far from this rate.
    
      The proportion which the usual market rate of interest ought to bear to
      the ordinary rate of clear profit, necessarily varies as profit rises or
      falls. Double interest is in Great Britain reckoned what the merchants
      call a good, moderate, reasonable profit; terms which, I apprehend, mean
      no more than a common and usual profit. In a country where the ordinary
      rate of clear profit is eight or ten per cent. it may be reasonable that
      one half of it should go to interest, wherever business is carried on with
      borrowed money. The stock is at the risk of the borrower, who, as it were,
      insures it to the lender; and four or five per cent. may, in the greater
      part of trades, be both a sufficient profit upon the risk of this
      insurance, and a sufficient recompence for the trouble of employing the
      stock. But the proportion between interest and clear profit might not be
      the same in countries where the ordinary rate of profit was either a good
      deal lower, or a good deal higher. If it were a good deal lower, one half
      of it, perhaps, could not be afforded for interest; and more might be
      afforded if it were a good deal higher.
    
      In countries which are fast advancing to riches, the low rate of profit
      may, in the price of many commodities, compensate the high wages of
      labour, and enable those countries to sell as cheap as their less thriving
      neighbours, among whom the wages of labour may be lower.
    
      In reality, high profits tend much more to raise the price of work than
      high wages. If, in the linen manufacture, for example, the wages of the
      different working people, the flax-dressers, the spinners, the weavers,
      etc. should all of them be advanced twopence a-day, it would be necessary
      to heighten the price of a piece of linen only by a number of twopences
      equal to the number of people that had been employed about it, multiplied
      by the number of days during which they had been so employed. That part of
      the price of the commodity which resolved itself into the wages, would,
      through all the different stages of the manufacture, rise only in
      arithmetical proportion to this rise of wages. But if the profits of all
      the different employers of those working people should be raised five per
      cent. that part of the price of the commodity which resolved itself into
      profit would, through all the different stages of the manufacture, rise in
      geometrical proportion to this rise of profit. The employer of the flax
      dressers would, in selling his flax, require an additional five per cent.
      upon the whole value of the materials and wages which he advanced to his
      workmen. The employer of the spinners would require an additional five per
      cent. both upon the advanced price of the flax, and upon the wages of the
      spinners. And the employer of the weavers would require alike five per
      cent. both upon the advanced price of the linen-yarn, and upon the wages
      of the weavers. In raising the price of commodities, the rise of wages
      operates in the same manner as simple interest does in the accumulation of
      debt. The rise of profit operates like compound interest. Our merchants
      and master manufacturers complain much of the bad effects of high wages in
      raising the price, and thereby lessening the sale of their goods, both at
      home and abroad. They say nothing concerning the bad effects of high
      profits; they are silent with regard to the pernicious effects of their
      own gains; they complain only of those of other people.
    


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


    
      The whole of the advantages and disadvantages of the different employments
      of labour and stock, must, in the same neighbourhood, be either perfectly
      equal, or continually tending to equality. If, in the same neighbourhood,
      there was any employment evidently either more or less advantageous than
      the rest, so many people would crowd into it in the one case, and so many
      would desert it in the other, that its advantages would soon return to the
      level of other employments. This, at least, would be the case in a society
      where things were left to follow their natural course, where there was
      perfect liberty, and where every man was perfectly free both to choose
      what occupation he thought proper, and to change it as often as he thought
      proper. Every man’s interest would prompt him to seek the advantageous,
      and to shun the disadvantageous employment.
    
      Pecuniary wages and profit, indeed, are everywhere in Europe extremely
      different, according to the different employments of labour and stock. But
      this difference arises, partly from certain circumstances in the
      employments themselves, which, either really, or at least in the
      imagination of men, make up for a small pecuniary gain in some, and
      counterbalance a great one in others, and partly from the policy of
      Europe, which nowhere leaves things at perfect liberty.
    
      The particular consideration of those circumstances, and of that policy,
      will divide this Chapter into two parts.
    


    
      PART I. Inequalities arising from the nature of the employments
      themselves.
    
      The five following are the principal circumstances which, so far as I have
      been able to observe, make up for a small pecuniary gain in some
      employments, and counterbalance a great one in others. First, the
      agreeableness or disagreeableness of the employments themselves; secondly,
      the easiness and cheapness, or the difficulty and expense of learning
      them; thirdly, the constancy or inconstancy of employment in them;
      fourthly, the small or great trust which must be reposed in those who
      exercise them; and, fifthly, the probability or improbability of success
      in them.
    
      First, the wages of labour vary with the ease or hardship, the cleanliness
      or dirtiness, the honourableness or dishonourableness, of the employment.
      Thus in most places, take the year round, a journeyman tailor earns less
      than a journeyman weaver. His work is much easier. A journeyman weaver
      earns less than a journeyman smith. His work is not always easier, but it
      is much cleanlier. A journeyman blacksmith, though an artificer, seldom
      earns so much in twelve hours, as a collier, who is only a labourer, does
      in eight. His work is not quite so dirty, is less dangerous, and is
      carried on in day-light, and above ground. Honour makes a great part of
      the reward of all honourable professions. In point of pecuniary gain, all
      things considered, they are generally under-recompensed, as I shall
      endeavour to shew by and by. Disgrace has the contrary effect. The trade
      of a butcher is a brutal and an odious business; but it is in most places
      more profitable than the greater part of common trades. The most
      detestable of all employments, that of public executioner, is, in
      proportion to the quantity of work done, better paid than any common trade
      whatever.
    
      Hunting and fishing, the most important employments of mankind in the rude
      state of society, become, in its advanced state, their most agreeable
      amusements, and they pursue for pleasure what they once followed from
      necessity. In the advanced state of society, therefore, they are all very
      poor people who follow as a trade, what other people pursue as a pastime.
      Fishermen have been so since the time of Theocritus. {See Idyllium xxi.}.
      A poacher is everywhere a very poor man in Great Britain. In countries
      where the rigour of the law suffers no poachers, the licensed hunter is
      not in a much better condition. The natural taste for those employments
      makes more people follow them, than can live comfortably by them; and the
      produce of their labour, in proportion to its quantity, comes always too
      cheap to market, to afford any thing but the most scanty subsistence to
      the labourers.
    
      Disagreeableness and disgrace affect the profits of stock in the same
      manner as the wages of labour. The keeper of an inn or tavern, who is
      never master of his own house, and who is exposed to the brutality of
      every drunkard, exercises neither a very agreeable nor a very creditable
      business. But there is scarce any common trade in which a small stock
      yields so great a profit.
    
      Secondly, the wages of labour vary with the easiness and cheapness, or the
      difficulty and expense, of learning the business.
    
      When any expensive machine is erected, the extraordinary work to be
      performed by it before it is worn out, it must be expected, will replace
      the capital laid out upon it, with at least the ordinary profits. A man
      educated at the expense of much labour and time to any of those
      employments which require extraordinary dexterity and skill, may be
      compared to one of those expensive machines. The work which he learns to
      perform, it must be expected, over and above the usual wages of common
      labour, will replace to him the whole expense of his education, with at
      least the ordinary profits of an equally valuable capital. It must do this
      too in a reasonable time, regard being had to the very uncertain duration
      of human life, in the same manner as to the more certain duration of the
      machine.
    
      The difference between the wages of skilled labour and those of common
      labour, is founded upon this principle.
    
      The policy of Europe considers the labour of all mechanics, artificers,
      and manufacturers, as skilled labour; and that of all country labourers as
      common labour. It seems to suppose that of the former to be of a more nice
      and delicate nature than that of the latter. It is so perhaps in some
      cases; but in the greater part it is quite otherwise, as I shall endeavour
      to shew by and by. The laws and customs of Europe, therefore, in order to
      qualify any person for exercising the one species of labour, impose the
      necessity of an apprenticeship, though with different degrees of rigour in
      different places. They leave the other free and open to every body. During
      the continuance of the apprenticeship, the whole labour of the apprentice
      belongs to his master. In the meantime he must, in many cases, be
      maintained by his parents or relations, and, in almost all cases, must be
      clothed by them. Some money, too, is commonly given to the master for
      teaching him his trade. They who cannot give money, give time, or become
      bound for more than the usual number of years; a consideration which,
      though it is not always advantageous to the master, on account of the
      usual idleness of apprentices, is always disadvantageous to the
      apprentice. In country labour, on the contrary, the labourer, while he is
      employed about the easier, learns the more difficult parts of his
      business, and his own labour maintains him through all the different
      stages of his employment. It is reasonable, therefore, that in Europe the
      wages of mechanics, artificers, and manufacturers, should be somewhat
      higher than those of common labourers. They are so accordingly, and their
      superior gains make them, in most places, be considered as a superior rank
      of people. This superiority, however, is generally very small: the daily
      or weekly earnings of journeymen in the more common sorts of manufactures,
      such as those of plain linen and woollen cloth, computed at an average,
      are, in most places, very little more than the day-wages of common
      labourers. Their employment, indeed, is more steady and uniform, and the
      superiority of their earnings, taking the whole year together, may be
      somewhat greater. It seems evidently, however, to be no greater than what
      is sufficient to compensate the superior expense of their education.
      Education in the ingenious arts, and in the liberal professions, is still
      more tedious and expensive. The pecuniary recompence, therefore, of
      painters and sculptors, of lawyers and physicians, ought to be much more
      liberal; and it is so accordingly.
    
      The profits of stock seem to be very little affected by the easiness or
      difficulty of learning the trade in which it is employed. All the
      different ways in which stock is commonly employed in great towns seem, in
      reality, to be almost equally easy and equally difficult to learn. One
      branch, either of foreign or domestic trade, cannot well be a much more
      intricate business than another.
    
      Thirdly, the wages of labour in different occupations vary with the
      constancy or inconstancy of employment.
    
      Employment is much more constant in some trades than in others. In the
      greater part of manufactures, a journeyman maybe pretty sure of employment
      almost every day in the year that he is able to work. A mason or
      bricklayer, on the contrary, can work neither in hard frost nor in foul
      weather, and his employment at all other times depends upon the occasional
      calls of his customers. He is liable, in consequence, to be frequently
      without any. What he earns, therefore, while he is employed, must not only
      maintain him while he is idle, but make him some compensation for those
      anxious and desponding moments which the thought of so precarious a
      situation must sometimes occasion. Where the computed earnings of the
      greater part of manufacturers, accordingly, are nearly upon a level with
      the day-wages of common labourers, those of masons and bricklayers are
      generally from one-half more to double those wages. Where common labourers
      earn four or five shillings a-week, masons and bricklayers frequently earn
      seven and eight; where the former earn six, the latter often earn nine and
      ten; and where the former earn nine and ten, as in London, the latter
      commonly earn fifteen and eighteen. No species of skilled labour, however,
      seems more easy to learn than that of masons and bricklayers. Chairmen in
      London, during the summer season, are said sometimes to be employed as
      bricklayers. The high wages of those workmen, therefore, are not so much
      the recompence of their skill, as the compensation for the inconstancy of
      their employment.
    
      A house-carpenter seems to exercise rather a nicer and a more ingenious
      trade than a mason. In most places, however, for it is not universally so,
      his day-wages are somewhat lower. His employment, though it depends much,
      does not depend so entirely upon the occasional calls of his customers;
      and it is not liable to be interrupted by the weather.
    
      When the trades which generally afford constant employment, happen in a
      particular place not to do so, the wages of the workmen always rise a good
      deal above their ordinary proportion to those of common labour. In London,
      almost all journeymen artificers are liable to be called upon and
      dismissed by their masters from day to day, and from week to week, in the
      same manner as day-labourers in other places. The lowest order of
      artificers, journeymen tailors, accordingly, earn their half-a-crown
      a-day, though eighteen pence may be reckoned the wages of common labour.
      In small towns and country villages, the wages of journeymen tailors
      frequently scarce equal those of common labour; but in London they are
      often many weeks without employment, particularly during the summer.
    
      When the inconstancy of employment is combined with the hardship,
      disagreeableness, and dirtiness of the work, it sometimes raises the wages
      of the most common labour above those of the most skilful artificers. A
      collier working by the piece is supposed, at Newcastle, to earn commonly
      about double, and, in many parts of Scotland, about three times, the wages
      of common labour. His high wages arise altogether from the hardship,
      disagreeableness, and dirtiness of his work. His employment may, upon most
      occasions, be as constant as he pleases. The coal-heavers in London
      exercise a trade which, in hardship, dirtiness, and disagreeableness,
      almost equals that of colliers; and, from the unavoidable irregularity in
      the arrivals of coal-ships, the employment of the greater part of them is
      necessarily very inconstant. If colliers, therefore, commonly earn double
      and triple the wages of common labour, it ought not to seem unreasonable
      that coal-heavers should sometimes earn four and five times those wages.
      In the inquiry made into their condition a few years ago, it was found
      that, at the rate at which they were then paid, they could earn from six
      to ten shillings a-day. Six shillings are about four times the wages of
      common labour in London; and, in every particular trade, the lowest common
      earnings may always be considered as those of the far greater number. How
      extravagant soever those earnings may appear, if they were more than
      sufficient to compensate all the disagreeable circumstances of the
      business, there would soon be so great a number of competitors, as, in a
      trade which has no exclusive privilege, would quickly reduce them to a
      lower rate.
    
      The constancy or inconstancy of employment cannot affect the ordinary
      profits of stock in any particular trade. Whether the stock is or is not
      constantly employed, depends, not upon the trade, but the trader.
    
      Fourthly, the wages of labour vary according to the small or great trust
      which must be reposed in the workmen.
    
      The wages of goldsmiths and jewellers are everywhere superior to those of
      many other workmen, not only of equal, but of much superior ingenuity, on
      account of the precious materials with which they are entrusted. We trust
      our health to the physician, our fortune, and sometimes our life and
      reputation, to the lawyer and attorney. Such confidence could not safely
      be reposed in people of a very mean or low condition. Their reward must be
      such, therefore, as may give them that rank in the society which so
      important a trust requires. The long time and the great expense which must
      be laid out in their education, when combined with this circumstance,
      necessarily enhance still further the price of their labour.
    
      When a person employs only his own stock in trade, there is no trust; and
      the credit which he may get from other people, depends, not upon the
      nature of the trade, but upon their opinion of his fortune, probity and
      prudence. The different rates of profit, therefore, in the different
      branches of trade, cannot arise from the different degrees of trust
      reposed in the traders.
    
      Fifthly, the wages of labour in different employments vary according to
      the probability or improbability of success in them.
    
      The probability that any particular person shall ever be qualified for the
      employments to which he is educated, is very different in different
      occupations. In the greatest part of mechanic trades success is almost
      certain; but very uncertain in the liberal professions. Put your son
      apprentice to a shoemaker, there is little doubt of his learning to make a
      pair of shoes; but send him to study the law, it as at least twenty to one
      if he ever makes such proficiency as will enable him to live by the
      business. In a perfectly fair lottery, those who draw the prizes ought to
      gain all that is lost by those who draw the blanks. In a profession, where
      twenty fail for one that succeeds, that one ought to gain all that should
      have been gained by the unsuccessful twenty. The counsellor at law, who,
      perhaps, at near forty years of age, begins to make something by his
      profession, ought to receive the retribution, not only of his own so
      tedious and expensive education, but of that of more than twenty others,
      who are never likely to make any thing by it. How extravagant soever the
      fees of counsellors at law may sometimes appear, their real retribution is
      never equal to this. Compute, in any particular place, what is likely to
      be annually gained, and what is likely to be annually spent, by all the
      different workmen in any common trade, such as that of shoemakers or
      weavers, and you will find that the former sum will generally exceed the
      latter. But make the same computation with regard to all the counsellors
      and students of law, in all the different Inns of Court, and you will find
      that their annual gains bear but a very small proportion to their annual
      expense, even though you rate the former as high, and the latter as low,
      as can well be done. The lottery of the law, therefore, is very far from
      being a perfectly fair lottery; and that as well as many other liberal and
      honourable professions, is, in point of pecuniary gain, evidently
      under-recompensed.
    
      Those professions keep their level, however, with other occupations; and,
      notwithstanding these discouragements, all the most generous and liberal
      spirits are eager to crowd into them. Two different causes contribute to
      recommend them. First, the desire of the reputation which attends upon
      superior excellence in any of them; and, secondly, the natural confidence
      which every man has, more or less, not only in his own abilities, but in
      his own good fortune.
    
      To excel in any profession, in which but few arrive at mediocrity, is the
      most decisive mark of what is called genius, or superior talents. The
      public admiration which attends upon such distinguished abilities makes
      always a part of their reward; a greater or smaller, in proportion as it
      is higher or lower in degree. It makes a considerable part of that reward
      in the profession of physic; a still greater, perhaps, in that of law; in
      poetry and philosophy it makes almost the whole.
    
      There are some very agreeable and beautiful talents, of which the
      possession commands a certain sort of admiration, but of which the
      exercise, for the sake of gain, is considered, whether from reason or
      prejudice, as a sort of public prostitution. The pecuniary recompence,
      therefore, of those who exercise them in this manner, must be sufficient,
      not only to pay for the time, labour, and expense of acquiring the
      talents, but for the discredit which attends the employment of them as the
      means of subsistence. The exorbitant rewards of players, opera-singers,
      opera-dancers, etc. are founded upon those two principles; the rarity and
      beauty of the talents, and the discredit of employing them in this manner.
      It seems absurd at first sight, that we should despise their persons, and
      yet reward their talents with the most profuse liberality. While we do the
      one, however, we must of necessity do the other, Should the public opinion
      or prejudice ever alter with regard to such occupations, their pecuniary
      recompence would quickly diminish. More people would apply to them, and
      the competition would quickly reduce the price of their labour. Such
      talents, though far from being common, are by no means so rare as
      imagined. Many people possess them in great perfection, who disdain to
      make this use of them; and many more are capable of acquiring them, if any
      thing could be made honourably by them.
    
      The over-weening conceit which the greater part of men have of their own
      abilities, is an ancient evil remarked by the philosophers and moralists
      of all ages. Their absurd presumption in their own good fortune has been
      less taken notice of. It is, however, if possible, still more universal.
      There is no man living, who, when in tolerable health and spirits, has not
      some share of it. The chance of gain is by every man more or less
      over-valued, and the chance of loss is by most men under-valued, and by
      scarce any man, who is in tolerable health and spirits, valued more than
      it is worth.
    
      That the chance of gain is naturally overvalued, we may learn from the
      universal success of lotteries. The world neither ever saw, nor ever will
      see, a perfectly fair lottery, or one in which the whole gain compensated
      the whole loss; because the undertaker could make nothing by it. In the
      state lotteries, the tickets are really not worth the price which is paid
      by the original subscribers, and yet commonly sell in the market for
      twenty, thirty, and sometimes forty per cent. advance. The vain hopes of
      gaining some of the great prizes is the sole cause of this demand. The
      soberest people scarce look upon it as a folly to pay a small sum for the
      chance of gaining ten or twenty thousand pounds, though they know that
      even that small sum is perhaps twenty or thirty per cent. more than the
      chance is worth. In a lottery in which no prize exceeded twenty pounds,
      though in other respects it approached much nearer to a perfectly fair one
      than the common state lotteries, there would not be the same demand for
      tickets. In order to have a better chance for some of the great prizes,
      some people purchase several tickets; and others, small shares in a still
      greater number. There is not, however, a more certain proposition in
      mathematics, than that the more tickets you adventure upon, the more
      likely you are to be a loser. Adventure upon all the tickets in the
      lottery, and you lose for certain; and the greater the number of your
      tickets, the nearer you approach to this certainty.
    
      That the chance of loss is frequently undervalued, and scarce ever valued
      more than it is worth, we may learn from the very moderate profit of
      insurers. In order to make insurance, either from fire or sea-risk, a
      trade at all, the common premium must be sufficient to compensate the
      common losses, to pay the expense of management, and to afford such a
      profit as might have been drawn from an equal capital employed in any
      common trade. The person who pays no more than this, evidently pays no
      more than the real value of the risk, or the lowest price at which he can
      reasonably expect to insure it. But though many people have made a little
      money by insurance, very few have made a great fortune; and, from this
      consideration alone, it seems evident enough that the ordinary balance of
      profit and loss is not more advantageous in this than in other common
      trades, by which so many people make fortunes. Moderate, however, as the
      premium of insurance commonly is, many people despise the risk too much to
      care to pay it. Taking the whole kingdom at an average, nineteen houses in
      twenty, or rather, perhaps, ninety-nine in a hundred, are not insured from
      fire. Sea-risk is more alarming to the greater part of people; and the
      proportion of ships insured to those not insured is much greater. Many
      sail, however, at all seasons, and even in time of war, without any
      insurance. This may sometimes, perhaps, be done without any imprudence.
      When a great company, or even a great merchant, has twenty or thirty ships
      at sea, they may, as it were, insure one another. The premium saved up on
      them all may more than compensate such losses as they are likely to meet
      with in the common course of chances. The neglect of insurance upon
      shipping, however, in the same manner as upon houses, is, in most cases,
      the effect of no such nice calculation, but of mere thoughtless rashness,
      and presumptuous contempt of the risk.
    
      The contempt of risk, and the presumptuous hope of success, are in no
      period of life more active than at the age at which young people choose
      their professions. How little the fear of misfortune is then capable of
      balancing the hope of good luck, appears still more evidently in the
      readiness of the common people to enlist as soldiers, or to go to sea,
      than in the eagerness of those of better fashion to enter into what are
      called the liberal professions.
    
      What a common soldier may lose is obvious enough. Without regarding the
      danger, however, young volunteers never enlist so readily as at the
      beginning of a new war; and though they have scarce any chance of
      preferment, they figure to themselves, in their youthful fancies, a
      thousand occasions of acquiring honour and distinction which never occur.
      These romantic hopes make the whole price of their blood. Their pay is
      less than that of common labourers, and, in actual service, their fatigues
      are much greater.
    
      The lottery of the sea is not altogether so disadvantageous as that of the
      army. The son of a creditable labourer or artificer may frequently go to
      sea with his father’s consent; but if he enlists as a soldier, it is
      always without it. Other people see some chance of his making something by
      the one trade; nobody but himself sees any of his making any thing by the
      other. The great admiral is less the object of public admiration than the
      great general; and the highest success in the sea service promises a less
      brilliant fortune and reputation than equal success in the land. The same
      difference runs through all the inferior degrees of preferment in both. By
      the rules of precedency, a captain in the navy ranks with a colonel in the
      army; but he does not rank with him in the common estimation. As the great
      prizes in the lottery are less, the smaller ones must be more numerous.
      Common sailors, therefore, more frequently get some fortune and preferment
      than common soldiers; and the hope of those prizes is what principally
      recommends the trade. Though their skill and dexterity are much superior
      to that of almost any artificers; and though their whole life is one
      continual scene of hardship and danger; yet for all this dexterity and
      skill, for all those hardships and dangers, while they remain in the
      condition of common sailors, they receive scarce any other recompence but
      the pleasure of exercising the one and of surmounting the other. Their
      wages are not greater than those of common labourers at the port which
      regulates the rate of seamen’s wages. As they are continually going from
      port to port, the monthly pay of those who sail from all the different
      ports of Great Britain, is more nearly upon a level than that of any other
      workmen in those different places; and the rate of the port to and from
      which the greatest number sail, that is, the port of London, regulates
      that of all the rest. At London, the wages of the greater part of the
      different classes of workmen are about double those of the same classes at
      Edinburgh. But the sailors who sail from the port of London, seldom earn
      above three or four shillings a month more than those who sail from the
      port of Leith, and the difference is frequently not so great. In time of
      peace, and in the merchant-service, the London price is from a guinea to
      about seven-and-twenty shillings the calendar month. A common labourer in
      London, at the rate of nine or ten shillings a week, may earn in the
      calendar month from forty to five-and-forty shillings. The sailor, indeed,
      over and above his pay, is supplied with provisions. Their value, however,
      may not perhaps always exceed the difference between his pay and that of
      the common labourer; and though it sometimes should, the excess will not
      be clear gain to the sailor, because he cannot share it with his wife and
      family, whom he must maintain out of his wages at home.
    
      The dangers and hair-breadth escapes of a life of adventures, instead of
      disheartening young people, seem frequently to recommend a trade to them.
      A tender mother, among the inferior ranks of people, is often afraid to
      send her son to school at a sea-port town, lest the sight of the ships,
      and the conversation and adventures of the sailors, should entice him to
      go to sea. The distant prospect of hazards, from which we can hope to
      extricate ourselves by courage and address, is not disagreeable to us, and
      does not raise the wages of labour in any employment. It is otherwise with
      those in which courage and address can be of no avail. In trades which are
      known to be very unwholesome, the wages of labour are always remarkably
      high. Unwholesomeness is a species of disagreeableness, and its effects
      upon the wages of labour are to be ranked under that general head.
    
      In all the different employments of stock, the ordinary rate of profit
      varies more or less with the certainty or uncertainty of the returns.
      These are, in general, less uncertain in the inland than in the foreign
      trade, and in some branches of foreign trade than in others; in the trade
      to North America, for example, than in that to Jamaica. The ordinary rate
      of profit always rises more or less with the risk. It does not, however,
      seem to rise in proportion to it, or so as to compensate it completely.
      Bankruptcies are most frequent in the most hazardous trades. The most
      hazardous of all trades, that of a smuggler, though, when the adventure
      succeeds, it is likewise the most profitable, is the infallible road to
      bankruptcy. The presumptuous hope of success seems to act here as upon all
      other occasions, and to entice so many adventurers into those hazardous
      trades, that their competition reduces the profit below what is sufficient
      to compensate the risk. To compensate it completely, the common returns
      ought, over and above the ordinary profits of stock, not only to make up
      for all occasional losses, but to afford a surplus profit to the
      adventurers, of the same nature with the profit of insurers. But if the
      common returns were sufficient for all this, bankruptcies would not be
      more frequent in these than in other trades.
    
      Of the five circumstances, therefore, which vary the wages of labour, two
      only affect the profits of stock; the agreeableness or disagreeableness of
      the business, and the risk or security with which it is attended. In point
      of agreeableness or disagreeableness, there is little or no difference in
      the far greater part of the different employments of stock, but a great
      deal in those of labour; and the ordinary profit of stock, though it rises
      with the risk, does not always seem to rise in proportion to it. It should
      follow from all this, that, in the same society or neighbourhood, the
      average and ordinary rates of profit in the different employments of stock
      should be more nearly upon a level than the pecuniary wages of the
      different sorts of labour.
    
      They are so accordingly. The difference between the earnings of a common
      labourer and those of a well employed lawyer or physician, is evidently
      much greater than that between the ordinary profits in any two different
      branches of trade. The apparent difference, besides, in the profits of
      different trades, is generally a deception arising from our not always
      distinguishing what ought to be considered as wages, from what ought to be
      considered as profit.
    
      Apothecaries’ profit is become a bye-word, denoting something uncommonly
      extravagant. This great apparent profit, however, is frequently no more
      than the reasonable wages of labour. The skill of an apothecary is a much
      nicer and more delicate matter than that of any artificer whatever; and
      the trust which is reposed in him is of much greater importance. He is the
      physician of the poor in all cases, and of the rich when the distress or
      danger is not very great. His reward, therefore, ought to be suitable to
      his skill and his trust; and it arises generally from the price at which
      he sells his drugs. But the whole drugs which the best employed apothecary
      in a large market-town, will sell in a year, may not perhaps cost him
      above thirty or forty pounds. Though he should sell them, therefore, for
      three or four hundred, or at a thousand per cent. profit, this may
      frequently be no more than the reasonable wages of his labour, charged, in
      the only way in which he can charge them, upon the price of his drugs. The
      greater part of the apparent profit is real wages disguised in the garb of
      profit.
    
      In a small sea-port town, a little grocer will make forty or fifty per
      cent. upon a stock of a single hundred pounds, while a considerable
      wholesale merchant in the same place will scarce make eight or ten per
      cent. upon a stock of ten thousand. The trade of the grocer may be
      necessary for the conveniency of the inhabitants, and the narrowness of
      the market may not admit the employment of a larger capital in the
      business. The man, however, must not only live by his trade, but live by
      it suitably to the qualifications which it requires. Besides possessing a
      little capital, he must be able to read, write, and account and must be a
      tolerable judge, too, of perhaps fifty or sixty different sorts of goods,
      their prices, qualities, and the markets where they are to be had
      cheapest. He must have all the knowledge, in short, that is necessary for
      a great merchant, which nothing hinders him from becoming but the want of
      a sufficient capital. Thirty or forty pounds a year cannot be considered
      as too great a recompence for the labour of a person so accomplished.
      Deduct this from the seemingly great profits of his capital, and little
      more will remain, perhaps, than the ordinary profits of stock. The greater
      part of the apparent profit is, in this case too, real wages.
    
      The difference between the apparent profit of the retail and that of the
      wholesale trade, is much less in the capital than in small towns and
      country villages. Where ten thousand pounds can be employed in the grocery
      trade, the wages of the grocer’s labour must be a very trifling addition
      to the real profits of so great a stock. The apparent profits of the
      wealthy retailer, therefore, are there more nearly upon a level with those
      of the wholesale merchant. It is upon this account that goods sold by
      retail are generally as cheap, and frequently much cheaper, in the capital
      than in small towns and country villages. Grocery goods, for example, are
      generally much cheaper; bread and butchers’ meat frequently as cheap. It
      costs no more to bring grocery goods to the great town than to the country
      village; but it costs a great deal more to bring corn and cattle, as the
      greater part of them must be brought from a much greater distance. The
      prime cost of grocery goods, therefore, being the same in both places,
      they are cheapest where the least profit is charged upon them. The prime
      cost of bread and butchers’ meat is greater in the great town than in the
      country village; and though the profit is less, therefore they are not
      always cheaper there, but often equally cheap. In such articles as bread
      and butchers’ meat, the same cause which diminishes apparent profit,
      increases prime cost. The extent of the market, by giving employment to
      greater stocks, diminishes apparent profit; but by requiring supplies from
      a greater distance, it increases prime cost. This diminution of the one
      and increase of the other, seem, in most cases, nearly to counterbalance
      one another; which is probably the reason that, though the prices of corn
      and cattle are commonly very different in different parts of the kingdom,
      those of bread and butchers’ meat are generally very nearly the same
      through the greater part of it.
    
      Though the profits of stock, both in the wholesale and retail trade, are
      generally less in the capital than in small towns and country villages,
      yet great fortunes are frequently acquired from small beginnings in the
      former, and scarce ever in the latter. In small towns and country
      villages, on account of the narrowness of the market, trade cannot always
      be extended as stock extends. In such places, therefore, though the rate
      of a particular person’s profits may be very high, the sum or amount of
      them can never be very great, nor consequently that of his annual
      accumulation. In great towns, on the contrary, trade can be extended as
      stock increases, and the credit of a frugal and thriving man increases
      much faster than his stock. His trade is extended in proportion to the
      amount of both; and the sum or amount of his profits is in proportion to
      the extent of his trade, and his annual accumulation in proportion to the
      amount of his profits. It seldom happens, however, that great fortunes are
      made, even in great towns, by any one regular, established, and well-known
      branch of business, but in consequence of a long life of industry,
      frugality, and attention. Sudden fortunes, indeed, are sometimes made in
      such places, by what is called the trade of speculation. The speculative
      merchant exercises no one regular, established, or well-known branch of
      business. He is a corn merchant this year, and a wine merchant the next,
      and a sugar, tobacco, or tea merchant the year after. He enters into every
      trade, when he foresees that it is likely to be more than commonly
      profitable, and he quits it when he foresees that its profits are likely
      to return to the level of other trades. His profits and losses, therefore,
      can bear no regular proportion to those of any one established and
      well-known branch of business. A bold adventurer may sometimes acquire a
      considerable fortune by two or three successful speculations, but is just
      as likely to lose one by two or three unsuccessful ones. This trade can be
      carried on nowhere but in great towns. It is only in places of the most
      extensive commerce and correspondence that the intelligence requisite for
      it can be had.
    
      The five circumstances above mentioned, though they occasion considerable
      inequalities in the wages of labour and profits of stock, occasion none in
      the whole of the advantages and disadvantages, real or imaginary, of the
      different employments of either. The nature of those circumstances is
      such, that they make up for a small pecuniary gain in some, and
      counterbalance a great one in others.
    
      In order, however, that this equality may take place in the whole of their
      advantages or disadvantages, three things are requisite, even where there
      is the most perfect freedom. First the employments must be well known and
      long established in the neighbourhood; secondly, they must be in their
      ordinary, or what may be called their natural state; and, thirdly, they
      must be the sole or principal employments of those who occupy them.
    
      First, this equality can take place only in those employments which are
      well known, and have been long established in the neighbourhood.
    
      Where all other circumstances are equal, wages are generally higher in new
      than in old trades. When a projector attempts to establish a new
      manufacture, he must at first entice his workmen from other employments,
      by higher wages than they can either earn in their own trades, or than the
      nature of his work would otherwise require; and a considerable time must
      pass away before he can venture to reduce them to the common level.
      Manufactures for which the demand arises altogether from fashion and
      fancy, are continually changing, and seldom last long enough to be
      considered as old established manufactures. Those, on the contrary, for
      which the demand arises chiefly from use or necessity, are less liable to
      change, and the same form or fabric may continue in demand for whole
      centuries together. The wages of labour, therefore, are likely to be
      higher in manufactures of the former, than in those of the latter kind.
      Birmingham deals chiefly in manufactures of the former kind; Sheffield in
      those of the latter; and the wages of labour in those two different places
      are said to be suitable to this difference in the nature of their
      manufactures.
    
      The establishment of any new manufacture, of any new branch of commerce,
      or of any new practice in agriculture, is always a speculation from which
      the projector promises himself extraordinary profits. These profits
      sometimes are very great, and sometimes, more frequently, perhaps, they
      are quite otherwise; but, in general, they bear no regular proportion to
      those of other old trades in the neighbourhood. If the project succeeds,
      they are commonly at first very high. When the trade or practice becomes
      thoroughly established and well known, the competition reduces them to the
      level of other trades.
    
      Secondly, this equality in the whole of the advantages and disadvantages
      of the different employments of labour and stock, can take place only in
      the ordinary, or what may be called the natural state of those
      employments.
    
      The demand for almost every different species of labour is sometimes
      greater, and sometimes less than usual. In the one case, the advantages of
      the employment rise above, in the other they fall below the common level.
      The demand for country labour is greater at hay-time and harvest than
      during the greater part of the year; and wages rise with the demand. In
      time of war, when forty or fifty thousand sailors are forced from the
      merchant service into that of the king, the demand for sailors to merchant
      ships necessarily rises with their scarcity; and their wages, upon such
      occasions, commonly rise from a guinea and seven-and-twenty shillings to
      forty shillings and three pounds a-month. In a decaying manufacture, on
      the contrary, many workmen, rather than quit their own trade, are
      contented with smaller wages than would otherwise be suitable to the
      nature of their employment.
    
      The profits of stock vary with the price of the commodities in which it is
      employed. As the price of any commodity rises above the ordinary or
      average rate, the profits of at least some part of the stock that is
      employed in bringing it to market, rise above their proper level, and as
      it falls they sink below it. All commodities are more or less liable to
      variations of price, but some are much more so than others. In all
      commodities which are produced by human industry, the quantity of industry
      annually employed is necessarily regulated by the annual demand, in such a
      manner that the average annual produce may, as nearly as possible, be
      equal to the average annual consumption. In some employments, it has
      already been observed, the same quantity of industry will always produce
      the same, or very nearly the same quantity of commodities. In the linen or
      woollen manufactures, for example, the same number of hands will annually
      work up very nearly the same quantity of linen and woollen cloth. The
      variations in the market price of such commodities, therefore, can arise
      only from some accidental variation in the demand. A public mourning
      raises the price of black cloth. But as the demand for most sorts of plain
      linen and woollen cloth is pretty uniform, so is likewise the price. But
      there are other employments in which the same quantity of industry will
      not always produce the same quantity of commodities. The same quantity of
      industry, for example, will, in different years, produce very different
      quantities of corn, wine, hops, sugar tobacco, etc. The price of such
      commodities, therefore, varies not only with the variations of demand, but
      with the much greater and more frequent variations of quantity, and is
      consequently extremely fluctuating; but the profit of some of the dealers
      must necessarily fluctuate with the price of the commodities. The
      operations of the speculative merchant are principally employed about such
      commodities. He endeavours to buy them up when he foresees that their
      price is likely to rise, and to sell them when it is likely to fall.
    
      Thirdly, this equality in the whole of the advantages and disadvantages of
      the different employments of labour and stock, can take place only in such
      as are the sole or principal employments of those who occupy them.
    
      When a person derives his subsistence from one employment, which does not
      occupy the greater part of his time, in the intervals of his leisure he is
      often willing to work at another for less wages than would otherwise suit
      the nature of the employment.
    
      There still subsists, in many parts of Scotland, a set of people called
      cottars or cottagers, though they were more frequent some years ago than
      they are now. They are a sort of out-servants of the landlords and
      farmers. The usual reward which they receive from their master is a house,
      a small garden for pot-herbs, as much grass as will feed a cow, and,
      perhaps, an acre or two of bad arable land. When their master has occasion
      for their labour, he gives them, besides, two pecks of oatmeal a-week,
      worth about sixteen pence sterling. During a great part of the year, he
      has little or no occasion for their labour, and the cultivation of their
      own little possession is not sufficient to occupy the time which is left
      at their own disposal. When such occupiers were more numerous than they
      are at present, they are said to have been willing to give their spare
      time for a very small recompence to any body, and to have wrought for less
      wages than other labourers. In ancient times, they seem to have been
      common all over Europe. In countries ill cultivated, and worse inhabited,
      the greater part of landlords and farmers could not otherwise provide
      themselves with the extraordinary number of hands which country labour
      requires at certain seasons. The daily or weekly recompence which such
      labourers occasionally received from their masters, was evidently not the
      whole price of their labour. Their small tenement made a considerable part
      of it. This daily or weekly recompence, however, seems to have been
      considered as the whole of it, by many writers who have collected the
      prices of labour and provisions in ancient times, and who have taken
      pleasure in representing both as wonderfully low.
    
      The produce of such labour comes frequently cheaper to market than would
      otherwise be suitable to its nature. Stockings, in many parts of Scotland,
      are knit much cheaper than they can anywhere be wrought upon the loom.
      They are the work of servants and labourers who derive the principal part
      of their subsistence from some other employment. More than a thousand pair
      of Shetland stockings are annually imported into Leith, of which the price
      is from fivepence to seven-pence a pair. At Lerwick, the small capital of
      the Shetland islands, tenpence a-day, I have been assured, is a common
      price of common labour. In the same islands, they knit worsted stockings
      to the value of a guinea a pair and upwards.
    
      The spinning of linen yarn is carried on in Scotland nearly in the same
      way as the knitting of stockings, by servants, who are chiefly hired for
      other purposes. They earn but a very scanty subsistence, who endeavour to
      get their livelihood by either of those trades. In most parts of Scotland,
      she is a good spinner who can earn twentypence a-week.
    
      In opulent countries, the market is generally so extensive, that any one
      trade is sufficient to employ the whole labour and stock of those who
      occupy it. Instances of people living by one employment, and, at the same
      time, deriving some little advantage from another, occur chiefly in poor
      countries. The following instance, however, of something of the same kind,
      is to be found in the capital of a very rich one. There is no city in
      Europe, I believe, in which house-rent is dearer than in London, and yet I
      know no capital in which a furnished apartment can be hired so cheap.
      Lodging is not only much cheaper in London than in Paris; it is much
      cheaper than in Edinburgh, of the same degree of goodness; and, what may
      seem extraordinary, the dearness of house-rent is the cause of the
      cheapness of lodging. The dearness of house-rent in London arises, not
      only from those causes which render it dear in all great capitals, the
      dearness of labour, the dearness of all the materials of building, which
      must generally be brought from a great distance, and, above all, the
      dearness of ground-rent, every landlord acting the part of a monopolist,
      and frequently exacting a higher rent for a single acre of bad land in a
      town, than can be had for a hundred of the best in the country; but it
      arises in part from the peculiar manners and customs of the people, which
      oblige every master of a family to hire a whole house from top to bottom.
      A dwelling-house in England means every thing that is contained under the
      same roof. In France, Scotland, and many other parts of Europe, it
      frequently means no more than a single storey. A tradesman in London is
      obliged to hire a whole house in that part of the town where his customers
      live. His shop is upon the ground floor, and he and his family sleep in
      the garret; and he endeavours to pay a part of his house-rent by letting
      the two middle storeys to lodgers. He expects to maintain his family by
      his trade, and not by his lodgers. Whereas at Paris and Edinburgh, people
      who let lodgings have commonly no other means of subsistence; and the
      price of the lodging must pay, not only the rent of the house, but the
      whole expense of the family.
    


    
      PART II.—Inequalities occasioned by the Policy of Europe.
    
      Such are the inequalities in the whole of the advantages and disadvantages
      of the different employments of labour and stock, which the defect of any
      of the three requisites above mentioned must occasion, even where there is
      the most perfect liberty. But the policy of Europe, by not leaving things
      at perfect liberty, occasions other inequalities of much greater
      importance.
    
      It does this chiefly in the three following ways. First, by restraining
      the competition in some employments to a smaller number than would
      otherwise be disposed to enter into them; secondly, by increasing it in
      others beyond what it naturally would be; and, thirdly, by obstructing the
      free circulation of labour and stock, both from employment to employment,
      and from place to place.
    
      First, The policy of Europe occasions a very important inequality in the
      whole of the advantages and disadvantages of the different employments of
      labour and stock, by restraining the competition in some employments to a
      smaller number than might otherwise be disposed to enter into them.
    
      The exclusive privileges of corporations are the principal means it makes
      use of for this purpose.
    
      The exclusive privilege of an incorporated trade necessarily restrains the
      competition, in the town where it is established, to those who are free of
      the trade. To have served an apprenticeship in the town, under a master
      properly qualified, is commonly the necessary requisite for obtaining this
      freedom. The bye-laws of the corporation regulate sometimes the number of
      apprentices which any master is allowed to have, and almost always the
      number of years which each apprentice is obliged to serve. The intention
      of both regulations is to restrain the competition to a much smaller
      number than might otherwise be disposed to enter into the trade. The
      limitation of the number of apprentices restrains it directly. A long term
      of apprenticeship restrains it more indirectly, but as effectually, by
      increasing the expense of education.
    
      In Sheffield, no master cutler can have more than one apprentice at a
      time, by a bye-law of the corporation. In Norfolk and Norwich, no master
      weaver can have more than two apprentices, under pain of forfeiting five
      pounds a-month to the king. No master hatter can have more than two
      apprentices anywhere in England, or in the English plantations, under pain
      of forfeiting; five pounds a-month, half to the king, and half to him who
      shall sue in any court of record. Both these regulations, though they have
      been confirmed by a public law of the kingdom, are evidently dictated by
      the same corporation-spirit which enacted the bye-law of Sheffield. The
      silk-weavers in London had scarce been incorporated a year, when they
      enacted a bye-law, restraining any master from having more than two
      apprentices at a time. It required a particular act of parliament to
      rescind this bye-law.
    
      Seven years seem anciently to have been, all over Europe, the usual term
      established for the duration of apprenticeships in the greater part of
      incorporated trades. All such incorporations were anciently called
      universities, which, indeed, is the proper Latin name for any
      incorporation whatever. The university of smiths, the university of
      tailors, etc. are expressions which we commonly meet with in the old
      charters of ancient towns. When those particular incorporations, which are
      now peculiarly called universities, were first established, the term of
      years which it was necessary to study, in order to obtain the degree of
      master of arts, appears evidently to have been copied from the term of
      apprenticeship in common trades, of which the incorporations were much
      more ancient. As to have wrought seven years under a master properly
      qualified, was necessary, in order to entitle any person to become a
      master, and to have himself apprentices in a common trade; so to have
      studied seven years under a master properly qualified, was necessary to
      entitle him to become a master, teacher, or doctor (words anciently
      synonymous), in the liberal arts, and to have scholars or apprentices
      (words likewise originally synonymous) to study under him.
    
      By the 5th of Elizabeth, commonly called the Statute of Apprenticeship, it
      was enacted, that no person should, for the future, exercise any trade,
      craft, or mystery, at that time exercised in England, unless he had
      previously served to it an apprenticeship of seven years at least; and
      what before had been the bye-law of many particular corporations, became
      in England the general and public law of all trades carried on in market
      towns. For though the words of the statute are very general, and seem
      plainly to include the whole kingdom, by interpretation its operation has
      been limited to market towns; it having been held that, in country
      villages, a person may exercise several different trades, though he has
      not served a seven years apprenticeship to each, they being necessary for
      the conveniency of the inhabitants, and the number of people frequently
      not being sufficient to supply each with a particular set of hands. By a
      strict interpretation of the words, too, the operation of this statute has
      been limited to those trades which were established in England before the
      5th of Elizabeth, and has never been extended to such as have been
      introduced since that time. This limitation has given occasion to several
      distinctions, which, considered as rules of police, appear as foolish as
      can well be imagined. It has been adjudged, for example, that a
      coach-maker can neither himself make nor employ journeymen to make his
      coach-wheels, but must buy them of a master wheel-wright; this latter
      trade having been exercised in England before the 5th of Elizabeth. But a
      wheel-wright, though he has never served an apprenticeship to a
      coachmaker, may either himself make or employ journeymen to make coaches;
      the trade of a coachmaker not being within the statute, because not
      exercised in England at the time when it was made. The manufactures of
      Manchester, Birmingham, and Wolverhampton, are many of them, upon this
      account, not within the statute, not having been exercised in England
      before the 5th of Elizabeth.
    
      In France, the duration of apprenticeships is different in different towns
      and in different trades. In Paris, five years is the term required in a
      great number; but, before any person can be qualified to exercise the
      trade as a master, he must, in many of them, serve five years more as a
      journeyman. During this latter term, he is called the companion of his
      master, and the term itself is called his companionship.
    
      In Scotland, there is no general law which regulates universally the
      duration of apprenticeships. The term is different in different
      corporations. Where it is long, a part of it may generally be redeemed by
      paying a small fine. In most towns, too, a very small fine is sufficient
      to purchase the freedom of any corporation. The weavers of linen and
      hempen cloth, the principal manufactures of the country, as well as all
      other artificers subservient to them, wheel-makers, reel-makers, etc. may
      exercise their trades in any town-corporate without paying any fine. In
      all towns-corporate, all persons are free to sell butchers’ meat upon any
      lawful day of the week. Three years is, in Scotland, a common term of
      apprenticeship, even in some very nice trades; and, in general, I know of
      no country in Europe, in which corporation laws are so little oppressive.
    
      The property which every man has in his own labour, as it is the original
      foundation of all other property, so it is the most sacred and inviolable.
      The patrimony of a poor man lies in the strength and dexterity of his
      hands; and to hinder him from employing this strength and dexterity in
      what manner he thinks proper, without injury to his neighbour, is a plain
      violation of this most sacred property. It is a manifest encroachment upon
      the just liberty, both of the workman, and of those who might be disposed
      to employ him. As it hinders the one from working at what he thinks
      proper, so it hinders the others from employing whom they think proper. To
      judge whether he is fit to be employed, may surely be trusted to the
      discretion of the employers, whose interest it so much concerns. The
      affected anxiety of the lawgiver, lest they should employ an improper
      person, is evidently as impertinent as it is oppressive.
    
      The institution of long apprenticeships can give no security that
      insufficient workmanship shall not frequently be exposed to public sale.
      When this is done, it is generally the effect of fraud, and not of
      inability; and the longest apprenticeship can give no security against
      fraud. Quite different regulations are necessary to prevent this abuse.
      The sterling mark upon plate, and the stamps upon linen and woollen cloth,
      give the purchaser much greater security than any statute of
      apprenticeship. He generally looks at these, but never thinks it worth
      while to enquire whether the workman had served a seven years
      apprenticeship.
    
      The institution of long apprenticeships has no tendency to form young
      people to industry. A journeyman who works by the piece is likely to be
      industrious, because he derives a benefit from every exertion of his
      industry. An apprentice is likely to be idle, and almost always is so,
      because he has no immediate interest to be otherwise. In the inferior
      employments, the sweets of labour consist altogether in the recompence of
      labour. They who are soonest in a condition to enjoy the sweets of it, are
      likely soonest to conceive a relish for it, and to acquire the early habit
      of industry. A young man naturally conceives an aversion to labour, when
      for a long time he receives no benefit from it. The boys who are put out
      apprentices from public charities are generally bound for more than the
      usual number of years, and they generally turn out very idle and
      worthless.
    
      Apprenticeships were altogether unknown to the ancients. The reciprocal
      duties of master and apprentice make a considerable article in every
      modern code. The Roman law is perfectly silent with regard to them. I know
      no Greek or Latin word (I might venture, I believe, to assert that there
      is none) which expresses the idea we now annex to the word apprentice, a
      servant bound to work at a particular trade for the benefit of a master,
      during a term of years, upon condition that the master shall teach him
      that trade.
    
      Long apprenticeships are altogether unnecessary. The arts, which are much
      superior to common trades, such as those of making clocks and watches,
      contain no such mystery as to require a long course of instruction. The
      first invention of such beautiful machines, indeed, and even that of some
      of the instruments employed in making them, must no doubt have been the
      work of deep thought and long time, and may justly be considered as among
      the happiest efforts of human ingenuity. But when both have been fairly
      invented, and are well understood, to explain to any young man, in the
      completest manner, how to apply the instruments, and how to construct the
      machines, cannot well require more than the lessons of a few weeks;
      perhaps those of a few days might be sufficient. In the common mechanic
      trades, those of a few days might certainly be sufficient. The dexterity
      of hand, indeed, even in common trades, cannot be acquired without much
      practice and experience. But a young man would practice with much more
      diligence and attention, if from the beginning he wrought as a journeyman,
      being paid in proportion to the little work which he could execute, and
      paying in his turn for the materials which he might sometimes spoil
      through awkwardness and inexperience. His education would generally in
      this way be more effectual, and always less tedious and expensive. The
      master, indeed, would be a loser. He would lose all the wages of the
      apprentice, which he now saves, for seven years together. In the end,
      perhaps, the apprentice himself would be a loser. In a trade so easily
      learnt he would have more competitors, and his wages, when he came to be a
      complete workman, would be much less than at present. The same increase of
      competition would reduce the profits of the masters, as well as the wages
      of workmen. The trades, the crafts, the mysteries, would all be losers.
      But the public would be a gainer, the work of all artificers coming in
      this way much cheaper to market.
    
      It is to prevent his reduction of price, and consequently of wages and
      profit, by restraining that free competition which would most certainly
      occasion it, that all corporations, and the greater part of corporation
      laws have been established. In order to erect a corporation, no other
      authority in ancient times was requisite, in many parts of Europe, but
      that of the town-corporate in which it was established. In England,
      indeed, a charter from the king was likewise necessary. But this
      prerogative of the crown seems to have been reserved rather for extorting
      money from the subject, than for the defence of the common liberty against
      such oppressive monopolies. Upon paying a fine to the king, the charter
      seems generally to have been readily granted; and when any particular
      class of artificers or traders thought proper to act as a corporation,
      without a charter, such adulterine guilds, as they were called, were not
      always disfranchised upon that account, but obliged to fine annually to
      the king, for permission to exercise their usurped privileges {See Madox
      Firma Burgi p. 26 etc.}. The immediate inspection of all corporations, and
      of the bye-laws which they might think proper to enact for their own
      government, belonged to the town-corporate in which they were established;
      and whatever discipline was exercised over them, proceeded commonly, not
      from the king, but from that greater incorporation of which those
      subordinate ones were only parts or members.
    
      The government of towns-corporate was altogether in the hands of traders
      and artificers, and it was the manifest interest of every particular class
      of them, to prevent the market from being overstocked, as they commonly
      express it, with their own particular species of industry; which is in
      reality to keep it always understocked. Each class was eager to establish
      regulations proper for this purpose, and, provided it was allowed to do
      so, was willing to consent that every other class should do the same. In
      consequence of such regulations, indeed, each class was obliged to buy the
      goods they had occasion for from every other within the town, somewhat
      dearer than they otherwise might have done. But, in recompence, they were
      enabled to sell their own just as much dearer; so that, so far it was as
      broad as long, as they say; and in the dealings of the different classes
      within the town with one another, none of them were losers by these
      regulations. But in their dealings with the country they were all great
      gainers; and in these latter dealings consist the whole trade which
      supports and enriches every town.
    
      Every town draws its whole subsistence, and all the materials of its
      industry, from the: country. It pays for these chiefly in two ways. First,
      by sending back to the country a part of those materials wrought up and
      manufactured; in which case, their price is augmented by the wages of the
      workmen, and the profits of their masters or immediate employers;
      secondly, by sending to it a part both of the rude and manufactured
      produce, either of other countries, or of distant parts of the same
      country, imported into the town; in which case, too, the original price of
      those goods is augmented by the wages of the carriers or sailors, and by
      the profits of the merchants who employ them. In what is gained upon the
      first of those branches of commerce, consists the advantage which the town
      makes by its manufactures; in what is gained upon the second, the
      advantage of its inland and foreign trade. The wages of the workmen, and
      the profits of their different employers, make up the whole of what is
      gained upon both. Whatever regulations, therefore, tend to increase those
      wages and profits beyond what they otherwise: would be, tend to enable the
      town to purchase, with a smaller quantity of its labour, the produce of a
      greater quantity of the labour of the country. They give the traders and
      artificers in the town an advantage over the landlords, farmers, and
      labourers, in the country, and break down that natural equality which
      would otherwise take place in the commerce which is carried on between
      them. The whole annual produce of the labour of the society is annually
      divided between those two different sets of people. By means of those
      regulations, a greater share of it is given to the inhabitants of the town
      than would otherwise fall to them, and a less to those of the country.
    
      The price which the town really pays for the provisions and materials
      annually imported into it, is the quantity of manufactures and other goods
      annually exported from it. The dearer the latter are sold, the cheaper the
      former are bought. The industry of the town becomes more, and that of the
      country less advantageous.
    
      That the industry which is carried on in towns is, everywhere in Europe,
      more advantageous than that which is carried on in the country, without
      entering into any very nice computations, we may satisfy ourselves by one
      very simple and obvious observation. In every country of Europe, we find
      at least a hundred people who have acquired great fortunes, from small
      beginnings, by trade and manufactures, the industry which properly belongs
      to towns, for one who has done so by that which properly belongs to the
      country, the raising of rude produce by the improvement and cultivation of
      land. Industry, therefore, must be better rewarded, the wages of labour
      and the profits of stock must evidently be greater, in the one situation
      than in the other. But stock and labour naturally seek the most
      advantageous employment. They naturally, therefore, resort as much as they
      can to the town, and desert the country.
    
      The inhabitants of a town being collected into one place, can easily
      combine together. The most insignificant trades carried on in towns have,
      accordingly, in some place or other, been incorporated; and even where
      they have never been incorporated, yet the corporation-spirit, the
      jealousy of strangers, the aversion to take apprentices, or to communicate
      the secret of their trade, generally prevail in them, and often teach
      them, by voluntary associations and agreements, to prevent that free
      competition which they cannot prohibit by bye-laws. The trades which
      employ but a small number of hands, run most easily into such
      combinations. Half-a-dozen wool-combers, perhaps, are necessary to keep a
      thousand spinners and weavers at work. By combining not to take
      apprentices, they can not only engross the employment, but reduce the
      whole manufacture into a sort of slavery to themselves, and raise the
      price of their labour much above what is due to the nature of their work.
    
      The inhabitants of the country, dispersed in distant places, cannot easily
      combine together. They have not only never been incorporated, but the
      incorporation spirit never has prevailed among them. No apprenticeship has
      ever been thought necessary to qualify for husbandry, the great trade of
      the country. After what are called the fine arts, and the liberal
      professions, however, there is perhaps no trade which requires so great a
      variety of knowledge and experience. The innumerable volumes which have
      been written upon it in all languages, may satisfy us, that among the
      wisest and most learned nations, it has never been regarded as a matter
      very easily understood. And from all those volumes we shall in vain
      attempt to collect that knowledge of its various and complicated
      operations which is commonly possessed even by the common farmer; how
      contemptuously soever the very contemptible authors of some of them may
      sometimes affect to speak of him. There is scarce any common mechanic
      trade, on the contrary, of which all the operations may not be as
      completely and distinctly explained in a pamphlet of a very few pages, as
      it is possible for words illustrated by figures to explain them. In the
      history of the arts, now publishing by the French Academy of Sciences,
      several of them are actually explained in this manner. The direction of
      operations, besides, which must be varied with every change of the
      weather, as well as with many other accidents, requires much more judgment
      and discretion, than that of those which are always the same, or very
      nearly the same.
    
      Not only the art of the farmer, the general direction of the operations of
      husbandry, but many inferior branches of country labour require much more
      skill and experience than the greater part of mechanic trades. The man who
      works upon brass and iron, works with instruments, and upon materials of
      which the temper is always the same, or very nearly the same. But the man
      who ploughs the ground with a team of horses or oxen, works with
      instruments of which the health, strength, and temper, are very different
      upon different occasions. The condition of the materials which he works
      upon, too, is as variable as that of the instruments which he works with,
      and both require to be managed with much judgment and discretion. The
      common ploughman, though generally regarded as the pattern of stupidity
      and ignorance, is seldom defective in this judgment and discretion. He is
      less accustomed, indeed, to social intercourse, than the mechanic who
      lives in a town. His voice and language are more uncouth, and more
      difficult to be understood by those who are not used to them. His
      understanding, however, being accustomed to consider a greater variety of
      objects, is generally much superior to that of the other, whose whole
      attention, from morning till night, is commonly occupied in performing one
      or two very simple operations. How much the lower ranks of people in the
      country are really superior to those of the town, is well known to every
      man whom either business or curiosity has led to converse much with both.
      In China and Indostan, accordingly, both the rank and the wages of country
      labourers are said to be superior to those of the greater part of
      artificers and manufacturers. They would probably be so everywhere, if
      corporation laws and the corporation spirit did not prevent it.
    
      The superiority which the industry of the towns has everywhere in Europe
      over that of the country, is not altogether owing to corporations and
      corporation laws. It is supported by many other regulations. The high
      duties upon foreign manufactures, and upon all goods imported by alien
      merchants, all tend to the same purpose. Corporation laws enable the
      inhabitants of towns to raise their prices, without fearing to be
      undersold by the free competition of their own countrymen. Those other
      regulations secure them equally against that of foreigners. The
      enhancement of price occasioned by both is everywhere finally paid by the
      landlords, farmers, and labourers, of the country, who have seldom opposed
      the establishment of such monopolies. They have commonly neither
      inclination nor fitness to enter into combinations; and the clamour and
      sophistry of merchants and manufacturers easily persuade them, that the
      private interest of a part, and of a subordinate part, of the society, is
      the general interest of the whole.
    
      In Great Britain, the superiority of the industry of the towns over that
      of the country seems to have been greater formerly than in the present
      times. The wages of country labour approach nearer to those of
      manufacturing labour, and the profits of stock employed in agriculture to
      those of trading and manufacturing stock, than they are said to have done
      in the last century, or in the beginning of the present. This change may
      be regarded as the necessary, though very late consequence of the
      extraordinary encouragement given to the industry of the towns. The stocks
      accumulated in them come in time to be so great, that it can no longer be
      employed with the ancient profit in that species of industry which is
      peculiar to them. That industry has its limits like every other; and the
      increase of stock, by increasing the competition, necessarily reduces the
      profit. The lowering of profit in the town forces out stock to the
      country, where, by creating a new demand for country labour, it
      necessarily raises its wages. It then spreads itself, if I my say so, over
      the face of the land, and, by being employed in agriculture, is in part
      restored to the country, at the expense of which, in a great measure, it
      had originally been accumulated in the town. That everywhere in Europe the
      greatest improvements of the country have been owing to such over flowings
      of the stock originally accumulated in the towns, I shall endeavour to
      shew hereafter, and at the same time to demonstrate, that though some
      countries have, by this course, attained to a considerable degree of
      opulence, it is in itself necessarily slow, uncertain, liable to be
      disturbed and interrupted by innumerable accidents, and, in every respect,
      contrary to the order of nature and of reason. The interests, prejudices,
      laws, and customs, which have given occasion to it, I shall endeavour to
      explain as fully and distinctly as I can in the third and fourth books of
      this Inquiry.
    
      People of the same trade seldom meet together, even for merriment and
      diversion, but the conversation ends in a conspiracy against the public,
      or in some contrivance to raise prices. It is impossible, indeed, to
      prevent such meetings, by any law which either could be executed, or would
      be consistent with liberty and justice. But though the law cannot hinder
      people of the same trade from sometimes assembling together, it ought to
      do nothing to facilitate such assemblies, much less to render them
      necessary.
    
      A regulation which obliges all those of the same trade in a particular
      town to enter their names and places of abode in a public register,
      facilitates such assemblies. It connects individuals who might never
      otherwise be known to one another, and gives every man of the trade a
      direction where to find every other man of it.
    
      A regulation which enables those of the same trade to tax themselves, in
      order to provide for their poor, their sick, their widows and orphans, by
      giving them a common interest to manage, renders such assemblies
      necessary.
    
      An incorporation not only renders them necessary, but makes the act of the
      majority binding upon the whole. In a free trade, an effectual combination
      cannot be established but by the unanimous consent of every single trader,
      and it cannot last longer than every single trader continues of the same
      mind. The majority of a corporation can enact a bye-law, with proper
      penalties, which will limit the competition more effectually and more
      durably than any voluntary combination whatever.
    
      The pretence that corporations are necessary for the better government of
      the trade, is without any foundation. The real and effectual discipline
      which is exercised over a workman, is not that of his corporation, but
      that of his customers. It is the fear of losing their employment which
      restrains his frauds and corrects his negligence. An exclusive corporation
      necessarily weakens the force of this discipline. A particular set of
      workmen must then be employed, let them behave well or ill. It is upon
      this account that, in many large incorporated towns, no tolerable workmen
      are to be found, even in some of the most necessary trades. If you would
      have your work tolerably executed, it must be done in the suburbs, where
      the workmen, having no exclusive privilege, have nothing but their
      character to depend upon, and you must then smuggle it into the town as
      well as you can.
    
      It is in this manner that the policy of Europe, by restraining the
      competition in some employments to a smaller number than would otherwise
      be disposed to enter into them, occasions a very important inequality in
      the whole of the advantages and disadvantages of the different employments
      of labour and stock.
    
      Secondly, the policy of Europe, by increasing the competition in some
      employments beyond what it naturally would be, occasions another
      inequality, of an opposite kind, in the whole of the advantages and
      disadvantages of the different employments of labour and stock.
    
      It has been considered as of so much importance that a proper number of
      young people should be educated for certain professions, that sometimes
      the public, and sometimes the piety of private founders, have established
      many pensions, scholarships, exhibitions, bursaries, etc. for this
      purpose, which draw many more people into those trades than could
      otherwise pretend to follow them. In all Christian countries, I believe,
      the education of the greater part of churchmen is paid for in this
      manner. Very few of them are educated altogether at their own expense.
      The long, tedious, and expensive education, therefore, of those who are,
      will not always procure them a suitable reward, the church being crowded
      with people, who, in order to get employment, are willing to accept of a
      much smaller recompence than what such an education would otherwise have
      entitled them to; and in this manner the competition of the poor takes
      away the reward of the rich. It would be indecent, no doubt, to compare
      either a curate or a chaplain with a journeyman in any common trade. The
      pay of a curate or chaplain, however, may very properly be considered as
      of the same nature with the wages of a journeyman. They are all three
      paid for their work according to the contract which they may happen to
      make with their respective superiors. Till after the middle of the
      fourteenth century, five merks, containing about as much silver as ten
      pounds of our present money, was in England the usual pay of a curate or
      a stipendiary parish priest, as we find it regulated by the decrees of
      several different national councils. At the same period, fourpence a-day,
      containing the same quantity of silver as a shilling of our present
      money, was declared to be the pay of a master mason; and threepence
      a-day, equal to ninepence of our present money, that of a journeyman
      mason. {See the Statute of Labourers, 25, Ed. III.} The wages of both
      these labourers, therefore, supposing them to have been constantly
      employed, were much superior to those of the curate. The wages of the
      master mason, supposing him to have been without employment one-third of
      the year, would have fully equalled them. By the 12th of Queen Anne, c.
      12. it is declared, “That whereas, for want of sufficient
      maintenance and encouragement to curates, the cures have, in several
      places, been meanly supplied, the bishop is, therefore, empowered to
      appoint, by writing under his hand and seal, a sufficient certain stipend
      or allowance, not exceeding fifty, and not less than twenty pounds
      a-year”. Forty pounds a-year is reckoned at present very good pay
      for a curate; and, notwithstanding this act of parliament, there are many
      curacies under twenty pounds a-year. There are journeymen shoemakers in
      London who earn forty pounds a-year, and there is scarce an industrious
      workman of any kind in that metropolis who does not earn more than
      twenty. This last sum, indeed, does not exceed what is frequently earned
      by common labourers in many country parishes. Whenever the law has
      attempted to regulate the wages of workmen, it has always been rather to
      lower them than to raise them. But the law has, upon many occasions,
      attempted to raise the wages of curates, and, for the dignity of the
      church, to oblige the rectors of parishes to give them more than the
      wretched maintenance which they themselves might be willing to accept of.
      And, in both cases, the law seems to have been equally ineffectual, and
      has never either been able to raise the wages of curates, or to sink
      those of labourers to the degree that was intended; because it has never
      been able to hinder either the one from being willing to accept of less
      than the legal allowance, on account of the indigence of their situation
      and the multitude of their competitors, or the other from receiving more,
      on account of the contrary competition of those who expected to derive
      either profit or pleasure from employing them.
    
      The great benefices and other ecclesiastical dignities support the honour
      of the church, notwithstanding the mean circumstances of some of its
      inferior members. The respect paid to the profession, too, makes some
      compensation even to them for the meanness of their pecuniary recompence.
      In England, and in all Roman catholic countries, the lottery of the church
      is in reality much more advantageous than is necessary. The example of the
      churches of Scotland, of Geneva, and of several other protestant churches,
      may satisfy us, that in so creditable a profession, in which education is
      so easily procured, the hopes of much more moderate benefices will draw a
      sufficient number of learned, decent, and respectable men into holy
      orders.
    
      In professions in which there are no benefices, such as law and physic, if
      an equal proportion of people were educated at the public expense, the
      competition would soon be so great as to sink very much their pecuniary
      reward. It might then not be worth any man’s while to educate his son to
      either of those professions at his own expense. They would be entirely
      abandoned to such as had been educated by those public charities, whose
      numbers and necessities would oblige them in general to content themselves
      with a very miserable recompence, to the entire degradation of the now
      respectable professions of law and physic.
    
      That unprosperous race of men, commonly called men of letters, are pretty
      much in the situation which lawyers and physicians probably would be in,
      upon the foregoing supposition. In every part of Europe, the greater part
      of them have been educated for the church, but have been hindered by
      different reasons from entering into holy orders. They have generally,
      therefore, been educated at the public expense; and their numbers are
      everywhere so great, as commonly to reduce the price of their labour to a
      very paltry recompence.
    
      Before the invention of the art of printing, the only employment by which
      a man of letters could make any thing by his talents, was that of a public
      or private teacher, or by communicating to other people the curious and
      useful knowledge which he had acquired himself; and this is still surely a
      more honourable, a more useful, and, in general, even a more profitable
      employment than that other of writing for a bookseller, to which the art
      of printing has given occasion. The time and study, the genius, knowledge,
      and application requisite to qualify an eminent teacher of the sciences,
      are at least equal to what is necessary for the greatest practitioners in
      law and physic. But the usual reward of the eminent teacher bears no
      proportion to that of the lawyer or physician, because the trade of the
      one is crowded with indigent people, who have been brought up to it at the
      public expense; whereas those of the other two are encumbered with very
      few who have not been educated at their own. The usual recompence,
      however, of public and private teachers, small as it may appear, would
      undoubtedly be less than it is, if the competition of those yet more
      indigent men of letters, who write for bread, was not taken out of the
      market. Before the invention of the art of printing, a scholar and a
      beggar seem to have been terms very nearly synonymous. The different
      governors of the universities, before that time, appear to have often
      granted licences to their scholars to beg.
    
      In ancient times, before any charities of this kind had been established
      for the education of indigent people to the learned professions, the
      rewards of eminent teachers appear to have been much more considerable.
      Isocrates, in what is called his discourse against the sophists,
      reproaches the teachers of his own times with inconsistency. “They make
      the most magnificent promises to their scholars,” says he, “and undertake
      to teach them to be wise, to be happy, and to be just; and, in return for
      so important a service, they stipulate the paltry reward of four or five
      minae.” “They who teach wisdom,” continues he, “ought certainly to be wise
      themselves; but if any man were to sell such a bargain for such a price,
      he would be convicted of the most evident folly.” He certainly does not
      mean here to exaggerate the reward, and we may be assured that it was not
      less than he represents it. Four minae were equal to thirteen pounds six
      shillings and eightpence; five minae to sixteen pounds thirteen shillings
      and fourpence. Something not less than the largest of those two sums,
      therefore, must at that time have been usually paid to the most eminent
      teachers at Athens. Isocrates himself demanded ten minae, or £ 33:6:8 from
      each scholar. When he taught at Athens, he is said to have had a hundred
      scholars. I understand this to be the number whom he taught at one time,
      or who attended what we would call one course of lectures; a number which
      will not appear extraordinary from so great a city to so famous a teacher,
      who taught, too, what was at that time the most fashionable of all
      sciences, rhetoric. He must have made, therefore, by each course of
      lectures, a thousand minae, or £ 3335:6:8. A thousand minae, accordingly,
      is said by Plutarch, in another place, to have been his didactron, or
      usual price of teaching. Many other eminent teachers in those times appear
      to have acquired great fortunes. Georgias made a present to the temple of
      Delphi of his own statue in solid gold. We must not, I presume, suppose
      that it was as large as the life. His way of living, as well as that of
      Hippias and Protagoras, two other eminent teachers of those times, is
      represented by Plato as splendid, even to ostentation. Plato himself is
      said to have lived with a good deal of magnificence. Aristotle, after
      having been tutor to Alexander, and most munificently rewarded, as it is
      universally agreed, both by him and his father, Philip, thought it worth
      while, notwithstanding, to return to Athens, in order to resume the
      teaching of his school. Teachers of the sciences were probably in those
      times less common than they came to be in an age or two afterwards, when
      the competition had probably somewhat reduced both the price of their
      labour and the admiration for their persons. The most eminent of them,
      however, appear always to have enjoyed a degree of consideration much
      superior to any of the like profession in the present times. The Athenians
      sent Carneades the academic, and Diogenes the stoic, upon a solemn embassy
      to Rome; and though their city had then declined from its former grandeur,
      it was still an independent and considerable republic.
    
      Carneades, too, was a Babylonian by birth; and as there never was a people
      more jealous of admitting foreigners to public offices than the Athenians,
      their consideration for him must have been very great.
    
      This inequality is, upon the whole, perhaps rather advantageous than
      hurtful to the public. It may somewhat degrade the profession of a public
      teacher; but the cheapness of literary education is surely an advantage
      which greatly overbalances this trifling inconveniency. The public, too,
      might derive still greater benefit from it, if the constitution of those
      schools and colleges, in which education is carried on, was more
      reasonable than it is at present through the greater part of Europe.
    
      Thirdly, the policy of Europe, by obstructing the free circulation of
      labour and stock, both from employment to employment, and from place to
      place, occasions, in some cases, a very inconvenient inequality in the
      whole of the advantages and disadvantages of their different employments.
    
      The statute of apprenticeship obstructs the free circulation of labour
      from one employment to another, even in the same place. The exclusive
      privileges of corporations obstruct it from one place to another, even in
      the same employment.
    
      It frequently happens, that while high wages are given to the workmen in
      one manufacture, those in another are obliged to content themselves with
      bare subsistence. The one is in an advancing state, and has therefore a
      continual demand for new hands; the other is in a declining state, and the
      superabundance of hands is continually increasing. Those two manufactures
      may sometimes be in the same town, and sometimes in the same
      neighbourhood, without being able to lend the least assistance to one
      another. The statute of apprenticeship may oppose it in the one case, and
      both that and an exclusive corporation in the other. In many different
      manufactures, however, the operations are so much alike, that the workmen
      could easily change trades with one another, if those absurd laws did not
      hinder them. The arts of weaving plain linen and plain silk, for example,
      are almost entirely the same. That of weaving plain woollen is somewhat
      different; but the difference is so insignificant, that either a linen or
      a silk weaver might become a tolerable workman in a very few days. If any
      of those three capital manufactures, therefore, were decaying, the workmen
      might find a resource in one of the other two which was in a more
      prosperous condition; and their wages would neither rise too high in the
      thriving, nor sink too low in the decaying manufacture. The linen
      manufacture, indeed, is in England, by a particular statute, open to every
      body; but as it is not much cultivated through the greater part of the
      country, it can afford no general resource to the work men of other
      decaying manufactures, who, wherever the statute of apprenticeship takes
      place, have no other choice, but either to come upon the parish, or to
      work as common labourers; for which, by their habits, they are much worse
      qualified than for any sort of manufacture that bears any resemblance to
      their own. They generally, therefore, chuse to come upon the parish.
    
      Whatever obstructs the free circulation of labour from one employment to
      another, obstructs that of stock likewise; the quantity of stock which can
      be employed in any branch of business depending very much upon that of the
      labour which can be employed in it. Corporation laws, however, give less
      obstruction to the free circulation of stock from one place to another,
      than to that of labour. It is everywhere much easier for a wealthy
      merchant to obtain the privilege of trading in a town-corporate, than for
      a poor artificer to obtain that of working in it.
    
      The obstruction which corporation laws give to the free circulation of
      labour is common, I believe, to every part of Europe. That which is given
      to it by the poor laws is, so far as I know, peculiar to England. It
      consists in the difficulty which a poor man finds in obtaining a
      settlement, or even in being allowed to exercise his industry in any
      parish but that to which he belongs. It is the labour of artificers and
      manufacturers only of which the free circulation is obstructed by
      corporation laws. The difficulty of obtaining settlements obstructs even
      that of common labour. It may be worth while to give some account of the
      rise, progress, and present state of this disorder, the greatest, perhaps,
      of any in the police of England.
    
      When, by the destruction of monasteries, the poor had been deprived of the
      charity of those religious houses, after some other ineffectual attempts
      for their relief, it was enacted, by the 43d of Elizabeth, c. 2. that
      every parish should be bound to provide for its own poor, and that
      overseers of the poor should be annually appointed, who, with the
      church-wardens, should raise, by a parish rate, competent sums for this
      purpose.
    
      By this statute, the necessity of providing for their own poor was
      indispensably imposed upon every parish. Who were to be considered as the
      poor of each parish became, therefore, a question of some importance. This
      question, after some variation, was at last determined by the 13th and
      14th of Charles II. when it was enacted, that forty days undisturbed
      residence should gain any person a settlement in any parish; but that
      within that time it should be lawful for two justices of the peace, upon
      complaint made by the church-wardens or overseers of the poor, to remove
      any new inhabitant to the parish where he was last legally settled; unless
      he either rented a tenement of ten pounds a-year, or could give such
      security for the discharge of the parish where he was then living, as
      those justices should judge sufficient.
    
      Some frauds, it is said, were committed in consequence of this statute;
      parish officers sometimes bribing their own poor to go clandestinely to
      another parish, and, by keeping themselves concealed for forty days, to
      gain a settlement there, to the discharge of that to which they properly
      belonged. It was enacted, therefore, by the 1st of James II. that the
      forty days undisturbed residence of any person necessary to gain a
      settlement, should be accounted only from the time of his delivering
      notice, in writing, of the place of his abode and the number of his
      family, to one of the church-wardens or overseers of the parish where he
      came to dwell.
    
      But parish officers, it seems, were not always more honest with regard to
      their own than they had been with regard to other parishes, and sometimes
      connived at such intrusions, receiving the notice, and taking no proper
      steps in consequence of it. As every person in a parish, therefore, was
      supposed to have an interest to prevent as much as possible their being
      burdened by such intruders, it was further enacted by the 3rd of William
      III. that the forty days residence should be accounted only from the
      publication of such notice in writing on Sunday in the church, immediately
      after divine service.
    
      “After all,” says Doctor Burn, “this kind of settlement, by continuing
      forty days after publication of notice in writing, is very seldom
      obtained; and the design of the acts is not so much for gaining of
      settlements, as for the avoiding of them by persons coming into a parish
      clandestinely, for the giving of notice is only putting a force upon the
      parish to remove. But if a person’s situation is such, that it is doubtful
      whether he is actually removable or not, he shall, by giving of notice,
      compel the parish either to allow him a settlement uncontested, by
      suffering him to continue forty days, or by removing him to try the
      right.”
    
      This statute, therefore, rendered it almost impracticable for a poor man
      to gain a new settlement in the old way, by forty days inhabitancy. But
      that it might not appear to preclude altogether the common people of one
      parish from ever establishing themselves with security in another, it
      appointed four other ways by which a settlement might be gained without
      any notice delivered or published. The first was, by being taxed to parish
      rates and paying them; the second, by being elected into an annual parish
      office, and serving in it a year; the third, by serving an apprenticeship
      in the parish; the fourth, by being hired into service there for a year,
      and continuing in the same service during the whole of it. Nobody can gain
      a settlement by either of the two first ways, but by the public deed of
      the whole parish, who are too well aware of the consequences to adopt any
      new-comer, who has nothing but his labour to support him, either by taxing
      him to parish rates, or by electing him into a parish office.
    
      No married man can well gain any settlement in either of the two last
      ways. An apprentice is scarce ever married; and it is expressly enacted,
      that no married servant shall gain any settlement by being hired for a
      year. The principal effect of introducing settlement by service, has been
      to put out in a great measure the old fashion of hiring for a year; which
      before had been so customary in England, that even at this day, if no
      particular term is agreed upon, the law intends that every servant is
      hired for a year. But masters are not always willing to give their
      servants a settlement by hiring them in this manner; and servants are not
      always willing to be so hired, because, as every last settlement
      discharges all the foregoing, they might thereby lose their original
      settlement in the places of their nativity, the habitation of their
      parents and relations.
    
      No independent workman, it is evident, whether labourer or artificer, is
      likely to gain any new settlement, either by apprenticeship or by service.
      When such a person, therefore, carried his industry to a new parish, he
      was liable to be removed, how healthy and industrious soever, at the
      caprice of any churchwarden or overseer, unless he either rented a
      tenement of ten pounds a-year, a thing impossible for one who has nothing
      but his labour to live by, or could give such security for the discharge
      of the parish as two justices of the peace should judge sufficient.
    
      What security they shall require, indeed, is left altogether to their
      discretion; but they cannot well require less than thirty pounds, it
      having been enacted, that the purchase even of a freehold estate of less
      than thirty pounds value, shall not gain any person a settlement, as not
      being sufficient for the discharge of the parish. But this is a security
      which scarce any man who lives by labour can give; and much greater
      security is frequently demanded.
    
      In order to restore, in some measure, that free circulation of labour
      which those different statutes had almost entirely taken away, the
      invention of certificates was fallen upon. By the 8th and 9th of William
      III. it was enacted that if any person should bring a certificate from the
      parish where he was last legally settled, subscribed by the church-wardens
      and overseers of the poor, and allowed by two justices of the peace, that
      every other parish should be obliged to receive him; that he should not be
      removable merely upon account of his being likely to become chargeable,
      but only upon his becoming actually chargeable; and that then the parish
      which granted the certificate should be obliged to pay the expense both of
      his maintenance and of his removal. And in order to give the most perfect
      security to the parish where such certificated man should come to reside,
      it was further enacted by the same statute, that he should gain no
      settlement there by any means whatever, except either by renting a
      tenement of ten pounds a-year, or by serving upon his own account in an
      annual parish office for one whole year; and consequently neither by
      notice nor by service, nor by apprenticeship, nor by paying parish rates.
      By the 12th of Queen Anne, too, stat. 1, c.18, it was further enacted,
      that neither the servants nor apprentices of such certificated man should
      gain any settlement in the parish where he resided under such certificate.
    
      How far this invention has restored that free circulation of labour, which
      the preceding statutes had almost entirely taken away, we may learn from
      the following very judicious observation of Doctor Burn. “It is obvious,”
      says he, “that there are divers good reasons for requiring certificates
      with persons coming to settle in any place; namely, that persons residing
      under them can gain no settlement, neither by apprenticeship, nor by
      service, nor by giving notice, nor by paying parish rates; that they can
      settle neither apprentices nor servants; that if they become chargeable,
      it is certainly known whither to remove them, and the parish shall be paid
      for the removal, and for their maintenance in the mean time; and that, if
      they fall sick, and cannot be removed, the parish which gave the
      certificate must maintain them; none of all which can be without a
      certificate. Which reasons will hold proportionably for parishes not
      granting certificates in ordinary cases; for it is far more than an equal
      chance, but that they will have the certificated persons again, and in a
      worse condition.” The moral of this observation seems to be, that
      certificates ought always to be required by the parish where any poor man
      comes to reside, and that they ought very seldom to be granted by that
      which he purposes to leave. “There is somewhat of hardship in this matter
      of certificates,” says the same very intelligent author, in his History of
      the Poor Laws, “by putting it in the power of a parish officer to imprison
      a man as it were for life, however inconvenient it may be for him to
      continue at that place where he has had the misfortune to acquire what is
      called a settlement, or whatever advantage he may propose himself by
      living elsewhere.”
    
      Though a certificate carries along with it no testimonial of good
      behaviour, and certifies nothing but that the person belongs to the parish
      to which he really does belong, it is altogether discretionary in the
      parish officers either to grant or to refuse it. A mandamus was once moved
      for, says Doctor Burn, to compel the church-wardens and overseers to sign
      a certificate; but the Court of King’s Bench rejected the motion as a very
      strange attempt.
    
      The very unequal price of labour which we frequently find in England, in
      places at no great distance from one another, is probably owing to the
      obstruction which the law of settlements gives to a poor man who would
      carry his industry from one parish to another without a certificate. A
      single man, indeed who is healthy and industrious, may sometimes reside by
      sufferance without one; but a man with a wife and family who should
      attempt to do so, would, in most parishes, be sure of being removed; and,
      if the single man should afterwards marry, he would generally be removed
      likewise. The scarcity of hands in one parish, therefore, cannot always be
      relieved by their superabundance in another, as it is constantly in
      Scotland, and I believe, in all other countries where there is no
      difficulty of settlement. In such countries, though wages may sometimes
      rise a little in the neighbourhood of a great town, or wherever else there
      is an extraordinary demand for labour, and sink gradually as the distance
      from such places increases, till they fall back to the common rate of the
      country; yet we never meet with those sudden and unaccountable differences
      in the wages of neighbouring places which we sometimes find in England,
      where it is often more difficult for a poor man to pass the artificial
      boundary of a parish, than an arm of the sea, or a ridge of high
      mountains, natural boundaries which sometimes separate very distinctly
      different rates of wages in other countries.
    
      To remove a man who has committed no misdemeanour, from the parish where
      he chooses to reside, is an evident violation of natural liberty and
      justice. The common people of England, however, so jealous of their
      liberty, but like the common people of most other countries, never rightly
      understanding wherein it consists, have now, for more than a century
      together, suffered themselves to be exposed to this oppression without a
      remedy. Though men of reflection, too, have sometimes complained of the
      law of settlements as a public grievance; yet it has never been the object
      of any general popular clamour, such as that against general warrants, an
      abusive practice undoubtedly, but such a one as was not likely to occasion
      any general oppression. There is scarce a poor man in England, of forty
      years of age, I will venture to say, who has not, in some part of his
      life, felt himself most cruelly oppressed by this ill-contrived law of
      settlements.
    
      I shall conclude this long chapter with observing, that though anciently
      it was usual to rate wages, first by general laws extending over the whole
      kingdom, and afterwards by particular orders of the justices of peace in
      every particular county, both these practices have now gone entirely into
      disuse. “By the experience of above four hundred years,” says Doctor Burn,
      “it seems time to lay aside all endeavours to bring under strict
      regulations, what in its own nature seems incapable of minute limitation;
      for if all persons in the same kind of work were to receive equal wages,
      there would be no emulation, and no room left for industry or ingenuity.”
    
      Particular acts of parliament, however, still attempt sometimes to
      regulate wages in particular trades, and in particular places. Thus the
      8th of George III. prohibits, under heavy penalties, all master tailors in
      London, and five miles round it, from giving, and their workmen from
      accepting, more than two shillings and sevenpence halfpenny a-day, except
      in the case of a general mourning. Whenever the legislature attempts to
      regulate the differences between masters and their workmen, its
      counsellors are always the masters. When the regulation, therefore, is in
      favour of the workmen, it is always just and equitable; but it is
      sometimes otherwise when in favour of the masters. Thus the law which
      obliges the masters in several different trades to pay their workmen in
      money, and not in goods, is quite just and equitable. It imposes no real
      hardship upon the masters. It only obliges them to pay that value in
      money, which they pretended to pay, but did not always really pay, in
      goods. This law is in favour of the workmen; but the 8th of George III. is
      in favour of the masters. When masters combine together, in order to
      reduce the wages of their workmen, they commonly enter into a private bond
      or agreement, not to give more than a certain wage, under a certain
      penalty. Were the workmen to enter into a contrary combination of the same
      kind, not to accept of a certain wage, under a certain penalty, the law
      would punish them very severely; and, if it dealt impartially, it would
      treat the masters in the same manner. But the 8th of George III. enforces
      by law that very regulation which masters sometimes attempt to establish
      by such combinations. The complaint of the workmen, that it puts the
      ablest and most industrious upon the same footing with an ordinary
      workman, seems perfectly well founded.
    
      In ancient times, too, it was usual to attempt to regulate the profits of
      merchants and other dealers, by regulating the price of provisions and
      ether goods. The assize of bread is, so far as I know, the only remnant of
      this ancient usage. Where there is an exclusive corporation, it may,
      perhaps, be proper to regulate the price of the first necessary of life;
      but, where there is none, the competition will regulate it much better
      than any assize. The method of fixing the assize of bread, established by
      the 31st of George II. could not be put in practice in Scotland, on
      account of a defect in the law, its execution depending upon the office of
      clerk of the market, which does not exist there. This defect was not
      remedied till the third of George III. The want of an assize occasioned no
      sensible inconveniency; and the establishment of one in the few places
      where it has yet taken place has produced no sensible advantage. In the
      greater part of the towns in Scotland, however, there is an incorporation
      of bakers, who claim exclusive privileges, though they are not very
      strictly guarded. The proportion between the different rates, both of
      wages and profit, in the different employments of labour and stock, seems
      not to be much affected, as has already been observed, by the riches or
      poverty, the advancing, stationary, or declining state of the society.
      Such revolutions in the public welfare, though they affect the general
      rates both of wages and profit, must, in the end, affect them equally in
      all different employments. The proportion between them, therefore, must
      remain the same, and cannot well be altered, at least for any considerable
      time, by any such revolutions.
    


CHAPTER XI.
OF THE RENT OF LAND.


    
      Rent, considered as the price paid for the use of land, is naturally the
      highest which the tenant can afford to pay in the actual circumstances of
      the land. In adjusting the terms of the lease, the landlord endeavours to
      leave him no greater share of the produce than what is sufficient to keep
      up the stock from which he furnishes the seed, pays the labour, and
      purchases and maintains the cattle and other instruments of husbandry,
      together with the ordinary profits of farming stock in the neighbourhood.
      This is evidently the smallest share with which the tenant can content
      himself, without being a loser, and the landlord seldom means to leave him
      any more. Whatever part of the produce, or, what is the same thing,
      whatever part of its price, is over and above this share, he naturally
      endeavours to reserve to himself as the rent of his land, which is
      evidently the highest the tenant can afford to pay in the actual
      circumstances of the land. Sometimes, indeed, the liberality, more
      frequently the ignorance, of the landlord, makes him accept of somewhat
      less than this portion; and sometimes, too, though more rarely, the
      ignorance of the tenant makes him undertake to pay somewhat more, or to
      content himself with somewhat less, than the ordinary profits of farming
      stock in the neighbourhood. This portion, however, may still be considered
      as the natural rent of land, or the rent at which it is naturally meant
      that land should, for the most part, be let.
    
      The rent of land, it may be thought, is frequently no more than a
      reasonable profit or interest for the stock laid out by the landlord upon
      its improvement. This, no doubt, may be partly the case upon some
      occasions; for it can scarce ever be more than partly the case. The
      landlord demands a rent even for unimproved land, and the supposed
      interest or profit upon the expense of improvement is generally an
      addition to this original rent. Those improvements, besides, are not
      always made by the stock of the landlord, but sometimes by that of the
      tenant. When the lease comes to be renewed, however, the landlord commonly
      demands the same augmentation of rent as if they had been all made by his
      own.
    
      He sometimes demands rent for what is altogether incapable of human
      improvements. Kelp is a species of sea-weed, which, when burnt, yields an
      alkaline salt, useful for making glass, soap, and for several other
      purposes. It grows in several parts of Great Britain, particularly in
      Scotland, upon such rocks only as lie within the high-water mark, which
      are twice every day covered with the sea, and of which the produce,
      therefore, was never augmented by human industry. The landlord, however,
      whose estate is bounded by a kelp shore of this kind, demands a rent for
      it as much as for his corn-fields.
    
      The sea in the neighbourhood of the islands of Shetland is more than
      commonly abundant in fish, which makes a great part of the subsistence of
      their inhabitants. But, in order to profit by the produce of the water,
      they must have a habitation upon the neighbouring land. The rent of the
      landlord is in proportion, not to what the farmer can make by the land,
      but to what he can make both by the land and the water. It is partly paid
      in sea-fish; and one of the very few instances in which rent makes a part
      of the price of that commodity, is to be found in that country.
    
      The rent of land, therefore, considered as the price paid for the use of
      the land, is naturally a monopoly price. It is not at all proportioned to
      what the landlord may have laid out upon the improvement of the land, or
      to what he can afford to take, but to what the farmer can afford to give.
    
      Such parts only of the produce of land can commonly be brought to market,
      of which the ordinary price is sufficient to replace the stock which must
      be employed in bringing them thither, together with its ordinary profits.
      If the ordinary price is more than this, the surplus part of it will
      naturally go to the rent of the land. If it is not more, though the
      commodity may be brought to market, it can afford no rent to the landlord.
      Whether the price is, or is not more, depends upon the demand.
    
      There are some parts of the produce of land, for which the demand must
      always be such as to afford a greater price than what is sufficient to
      bring them to market; and there are others for which it either may or may
      not be such as to afford this greater price. The former must always afford
      a rent to the landlord. The latter sometimes may and sometimes may not,
      according to different circumstances.
    
      Rent, it is to be observed, therefore, enters into the composition of the
      price of commodities in a different way from wages and profit. High or low
      wages and profit are the causes of high or low price; high or low rent is
      the effect of it. It is because high or low wages and profit must be paid,
      in order to bring a particular commodity to market, that its price is high
      or low. But it is because its price is high or low, a great deal more, or
      very little more, or no more, than what is sufficient to pay those wages
      and profit, that it affords a high rent, or a low rent, or no rent at all.
    
      The particular consideration, first, of those parts of the produce of land
      which always afford some rent; secondly, of those which sometimes may and
      sometimes may not afford rent; and, thirdly, of the variations which, in
      the different periods of improvement, naturally take place in the relative
      value of those two different sorts of rude produce, when compared both
      with one another and with manufactured commodities, will divide this
      chapter into three parts.
    


    
      PART I.—Of the Produce of Land which always affords Rent.
    
      As men, like all other animals, naturally multiply in proportion to the
      means of their subsistence, food is always more or less in demand. It can
      always purchase or command a greater or smaller quantity of labour, and
      somebody can always be found who is willing to do something in order to
      obtain it. The quantity of labour, indeed, which it can purchase, is not
      always equal to what it could maintain, if managed in the most economical
      manner, on account of the high wages which are sometimes given to labour;
      but it can always purchase such a quantity of labour as it can maintain,
      according to the rate at which that sort of labour is commonly maintained
      in the neighbourhood.
    
      But land, in almost any situation, produces a greater quantity of food
      than what is sufficient to maintain all the labour necessary for bringing
      it to market, in the most liberal way in which that labour is ever
      maintained. The surplus, too, is always more than sufficient to replace
      the stock which employed that labour, together with its profits.
      Something, therefore, always remains for a rent to the landlord.
    
      The most desert moors in Norway and Scotland produce some sort of pasture
      for cattle, of which the milk and the increase are always more than
      sufficient, not only to maintain all the labour necessary for tending
      them, and to pay the ordinary profit to the farmer or the owner of the
      herd or flock, but to afford some small rent to the landlord. The rent
      increases in proportion to the goodness of the pasture. The same extent of
      ground not only maintains a greater number of cattle, but as they are
      brought within a smaller compass, less labour becomes requisite to tend
      them, and to collect their produce. The landlord gains both ways; by the
      increase of the produce, and by the diminution of the labour which must be
      maintained out of it.
    
      The rent of land not only varies with its fertility, whatever be its
      produce, but with its situation, whatever be its fertility. Land in the
      neighbourhood of a town gives a greater rent than land equally fertile in
      a distant part of the country. Though it may cost no more labour to
      cultivate the one than the other, it must always cost more to bring the
      produce of the distant land to market. A greater quantity of labour,
      therefore, must be maintained out of it; and the surplus, from which are
      drawn both the profit of the farmer and the rent of the landlord, must be
      diminished. But in remote parts of the country, the rate of profit, as has
      already been shewn, is generally higher than in the neighbourhood of a
      large town. A smaller proportion of this diminished surplus, therefore,
      must belong to the landlord.
    
      Good roads, canals, and navigable rivers, by diminishing the expense of
      carriage, put the remote parts of the country more nearly upon a level
      with those in the neighbourhood of the town. They are upon that account
      the greatest of all improvements. They encourage the cultivation of the
      remote, which must always be the most extensive circle of the country.
      They are advantageous to the town by breaking down the monopoly of the
      country in its neighbourhood. They are advantageous even to that part of
      the country. Though they introduce some rival commodities into the old
      market, they open many new markets to its produce. Monopoly, besides, is a
      great enemy to good management, which can never be universally
      established, but in consequence of that free and universal competition
      which forces every body to have recourse to it for the sake of self
      defence. It is not more than fifty years ago, that some of the counties in
      the neighbourhood of London petitioned the parliament against the
      extension of the turnpike roads into the remoter counties. Those remoter
      counties, they pretended, from the cheapness of labour, would be able to
      sell their grass and corn cheaper in the London market than themselves,
      and would thereby reduce their rents, and ruin their cultivation. Their
      rents, however, have risen, and their cultivation has been improved since
      that time.
    
      A corn field of moderate fertility produces a much greater quantity of
      food for man, than the best pasture of equal extent. Though its
      cultivation requires much more labour, yet the surplus which remains after
      replacing the seed and maintaining all that labour, is likewise much
      greater. If a pound of butcher’s meat, therefore, was never supposed to be
      worth more than a pound of bread, this greater surplus would everywhere be
      of greater value and constitute a greater fund, both for the profit of the
      farmer and the rent of the landlord. It seems to have done so universally
      in the rude beginnings of agriculture.
    
      But the relative values of those two different species of food, bread and
      butcher’s meat, are very different in the different periods of
      agriculture. In its rude beginnings, the unimproved wilds, which then
      occupy the far greater part of the country, are all abandoned to cattle.
      There is more butcher’s meat than bread; and bread, therefore, is the food
      for which there is the greatest competition, and which consequently brings
      the greatest price. At Buenos Ayres, we are told by Ulloa, four reals,
      one-and-twenty pence halfpenny sterling, was, forty or fifty years ago,
      the ordinary price of an ox, chosen from a herd of two or three hundred.
      He says nothing of the price of bread, probably because he found nothing
      remarkable about it. An ox there, he says, costs little more than the
      labour of catching him. But corn can nowhere be raised without a great
      deal of labour; and in a country which lies upon the river Plate, at that
      time the direct road from Europe to the silver mines of Potosi, the
      money-price of labour could be very cheap. It is otherwise when
      cultivation is extended over the greater part of the country. There is
      then more bread than butcher’s meat. The competition changes its
      direction, and the price of butcher’s meat becomes greater than the price
      of bread.
    
      By the extension, besides, of cultivation, the unimproved wilds become
      insufficient to supply the demand for butcher’s meat. A great part of the
      cultivated lands must be employed in rearing and fattening cattle; of
      which the price, therefore, must be sufficient to pay, not only the labour
      necessary for tending them, but the rent which the landlord, and the
      profit which the farmer, could have drawn from such land employed in
      tillage. The cattle bred upon the most uncultivated moors, when brought to
      the same market, are, in proportion to their weight or goodness, sold at
      the same price as those which are reared upon the most improved land. The
      proprietors of those moors profit by it, and raise the rent of their land
      in proportion to the price of their cattle. It is not more than a century
      ago, that in many parts of the Highlands of Scotland, butcher’s meat was
      as cheap or cheaper than even bread made of oatmeal. The Union opened the
      market of England to the Highland cattle. Their ordinary price, at
      present, is about three times greater than at the beginning of the
      century, and the rents of many Highland estates have been tripled and
      quadrupled in the same time. In almost every part of Great Britain, a
      pound of the best butcher’s meat is, in the present times, generally worth
      more than two pounds of the best white bread; and in plentiful years it is
      sometimes worth three or four pounds.
    
      It is thus that, in the progress of improvement, the rent and profit of
      unimproved pasture come to be regulated in some measure by the rent and
      profit of what is improved, and these again by the rent and profit of
      corn. Corn is an annual crop; butcher’s meat, a crop which requires four
      or five years to grow. As an acre of land, therefore, will produce a much
      smaller quantity of the one species of food than of the other, the
      inferiority of the quantity must be compensated by the superiority of the
      price. If it was more than compensated, more corn-land would be turned
      into pasture; and if it was not compensated, part of what was in pasture
      would be brought back into corn.
    
      This equality, however, between the rent and profit of grass and those of
      corn; of the land of which the immediate produce is food for cattle, and
      of that of which the immediate produce is food for men, must be understood
      to take place only through the greater part of the improved lands of a
      great country. In some particular local situations it is quite otherwise,
      and the rent and profit of grass are much superior to what can be made by
      corn.
    
      Thus, in the neighbourhood of a great town, the demand for milk, and for
      forage to horses, frequently contribute, together with the high price of
      butcher’s meat, to raise the value of grass above what may be called its
      natural proportion to that of corn. This local advantage, it is evident,
      cannot be communicated to the lands at a distance.
    
      Particular circumstances have sometimes rendered some countries so
      populous, that the whole territory, like the lands in the neighbourhood of
      a great town, has not been sufficient to produce both the grass and the
      corn necessary for the subsistence of their inhabitants. Their lands,
      therefore, have been principally employed in the production of grass, the
      more bulky commodity, and which cannot be so easily brought from a great
      distance; and corn, the food of the great body of the people, has been
      chiefly imported from foreign countries. Holland is at present in this
      situation; and a considerable part of ancient Italy seems to have been so
      during the prosperity of the Romans. To feed well, old Cato said, as we
      are told by Cicero, was the first and most profitable thing in the
      management of a private estate; to feed tolerably well, the second; and to
      feed ill, the third. To plough, he ranked only in the fourth place of
      profit and advantage. Tillage, indeed, in that part of ancient Italy which
      lay in the neighbour hood of Rome, must have been very much discouraged by
      the distributions of corn which were frequently made to the people, either
      gratuitously, or at a very low price. This corn was brought from the
      conquered provinces, of which several, instead of taxes, were obliged to
      furnish a tenth part of their produce at a stated price, about sixpence
      a-peck, to the republic. The low price at which this corn was distributed
      to the people, must necessarily have sunk the price of what could be
      brought to the Roman market from Latium, or the ancient territory of Rome,
      and must have discouraged its cultivation in that country.
    
      In an open country, too, of which the principal produce is corn, a
      well-inclosed piece of grass will frequently rent higher than any corn
      field in its neighbourhood. It is convenient for the maintenance of the
      cattle employed in the cultivation of the corn; and its high rent is, in
      this case, not so properly paid from the value of its own produce, as from
      that of the corn lands which are cultivated by means of it. It is likely
      to fall, if ever the neighbouring lands are completely inclosed. The
      present high rent of inclosed land in Scotland seems owing to the scarcity
      of inclosure, and will probably last no longer than that scarcity. The
      advantage of inclosure is greater for pasture than for corn. It saves the
      labour of guarding the cattle, which feed better, too, when they are not
      liable to be disturbed by their keeper or his dog.
    
      But where there is no local advantage of this kind, the rent and profit of
      corn, or whatever else is the common vegetable food of the people, must
      naturally regulate upon the land which is fit for producing it, the rent
      and profit of pasture.
    
      The use of the artificial grasses, of turnips, carrots, cabbages, and the
      other expedients which have been fallen upon to make an equal quantity of
      land feed a greater number of cattle than when in natural grass, should
      somewhat reduce, it might be expected, the superiority which, in an
      improved country, the price of butcher’s meat naturally has over that of
      bread. It seems accordingly to have done so; and there is some reason for
      believing that, at least in the London market, the price of butcher’s
      meat, in proportion to the price of bread, is a good deal lower in the
      present times than it was in the beginning of the last century.
    
      In the Appendix to the life of Prince Henry, Doctor Birch has given us an
      account of the prices of butcher’s meat as commonly paid by that prince.
      It is there said, that the four quarters of an ox, weighing six hundred
      pounds, usually cost him nine pounds ten shillings, or thereabouts; that
      is thirty-one shillings and eight-pence per hundred pounds weight. Prince
      Henry died on the 6th of November 1612, in the nineteenth year of his age.
    
      In March 1764, there was a parliamentary inquiry into the causes of the
      high price of provisions at that time. It was then, among other proof to
      the same purpose, given in evidence by a Virginia merchant, that in March
      1763, he had victualled his ships for twentyfour or twenty-five shillings
      the hundred weight of beef, which he considered as the ordinary price;
      whereas, in that dear year, he had paid twenty-seven shillings for the
      same weight and sort. This high price in 1764 is, however, four shillings
      and eight-pence cheaper than the ordinary price paid by Prince Henry; and
      it is the best beef only, it must be observed, which is fit to be salted
      for those distant voyages.
    
      The price paid by Prince Henry amounts to 3d. 4/5ths per pound weight of
      the whole carcase, coarse and choice pieces taken together; and at that
      rate the choice pieces could not have been sold by retail for less than
      4½d. or 5d. the pound.
    
      In the parliamentary inquiry in 1764, the witnesses stated the price of
      the choice pieces of the best beef to be to the consumer 4d. and 4½d. the
      pound; and the coarse pieces in general to be from seven farthings to 2½d.
      and 2¾d.; and this, they said, was in general one halfpenny dearer than
      the same sort of pieces had usually been sold in the month of March. But
      even this high price is still a good deal cheaper than what we can well
      suppose the ordinary retail price to have been in the time of Prince
      Henry.
    
      During the first twelve years of the last century, the average price of
      the best wheat at the Windsor market was £ 1:18:3½d. the quarter of nine
      Winchester bushels.
    
      But in the twelve years preceding 1764 including that year, the average
      price of the same measure of the best wheat at the same market was £
      2:1:9½d.
    
      In the first twelve years of the last century, therefore, wheat appears to
      have been a good deal cheaper, and butcher’s meat a good deal dearer, than
      in the twelve years preceding 1764, including that year.
    
      In all great countries, the greater part of the cultivated lands are
      employed in producing either food for men or food for cattle. The rent and
      profit of these regulate the rent and profit of all other cultivated land.
      If any particular produce afforded less, the land would soon be turned
      into corn or pasture; and if any afforded more, some part of the lands in
      corn or pasture would soon be turned to that produce.
    
      Those productions, indeed, which require either a greater original expense
      of improvement, or a greater annual expense of cultivation in order to fit
      the land for them, appear commonly to afford, the one a greater rent, the
      other a greater profit, than corn or pasture. This superiority, however,
      will seldom be found to amount to more than a reasonable interest or
      compensation for this superior expense.
    
      In a hop garden, a fruit garden, a kitchen garden, both the rent of the
      landlord, and the profit of the farmer, are generally greater than in
      acorn or grass field. But to bring the ground into this condition requires
      more expense. Hence a greater rent becomes due to the landlord. It
      requires, too, a more attentive and skilful management. Hence a greater
      profit becomes due to the farmer. The crop, too, at least in the hop and
      fruit garden, is more precarious. Its price, therefore, besides
      compensating all occasional losses, must afford something like the profit
      of insurance. The circumstances of gardeners, generally mean, and always
      moderate, may satisfy us that their great ingenuity is not commonly
      over-recompensed. Their delightful art is practised by so many rich people
      for amusement, that little advantage is to be made by those who practise
      it for profit; because the persons who should naturally be their best
      customers, supply themselves with all their most precious productions.
    
      The advantage which the landlord derives from such improvements, seems at
      no time to have been greater than what was sufficient to compensate the
      original expense of making them. In the ancient husbandry, after the
      vineyard, a well-watered kitchen garden seems to have been the part of the
      farm which was supposed to yield the most valuable produce. But
      Democritus, who wrote upon husbandry about two thousand years ago, and who
      was regarded by the ancients as one of the fathers of the art, thought
      they did not act wisely who inclosed a kitchen garden. The profit, he
      said, would not compensate the expense of a stone-wall: and bricks (he
      meant, I suppose, bricks baked in the sun) mouldered with the rain and the
      winter-storm, and required continual repairs. Columella, who reports this
      judgment of Democritus, does not controvert it, but proposes a very frugal
      method of inclosing with a hedge of brambles and briars, which he says he
      had found by experience to be both a lasting and an impenetrable fence;
      but which, it seems, was not commonly known in the time of Democritus.
      Palladius adopts the opinion of Columella, which had before been
      recommended by Varro. In the judgment of those ancient improvers, the
      produce of a kitchen garden had, it seems, been little more than
      sufficient to pay the extraordinary culture and the expense of watering;
      for in countries so near the sun, it was thought proper, in those times as
      in the present, to have the command of a stream of water, which could be
      conducted to every bed in the garden. Through the greater part of Europe,
      a kitchen garden is not at present supposed to deserve a better inclosure
      than that recommended by Columella. In Great Britain, and some other
      northern countries, the finer fruits cannot be brought to perfection but
      by the assistance of a wall. Their price, therefore, in such countries,
      must be sufficient to pay the expense of building and maintaining what
      they cannot be had without. The fruit-wall frequently surrounds the
      kitchen garden, which thus enjoys the benefit of an inclosure which its
      own produce could seldom pay for.
    
      That the vineyard, when properly planted and brought to perfection, was
      the most valuable part of the farm, seems to have been an undoubted maxim
      in the ancient agriculture, as it is in the modern, through all the wine
      countries. But whether it was advantageous to plant a new vineyard, was a
      matter of dispute among the ancient Italian husbandmen, as we learn from
      Columella. He decides, like a true lover of all curious cultivation, in
      favour of the vineyard; and endeavours to shew, by a comparison of the
      profit and expense, that it was a most advantageous improvement. Such
      comparisons, however, between the profit and expense of new projects are
      commonly very fallacious; and in nothing more so than in agriculture. Had
      the gain actually made by such plantations been commonly as great as he
      imagined it might have been, there could have been no dispute about it.
      The same point is frequently at this day a matter of controversy in the
      wine countries. Their writers on agriculture, indeed, the lovers and
      promoters of high cultivation, seem generally disposed to decide with
      Columella in favour of the vineyard. In France, the anxiety of the
      proprietors of the old vineyards to prevent the planting of any new ones,
      seems to favour their opinion, and to indicate a consciousness in those
      who must have the experience, that this species of cultivation is at
      present in that country more profitable than any other. It seems, at the
      same time, however, to indicate another opinion, that this superior profit
      can last no longer than the laws which at present restrain the free
      cultivation of the vine. In 1731, they obtained an order of council,
      prohibiting both the planting of new vineyards, and the renewal of these
      old ones, of which the cultivation had been interrupted for two years,
      without a particular permission from the king, to be granted only in
      consequence of an information from the intendant of the province,
      certifying that he had examined the land, and that it was incapable of any
      other culture. The pretence of this order was the scarcity of corn and
      pasture, and the superabundance of wine. But had this superabundance been
      real, it would, without any order of council, have effectually prevented
      the plantation of new vineyards, by reducing the profits of this species
      of cultivation below their natural proportion to those of corn and
      pasture. With regard to the supposed scarcity of corn occasioned by the
      multiplication of vineyards, corn is nowhere in France more carefully
      cultivated than in the wine provinces, where the land is fit for producing
      it: as in Burgundy, Guienne, and the Upper Languedoc. The numerous hands
      employed in the one species of cultivation necessarily encourage the
      other, by affording a ready market for its produce. To diminish the number
      of those who are capable of paying it, is surely a most unpromising
      expedient for encouraging the cultivation of corn. It is like the policy
      which would promote agriculture, by discouraging manufactures.
    
      The rent and profit of those productions, therefore, which require either
      a greater original expense of improvement in order to fit the land for
      them, or a greater annual expense of cultivation, though often much
      superior to those of corn and pasture, yet when they do no more than
      compensate such extraordinary expense, are in reality regulated by the
      rent and profit of those common crops.
    
      It sometimes happens, indeed, that the quantity of land which can be
      fitted for some particular produce, is too small to supply the effectual
      demand. The whole produce can be disposed of to those who are willing to
      give somewhat more than what is sufficient to pay the whole rent, wages,
      and profit, necessary for raising and bringing it to market, according to
      their natural rates, or according to the rates at which they are paid in
      the greater part of other cultivated land. The surplus part of the price
      which remains after defraying the whole expense of improvement and
      cultivation, may commonly, in this case, and in this case only, bear no
      regular proportion to the like surplus in corn or pasture, but may exceed
      it in almost any degree; and the greater part of this excess naturally
      goes to the rent of the landlord.
    
      The usual and natural proportion, for example, between the rent and profit
      of wine, and those of corn and pasture, must be understood to take place
      only with regard to those vineyards which produce nothing but good common
      wine, such as can be raised almost anywhere, upon any light, gravelly, or
      sandy soil, and which has nothing to recommend it but its strength and
      wholesomeness. It is with such vineyards only, that the common land of the
      country can be brought into competition; for with those of a peculiar
      quality it is evident that it cannot.
    
      The vine is more affected by the difference of soils than any other
      fruit-tree. From some it derives a flavour which no culture or management
      can equal, it is supposed, upon any other. This flavour, real or
      imaginary, is sometimes peculiar to the produce of a few vineyards;
      sometimes it extends through the greater part of a small district, and
      sometimes through a considerable part of a large province. The whole
      quantity of such wines that is brought to market falls short of the
      effectual demand, or the demand of those who would be willing to pay the
      whole rent, profit, and wages, necessary for preparing and bringing them
      thither, according to the ordinary rate, or according to the rate at which
      they are paid in common vineyards. The whole quantity, therefore, can be
      disposed of to those who are willing to pay more, which necessarily raises
      their price above that of common wine. The difference is greater or less,
      according as the fashionableness and scarcity of the wine render the
      competition of the buyers more or less eager. Whatever it be, the greater
      part of it goes to the rent of the landlord. For though such vineyards are
      in general more carefully cultivated than most others, the high price of
      the wine seems to be, not so much the effect, as the cause of this careful
      cultivation. In so valuable a produce, the loss occasioned by negligence
      is so great, as to force even the most careless to attention. A small part
      of this high price, therefore, is sufficient to pay the wages of the
      extraordinary labour bestowed upon their cultivation, and the profits of
      the extraordinary stock which puts that labour into motion.
    
      The sugar colonies possessed by the European nations in the West Indies
      may be compared to those precious vineyards. Their whole produce falls
      short of the effectual demand of Europe, and can be disposed of to those
      who are willing to give more than what is sufficient to pay the whole
      rent, profit, and wages, necessary for preparing and bringing it to
      market, according to the rate at which they are commonly paid by any other
      produce. In Cochin China, the finest white sugar generally sells for three
      piastres the quintal, about thirteen shillings and sixpence of our money,
      as we are told by Mr Poivre {Voyages d’un Philosophe.}, a very careful
      observer of the agriculture of that country. What is there called the
      quintal, weighs from a hundred and fifty to two hundred Paris pounds, or a
      hundred and seventy-five Paris pounds at a medium, which reduces the price
      of the hundred weight English to about eight shillings sterling; not a
      fourth part of what is commonly paid for the brown or muscovada sugars
      imported from our colonies, and not a sixth part of what is paid for the
      finest white sugar. The greater part of the cultivated lands in Cochin
      China are employed in producing corn and rice, the food of the great body
      of the people. The respective prices of corn, rice, and sugar, are there
      probably in the natural proportion, or in that which naturally takes place
      in the different crops of the greater part of cultivated land, and which
      recompenses the landlord and farmer, as nearly as can be computed,
      according to what is usually the original expense of improvement, and the
      annual expense of cultivation. But in our sugar colonies, the price of
      sugar bears no such proportion to that of the produce of a rice or corn
      field either in Europe or America. It is commonly said that a sugar
      planter expects that the rum and the molasses should defray the whole
      expense of his cultivation, and that his sugar should be all clear profit.
      If this be true, for I pretend not to affirm it, it is as if a corn farmer
      expected to defray the expense of his cultivation with the chaff and the
      straw, and that the grain should be all clear profit. We see frequently
      societies of merchants in London, and other trading towns, purchase waste
      lands in our sugar colonies, which they expect to improve and cultivate
      with profit, by means of factors and agents, notwithstanding the great
      distance and the uncertain returns, from the defective administration of
      justice in those countries. Nobody will attempt to improve and cultivate
      in the same manner the most fertile lands of Scotland, Ireland, or the
      corn provinces of North America, though, from the more exact
      administration of justice in these countries, more regular returns might
      be expected.
    
      In Virginia and Maryland, the cultivation of tobacco is preferred, as most
      profitable, to that of corn. Tobacco might be cultivated with advantage
      through the greater part of Europe; but, in almost every part of Europe,
      it has become a principal subject of taxation; and to collect a tax from
      every different farm in the country where this plant might happen to be
      cultivated, would be more difficult, it has been supposed, than to levy
      one upon its importation at the custom-house. The cultivation of tobacco
      has, upon this account, been most absurdly prohibited through the greater
      part of Europe, which necessarily gives a sort of monopoly to the
      countries where it is allowed; and as Virginia and Maryland produce the
      greatest quantity of it, they share largely, though with some competitors,
      in the advantage of this monopoly. The cultivation of tobacco, however,
      seems not to be so advantageous as that of sugar. I have never even heard
      of any tobacco plantation that was improved and cultivated by the capital
      of merchants who resided in Great Britain; and our tobacco colonies send
      us home no such wealthy planters as we see frequently arrive from our
      sugar islands. Though, from the preference given in those colonies to the
      cultivation of tobacco above that of corn, it would appear that the
      effectual demand of Europe for tobacco is not completely supplied, it
      probably is more nearly so than that for sugar; and though the present
      price of tobacco is probably more than sufficient to pay the whole rent,
      wages, and profit, necessary for preparing and bringing it to market,
      according to the rate at which they are commonly paid in corn land, it
      must not be so much more as the present price of sugar. Our tobacco
      planters, accordingly, have shewn the same fear of the superabundance of
      tobacco, which the proprietors of the old vineyards in France have of the
      superabundance of wine. By act of assembly, they have restrained its
      cultivation to six thousand plants, supposed to yield a thousand weight of
      tobacco, for every negro between sixteen and sixty years of age. Such a
      negro, over and above this quantity of tobacco, can manage, they reckon,
      four acres of Indian corn. To prevent the market from being overstocked,
      too, they have sometimes, in plentiful years, we are told by Dr Douglas
      {Douglas’s Summary, vol. ii. p. 379, 373.} (I suspect he has been ill
      informed), burnt a certain quantity of tobacco for every negro, in the
      same manner as the Dutch are said to do of spices. If such violent methods
      are necessary to keep up the present price of tobacco, the superior
      advantage of its culture over that of corn, if it still has any, will not
      probably be of long continuance.
    
      It is in this manner that the rent of the cultivated land, of which the
      produce is human food, regulates the rent of the greater part of other
      cultivated land. No particular produce can long afford less, because the
      land would immediately be turned to another use; and if any particular
      produce commonly affords more, it is because the quantity of land which
      can be fitted for it is too small to supply the effectual demand.
    
      In Europe, corn is the principal produce of land, which serves immediately
      for human food. Except in particular situations, therefore, the rent of
      corn land regulates in Europe that of all other cultivated land. Britain
      need envy neither the vineyards of France, nor the olive plantations of
      Italy. Except in particular situations, the value of these is regulated by
      that of corn, in which the fertility of Britain is not much inferior to
      that of either of those two countries.
    
      If, in any country, the common and favourite vegetable food of the people
      should be drawn from a plant of which the most common land, with the same,
      or nearly the same culture, produced a much greater quantity than the most
      fertile does of corn; the rent of the landlord, or the surplus quantity of
      food which would remain to him, after paying the labour, and replacing the
      stock of the farmer, together with its ordinary profits, would necessarily
      be much greater. Whatever was the rate at which labour was commonly
      maintained in that country, this greater surplus could always maintain a
      greater quantity of it, and, consequently, enable the landlord to purchase
      or command a greater quantity of it. The real value of his rent, his real
      power and authority, his command of the necessaries and conveniencies of
      life with which the labour of other people could supply him, would
      necessarily be much greater.
    
      A rice field produces a much greater quantity of food than the most
      fertile corn field. Two crops in the year, from thirty to sixty bushels
      each, are said to be the ordinary produce of an acre. Though its
      cultivation, therefore, requires more labour, a much greater surplus
      remains after maintaining all that labour. In those rice countries,
      therefore, where rice is the common and favourite vegetable food of the
      people, and where the cultivators are chiefly maintained with it, a
      greater share of this greater surplus should belong to the landlord than
      in corn countries. In Carolina, where the planters, as in other British
      colonies, are generally both farmers and landlords, and where rent,
      consequently, is confounded with profit, the cultivation of rice is found
      to be more profitable than that of corn, though their fields produce only
      one crop in the year, and though, from the prevalence of the customs of
      Europe, rice is not there the common and favourite vegetable food of the
      people.
    
      A good rice field is a bog at all seasons, and at one season a bog covered
      with water. It is unfit either for corn, or pasture, or vineyard, or,
      indeed, for any other vegetable produce that is very useful to men; and
      the lands which are fit for those purposes are not fit for rice. Even in
      the rice countries, therefore, the rent of rice lands cannot regulate the
      rent of the other cultivated land which can never be turned to that
      produce.
    
      The food produced by a field of potatoes is not inferior in quantity to
      that produced by a field of rice, and much superior to what is produced by
      a field of wheat. Twelve thousand weight of potatoes from an acre of land
      is not a greater produce than two thousand weight of wheat. The food or
      solid nourishment, indeed, which can be drawn from each of those two
      plants, is not altogether in proportion to their weight, on account of the
      watery nature of potatoes. Allowing, however, half the weight of this root
      to go to water, a very large allowance, such an acre of potatoes will
      still produce six thousand weight of solid nourishment, three times the
      quantity produced by the acre of wheat. An acre of potatoes is cultivated
      with less expense than an acre of wheat; the fallow, which generally
      precedes the sowing of wheat, more than compensating the hoeing and other
      extraordinary culture which is always given to potatoes. Should this root
      ever become in any part of Europe, like rice in some rice countries, the
      common and favourite vegetable food of the people, so as to occupy the
      same proportion of the lands in tillage, which wheat and other sorts of
      grain for human food do at present, the same quantity of cultivated land
      would maintain a much greater number of people; and the labourers being
      generally fed with potatoes, a greater surplus would remain after
      replacing all the stock, and maintaining all the labour employed in
      cultivation. A greater share of this surplus, too, would belong to the
      landlord. Population would increase, and rents would rise much beyond what
      they are at present.
    
      The land which is fit for potatoes, is fit for almost every other useful
      vegetable. If they occupied the same proportion of cultivated land which
      corn does at present, they would regulate, in the same manner, the rent of
      the greater part of other cultivated land.
    
      In some parts of Lancashire, it is pretended, I have been told, that bread
      of oatmeal is a heartier food for labouring people than wheaten bread, and
      I have frequently heard the same doctrine held in Scotland. I am, however,
      somewhat doubtful of the truth of it. The common people in Scotland, who
      are fed with oatmeal, are in general neither so strong nor so handsome as
      the same rank of people in England, who are fed with wheaten bread. They
      neither work so well, nor look so well; and as there is not the same
      difference between the people of fashion in the two countries, experience
      would seem to shew, that the food of the common people in Scotland is not
      so suitable to the human constitution as that of their neighbours of the
      same rank in England. But it seems to be otherwise with potatoes. The
      chairmen, porters, and coal-heavers in London, and those unfortunate women
      who live by prostitution, the strongest men and the most beautiful women
      perhaps in the British dominions, are said to be, the greater part of
      them, from the lowest rank of people in Ireland, who are generally fed
      with this root. No food can afford a more decisive proof of its nourishing
      quality, or of its being peculiarly suitable to the health of the human
      constitution.
    
      It is difficult to preserve potatoes through the year, and impossible to
      store them like corn, for two or three years together. The fear of not
      being able to sell them before they rot, discourages their cultivation,
      and is, perhaps, the chief obstacle to their ever becoming in any great
      country, like bread, the principal vegetable food of all the different
      ranks of the people.
    


    
      PART II.—Of the Produce of Land, which sometimes does, and sometimes
      does not, afford Rent.
    
      Human food seems to be the only produce of land, which always and
      necessarily affords some rent to the landlord. Other sorts of produce
      sometimes may, and sometimes may not, according to different
      circumstances.
    
      After food, clothing and lodging are the two great wants of mankind.
    
      Land, in its original rude state, can afford the materials of clothing and
      lodging to a much greater number of people than it can feed. In its
      improved state, it can sometimes feed a greater number of people than it
      can supply with those materials; at least in the way in which they require
      them, and are willing to pay for them. In the one state, therefore, there
      is always a superabundance of these materials, which are frequently, upon
      that account, of little or no value. In the other, there is often a
      scarcity, which necessarily augments their value. In the one state, a
      great part of them is thrown away as useless and the price of what is used
      is considered as equal only to the labour and expense of fitting it for
      use, and can, therefore, afford no rent to the landlord. In the other,
      they are all made use of, and there is frequently a demand for more than
      can be had. Somebody is always willing to give more for every part of
      them, than what is sufficient to pay the expense of bringing them to
      market. Their price, therefore, can always afford some rent to the
      landlord.
    
      The skins of the larger animals were the original materials of clothing.
      Among nations of hunters and shepherds, therefore, whose food consists
      chiefly in the flesh of those animals, everyman, by providing himself with
      food, provides himself with the materials of more clothing than he can
      wear. If there was no foreign commerce, the greater part of them would be
      thrown away as things of no value. This was probably the case among the
      hunting nations of North America, before their country was discovered by
      the Europeans, with whom they now exchange their surplus peltry, for
      blankets, fire-arms, and brandy, which gives it some value. In the present
      commercial state of the known world, the most barbarous nations, I
      believe, among whom land property is established, have some foreign
      commerce of this kind, and find among their wealthier neighbours such a
      demand for all the materials of clothing, which their land produces, and
      which can neither be wrought up nor consumed at home, as raises their
      price above what it costs to send them to those wealthier neighbours. It
      affords, therefore, some rent to the landlord. When the greater part of
      the Highland cattle were consumed on their own hills, the exportation of
      their hides made the most considerable article of the commerce of that
      country, and what they were exchanged for afforded some addition to the
      rent of the Highland estates. The wool of England, which in old times,
      could neither be consumed nor wrought up at home, found a market in the
      then wealthier and more industrious country of Flanders, and its price
      afforded something to the rent of the land which produced it. In countries
      not better cultivated than England was then, or than the Highlands of
      Scotland are now, and which had no foreign commerce, the materials of
      clothing would evidently be so superabundant, that a great part of them
      would be thrown away as useless, and no part could afford any rent to the
      landlord.
    
      The materials of lodging cannot always be transported to so great a
      distance as those of clothing, and do not so readily become an object of
      foreign commerce. When they are superabundant in the country which
      produces them, it frequently happens, even in the present commercial state
      of the world, that they are of no value to the landlord. A good stone
      quarry in the neighbourhood of London would afford a considerable rent. In
      many parts of Scotland and Wales it affords none. Barren timber for
      building is of great value in a populous and well-cultivated country, and
      the land which produces it affords a considerable rent. But in many parts
      of North America, the landlord would be much obliged to any body who would
      carry away the greater part of his large trees. In some parts of the
      Highlands of Scotland, the bark is the only part of the wood which, for
      want of roads and water-carriage, can be sent to market; the timber is
      left to rot upon the ground. When the materials of lodging are so
      superabundant, the part made use of is worth only the labour and expense
      of fitting it for that use. It affords no rent to the landlord, who
      generally grants the use of it to whoever takes the trouble of asking it.
      The demand of wealthier nations, however, sometimes enables him to get a
      rent for it. The paving of the streets of London has enabled the owners of
      some barren rocks on the coast of Scotland to draw a rent from what never
      afforded any before. The woods of Norway, and of the coasts of the Baltic,
      find a market in many parts of Great Britain, which they could not find at
      home, and thereby afford some rent to their proprietors.
    
      Countries are populous, not in proportion to the number of people whom
      their produce can clothe and lodge, but in proportion to that of those
      whom it can feed. When food is provided, it is easy to find the necessary
      clothing and lodging. But though these are at hand, it may often be
      difficult to find food. In some parts of the British dominions, what is
      called a house may be built by one day’s labour of one man. The simplest
      species of clothing, the skins of animals, require somewhat more labour to
      dress and prepare them for use. They do not, however, require a great
      deal. Among savage or barbarous nations, a hundredth, or little more than
      a hundredth part of the labour of the whole year, will be sufficient to
      provide them with such clothing and lodging as satisfy the greater part of
      the people. All the other ninety-nine parts are frequently no more than
      enough to provide them with food.
    
      But when, by the improvement and cultivation of land, the labour of one
      family can provide food for two, the labour of half the society becomes
      sufficient to provide food for the whole. The other half, therefore, or at
      least the greater part of them, can be employed in providing other things,
      or in satisfying the other wants and fancies of mankind. Clothing and
      lodging, household furniture, and what is called equipage, are the
      principal objects of the greater part of those wants and fancies. The rich
      man consumes no more food than his poor neighbour. In quality it may be
      very different, and to select and prepare it may require more labour and
      art; but in quantity it is very nearly the same. But compare the spacious
      palace and great wardrobe of the one, with the hovel and the few rags of
      the other, and you will be sensible that the difference between their
      clothing, lodging, and household furniture, is almost as great in quantity
      as it is in quality. The desire of food is limited in every man by the
      narrow capacity of the human stomach; but the desire of the conveniencies
      and ornaments of building, dress, equipage, and household furniture, seems
      to have no limit or certain boundary. Those, therefore, who have the
      command of more food than they themselves can consume, are always willing
      to exchange the surplus, or, what is the same thing, the price of it, for
      gratifications of this other kind. What is over and above satisfying the
      limited desire, is given for the amusement of those desires which cannot
      be satisfied, but seem to be altogether endless. The poor, in order to
      obtain food, exert themselves to gratify those fancies of the rich; and to
      obtain it more certainly, they vie with one another in the cheapness and
      perfection of their work. The number of workmen increases with the
      increasing quantity of food, or with the growing improvement and
      cultivation of the lands; and as the nature of their business admits of
      the utmost subdivisions of labour, the quantity of materials which they
      can work up, increases in a much greater proportion than their numbers.
      Hence arises a demand for every sort of material which human invention can
      employ, either usefully or ornamentally, in building, dress, equipage, or
      household furniture; for the fossils and minerals contained in the bowels
      of the earth, the precious metals, and the precious stones.
    
      Food is, in this manner, not only the original source of rent, but every
      other part of the produce of land which afterwards affords rent, derives
      that part of its value from the improvement of the powers of labour in
      producing food, by means of the improvement and cultivation of land.
    
      Those other parts of the produce of land, however, which afterwards afford
      rent, do not afford it always. Even in improved and cultivated countries,
      the demand for them is not always such as to afford a greater price than
      what is sufficient to pay the labour, and replace, together with its
      ordinary profits, the stock which must be employed in bringing them to
      market. Whether it is or is not such, depends upon different
      circumstances.
    
      Whether a coal mine, for example, can afford any rent, depends partly upon
      its fertility, and partly upon its situation.
    
      A mine of any kind may be said to be either fertile or barren, according
      as the quantity of mineral which can be brought from it by a certain
      quantity of labour, is greater or less than what can be brought by an
      equal quantity from the greater part of other mines of the same kind.
    
      Some coal mines, advantageously situated, cannot be wrought on account of
      their barrenness. The produce does not pay the expense. They can afford
      neither profit nor rent.
    
      There are some, of which the produce is barely sufficient to pay the
      labour, and replace, together with its ordinary profits, the stock
      employed in working them. They afford some profit to the undertaker of the
      work, but no rent to the landlord. They can be wrought advantageously by
      nobody but the landlord, who, being himself the undertaker of the work,
      gets the ordinary profit of the capital which he employs in it. Many coal
      mines in Scotland are wrought in this manner, and can be wrought in no
      other. The landlord will allow nobody else to work them without paying
      some rent, and nobody can afford to pay any.
    
      Other coal mines in the same country, sufficiently fertile, cannot be
      wrought on account of their situation. A quantity of mineral, sufficient
      to defray the expense of working, could be brought from the mine by the
      ordinary, or even less than the ordinary quantity of labour: but in an
      inland country, thinly inhabited, and without either good roads or
      water-carriage, this quantity could not be sold.
    
      Coals are a less agreeable fuel than wood: they are said too to be less
      wholesome. The expense of coals, therefore, at the place where they are
      consumed, must generally be somewhat less than that of wood.
    
      The price of wood, again, varies with the state of agriculture, nearly in
      the same manner, and exactly for the same reason, as the price of cattle.
      In its rude beginnings, the greater part of every country is covered with
      wood, which is then a mere incumbrance, of no value to the landlord, who
      would gladly give it to any body for the cutting. As agriculture advances,
      the woods are partly cleared by the progress of tillage, and partly go to
      decay in consequence of the increased number of cattle. These, though they
      do not increase in the same proportion as corn, which is altogether the
      acquisition of human industry, yet multiply under the care and protection
      of men, who store up in the season of plenty what may maintain them in
      that of scarcity; who, through the whole year, furnish them with a greater
      quantity of food than uncultivated nature provides for them; and who, by
      destroying and extirpating their enemies, secure them in the free
      enjoyment of all that she provides. Numerous herds of cattle, when allowed
      to wander through the woods, though they do not destroy the old trees,
      hinder any young ones from coming up; so that, in the course of a century
      or two, the whole forest goes to ruin. The scarcity of wood then raises
      its price. It affords a good rent; and the landlord sometimes finds that
      he can scarce employ his best lands more advantageously than in growing
      barren timber, of which the greatness of the profit often compensates the
      lateness of the returns. This seems, in the present times, to be nearly
      the state of things in several parts of Great Britain, where the profit of
      planting is found to be equal to that of either corn or pasture. The
      advantage which the landlord derives from planting can nowhere exceed, at
      least for any considerable time, the rent which these could afford him;
      and in an inland country, which is highly cultivated, it will frequently
      not fall much short of this rent. Upon the sea-coast of a well-improved
      country, indeed, if coals can conveniently be had for fuel, it may
      sometimes be cheaper to bring barren timber for building from less
      cultivated foreign countries than to raise it at home. In the new town of
      Edinburgh, built within these few years, there is not, perhaps, a single
      stick of Scotch timber.
    
      Whatever may be the price of wood, if that of coals is such that the
      expense of a coal fire is nearly equal to that of a wood one we may be
      assured, that at that place, and in these circumstances, the price of
      coals is as high as it can be. It seems to be so in some of the inland
      parts of England, particularly in Oxfordshire, where it is usual, even in
      the fires of the common people, to mix coals and wood together, and where
      the difference in the expense of those two sorts of fuel cannot,
      therefore, be very great. Coals, in the coal countries, are everywhere
      much below this highest price. If they were not, they could not bear the
      expense of a distant carriage, either by land or by water. A small
      quantity only could be sold; and the coal masters and the coal proprietors
      find it more for their interest to sell a great quantity at a price
      somewhat above the lowest, than a small quantity at the highest. The most
      fertile coal mine, too, regulates the price of coals at all the other
      mines in its neighbourhood. Both the proprietor and the undertaker of the
      work find, the one that he can get a greater rent, the other that he can
      get a greater profit, by somewhat underselling all their neighbours. Their
      neighbours are soon obliged to sell at the same price, though they cannot
      so well afford it, and though it always diminishes, and sometimes takes
      away altogether, both their rent and their profit. Some works are
      abandoned altogether; others can afford no rent, and can be wrought only
      by the proprietor.
    
      The lowest price at which coals can be sold for any considerable time, is,
      like that of all other commodities, the price which is barely sufficient
      to replace, together with its ordinary profits, the stock which must be
      employed in bringing them to market. At a coal mine for which the landlord
      can get no rent, but, which he must either work himself or let it alone
      altogether, the price of coals must generally be nearly about this price.
    
      Rent, even where coals afford one, has generally a smaller share in their
      price than in that of most other parts of the rude produce of land. The
      rent of an estate above ground, commonly amounts to what is supposed to be
      a third of the gross produce; and it is generally a rent certain and
      independent of the occasional variations in the crop. In coal mines, a
      fifth of the gross produce is a very great rent, a tenth the common rent;
      and it is seldom a rent certain, but depends upon the occasional
      variations in the produce. These are so great, that in a country where
      thirty years purchase is considered as a moderate price for the property
      of a landed estate, ten years purchase is regarded as a good price for
      that of a coal mine.
    
      The value of a coal mine to the proprietor, frequently depends as much
      upon its situation as upon its fertility. That of a metallic mine depends
      more upon its fertility, and less upon its situation. The coarse, and
      still more the precious metals, when separated from the ore, are so
      valuable, that they can generally bear the expense of a very long land,
      and of the most distant sea carriage. Their market is not confined to the
      countries in the neighbourhood of the mine, but extends to the whole
      world. The copper of Japan makes an article of commerce in Europe; the
      iron of Spain in that of Chili and Peru. The silver of Peru finds its way,
      not only to Europe, but from Europe to China.
    
      The price of coals in Westmoreland or Shropshire can have little effect on
      their price at Newcastle; and their price in the Lionnois can have none at
      all. The productions of such distant coal mines can never be brought into
      competition with one another. But the productions of the most distant
      metallic mines frequently may, and in fact commonly are.
    
      The price, therefore, of the coarse, and still more that of the precious
      metals, at the most fertile mines in the world, must necessarily more or
      less affect their price at every other in it. The price of copper in Japan
      must have some influence upon its price at the copper mines in Europe. The
      price of silver in Peru, or the quantity either of labour or of other
      goods which it will purchase there, must have some influence on its price,
      not only at the silver mines of Europe, but at those of China. After the
      discovery of the mines of Peru, the silver mines of Europe were, the
      greater part of them, abandoned. The value of silver was so much reduced,
      that their produce could no longer pay the expense of working them, or
      replace, with a profit, the food, clothes, lodging, and other necessaries
      which were consumed in that operation. This was the case, too, with the
      mines of Cuba and St. Domingo, and even with the ancient mines of Peru,
      after the discovery of those of Potosi. The price of every metal, at every
      mine, therefore, being regulated in some measure by its price at the most
      fertile mine in the world that is actually wrought, it can, at the greater
      part of mines, do very little more than pay the expense of working, and
      can seldom afford a very high rent to the landlord. Rent accordingly,
      seems at the greater part of mines to have but a small share in the price
      of the coarse, and a still smaller in that of the precious metals. Labour
      and profit make up the greater part of both.
    
      A sixth part of the gross produce may be reckoned the average rent of the
      tin mines of Cornwall, the most fertile that are known in the world, as we
      are told by the Rev. Mr. Borlace, vice-warden of the stannaries. Some, he
      says, afford more, and some do not afford so much. A sixth part of the
      gross produce is the rent, too, of several very fertile lead mines in
      Scotland.
    
      In the silver mines of Peru, we are told by Frezier and Ulloa, the
      proprietor frequently exacts no other acknowledgment from the undertaker
      of the mine, but that he will grind the ore at his mill, paying him the
      ordinary multure or price of grinding. Till 1736, indeed, the tax of the
      king of Spain amounted to one fifth of the standard silver, which till
      then might be considered as the real rent of the greater part of the
      silver mines of Peru, the richest which have been known in the world. If
      there had been no tax, this fifth would naturally have belonged to the
      landlord, and many mines might have been wrought which could not then be
      wrought, because they could not afford this tax. The tax of the duke of
      Cornwall upon tin is supposed to amount to more than five per cent. or one
      twentieth part of the value; and whatever may be his proportion, it would
      naturally, too, belong to the proprietor of the mine, if tin was duty
      free. But if you add one twentieth to one sixth, you will find that the
      whole average rent of the tin mines of Cornwall, was to the whole average
      rent of the silver mines of Peru, as thirteen to twelve. But the silver
      mines of Peru are not now able to pay even this low rent; and the tax upon
      silver was, in 1736, reduced from one fifth to one tenth. Even this tax
      upon silver, too, gives more temptation to smuggling than the tax of one
      twentieth upon tin; and smuggling must be much easier in the precious than
      in the bulky commodity. The tax of the king of Spain, accordingly, is said
      to be very ill paid, and that of the duke of Cornwall very well. Rent,
      therefore, it is probable, makes a greater part of the price of tin at the
      most fertile tin mines than it does of silver at the most fertile silver
      mines in the world. After replacing the stock employed in working those
      different mines, together with its ordinary profits, the residue which
      remains to the proprietor is greater, it seems, in the coarse, than in the
      precious metal.
    
      Neither are the profits of the undertakers of silver mines commonly very
      great in Peru. The same most respectable and well-informed authors
      acquaint us, that when any person undertakes to work a new mine in Peru,
      he is universally looked upon as a man destined to bankruptcy and ruin,
      and is upon that account shunned and avoided by every body. Mining, it
      seems, is considered there in the same light as here, as a lottery, in
      which the prizes do not compensate the blanks, though the greatness of
      some tempts many adventurers to throw away their fortunes in such
      unprosperous projects.
    
      As the sovereign, however, derives a considerable part of his revenue from
      the produce of silver mines, the law in Peru gives every possible
      encouragement to the discovery and working of new ones. Whoever discovers
      a new mine, is entitled to measure off two hundred and forty-six feet in
      length, according to what he supposes to be the direction of the vein, and
      half as much in breadth. He becomes proprietor of this portion of the
      mine, and can work it without paving any acknowledgment to the landlord.
      The interest of the duke of Cornwall has given occasion to a regulation
      nearly of the same kind in that ancient dutchy. In waste and uninclosed
      lands, any person who discovers a tin mine may mark out its limits to a
      certain extent, which is called bounding a mine. The bounder becomes the
      real proprietor of the mine, and may either work it himself, or give it in
      lease to another, without the consent of the owner of the land, to whom,
      however, a very small acknowledgment must be paid upon working it. In both
      regulations, the sacred rights of private property are sacrificed to the
      supposed interests of public revenue.
    
      The same encouragement is given in Peru to the discovery and working of
      new gold mines; and in gold the king’s tax amounts only to a twentieth
      part of the standard rental. It was once a fifth, and afterwards a tenth,
      as in silver; but it was found that the work could not bear even the
      lowest of these two taxes. If it is rare, however, say the same authors,
      Frezier and Ulloa, to find a person who has made his fortune by a silver,
      it is still much rarer to find one who has done so by a gold mine. This
      twentieth part seems to be the whole rent which is paid by the greater
      part of the gold mines of Chili and Peru. Gold, too, is much more liable
      to be smuggled than even silver; not only on account of the superior value
      of the metal in proportion to its bulk, but on account of the peculiar way
      in which nature produces it. Silver is very seldom found virgin, but, like
      most other metals, is generally mineralized with some other body, from
      which it is impossible to separate it in such quantities as will pay for
      the expense, but by a very laborious and tedious operation, which cannot
      well be carried on but in work-houses erected for the purpose, and,
      therefore, exposed to the inspection of the king’s officers. Gold, on the
      contrary, is almost always found virgin. It is sometimes found in pieces
      of some bulk; and, even when mixed, in small and almost insensible
      particles, with sand, earth, and other extraneous bodies, it can be
      separated from them by a very short and simple operation, which can be
      carried on in any private house by any body who is possessed of a small
      quantity of mercury. If the king’s tax, therefore, is but ill paid upon
      silver, it is likely to be much worse paid upon gold; and rent must make a
      much smaller part of the price of gold than that of silver.
    
      The lowest price at which the precious metals can be sold, or the smallest
      quantity of other goods for which they can be exchanged, during any
      considerable time, is regulated by the same principles which fix the
      lowest ordinary price of all other goods. The stock which must commonly be
      employed, the food, clothes, and lodging, which must commonly be consumed
      in bringing them from the mine to the market, determine it. It must at
      least be sufficient to replace that stock, with the ordinary profits.
    
      Their highest price, however, seems not to be necessarily determined by
      any thing but the actual scarcity or plenty of these metals themselves. It
      is not determined by that of any other commodity, in the same manner as
      the price of coals is by that of wood, beyond which no scarcity can ever
      raise it. Increase the scarcity of gold to a certain degree, and the
      smallest bit of it may become more precious than a diamond, and exchange
      for a greater quantity of other goods.
    
      The demand for those metals arises partly from their utility, and partly
      from their beauty. If you except iron, they are more useful than, perhaps,
      any other metal. As they are less liable to rust and impurity, they can
      more easily be kept clean; and the utensils, either of the table or the
      kitchen, are often, upon that account, more agreeable when made of them. A
      silver boiler is more cleanly than a lead, copper, or tin one; and the
      same quality would render a gold boiler still better than a silver one.
      Their principal merit, however, arises from their beauty, which renders
      them peculiarly fit for the ornaments of dress and furniture. No paint or
      dye can give so splendid a colour as gilding. The merit of their beauty is
      greatly enhanced by their scarcity. With the greater part of rich people,
      the chief enjoyment of riches consists in the parade of riches; which, in
      their eye, is never so complete as when they appear to possess those
      decisive marks of opulence which nobody can possess but themselves. In
      their eyes, the merit of an object, which is in any degree either useful
      or beautiful, is greatly enhanced by its scarcity, or by the great labour
      which it requires to collect any considerable quantity of it; a labour
      which nobody can afford to pay but themselves. Such objects they are
      willing to purchase at a higher price than things much more beautiful and
      useful, but more common. These qualities of utility, beauty, and scarcity,
      are the original foundation of the high price of those metals, or of the
      great quantity of other goods for which they can everywhere be exchanged.
      This value was antecedent to, and independent of their being employed as
      coin, and was the quality which fitted them for that employment. That
      employment, however, by occasioning a new demand, and by diminishing the
      quantity which could be employed in any other way, may have afterwards
      contributed to keep up or increase their value.
    
      The demand for the precious stones arises altogether from their beauty.
      They are of no use but as ornaments; and the merit of their beauty is
      greatly enhanced by their scarcity, or by the difficulty and expense of
      getting them from the mine. Wages and profit accordingly make up, upon
      most occasions, almost the whole of the high price. Rent comes in but for
      a very small share, frequently for no share; and the most fertile mines
      only afford any considerable rent. When Tavernier, a jeweller, visited the
      diamond mines of Golconda and Visiapour, he was informed that the
      sovereign of the country, for whose benefit they were wrought, had ordered
      all of them to be shut up except those which yielded the largest and
      finest stones. The other, it seems, were to the proprietor not worth the
      working.
    
      As the prices, both of the precious metals and of the precious stones, is
      regulated all over the world by their price at the most fertile mine in
      it, the rent which a mine of either can afford to its proprietor is in
      proportion, not to its absolute, but to what may be called its relative
      fertility, or to its superiority over other mines of the same kind. If new
      mines were discovered, as much superior to those of Potosi, as they were
      superior to those of Europe, the value of silver might be so much degraded
      as to render even the mines of Potosi not worth the working. Before the
      discovery of the Spanish West Indies, the most fertile mines in Europe may
      have afforded as great a rent to their proprietors as the richest mines in
      Peru do at present. Though the quantity of silver was much less, it might
      have exchanged for an equal quantity of other goods, and the proprietor’s
      share might have enabled him to purchase or command an equal quantity
      either of labour or of commodities.
    
      The value, both of the produce and of the rent, the real revenue which
      they afforded, both to the public and to the proprietor, might have been
      the same.
    
      The most abundant mines, either of the precious metals, or of the precious
      stones, could add little to the wealth of the world. A produce, of which
      the value is principally derived from its scarcity, is necessarily
      degraded by its abundance. A service of plate, and the other frivolous
      ornaments of dress and furniture, could be purchased for a smaller
      quantity of commodities; and in this would consist the sole advantage
      which the world could derive from that abundance.
    
      It is otherwise in estates above ground. The value, both of their produce
      and of their rent, is in proportion to their absolute, and not to their
      relative fertility. The land which produces a certain quantity of food,
      clothes, and lodging, can always feed, clothe, and lodge, a certain number
      of people; and whatever may be the proportion of the landlord, it will
      always give him a proportionable command of the labour of those people,
      and of the commodities with which that labour can supply him. The value of
      the most barren land is not diminished by the neighbourhood of the most
      fertile. On the contrary, it is generally increased by it. The great
      number of people maintained by the fertile lands afford a market to many
      parts of the produce of the barren, which they could never have found
      among those whom their own produce could maintain.
    
      Whatever increases the fertility of land in producing food, increases not
      only the value of the lands upon which the improvement is bestowed, but
      contributes likewise to increase that of many other lands, by creating a
      new demand for their produce. That abundance of food, of which, in
      consequence of the improvement of land, many people have the disposal
      beyond what they themselves can consume, is the great cause of the demand,
      both for the precious metals and the precious stones, as well as for every
      other conveniency and ornament of dress, lodging, household furniture, and
      equipage. Food not only constitutes the principal part of the riches of
      the world, but it is the abundance of food which gives the principal part
      of their value to many other sorts of riches. The poor inhabitants of Cuba
      and St. Domingo, when they were first discovered by the Spaniards, used to
      wear little bits of gold as ornaments in their hair and other parts of
      their dress. They seemed to value them as we would do any little pebbles
      of somewhat more than ordinary beauty, and to consider them as just worth
      the picking up, but not worth the refusing to any body who asked them,
      They gave them to their new guests at the first request, without seeming
      to think that they had made them any very valuable present. They were
      astonished to observe the rage of the Spaniards to obtain them; and had no
      notion that there could anywhere be a country in which many people had the
      disposal of so great a superfluity of food; so scanty always among
      themselves, that, for a very small quantity of those glittering baubles,
      they would willingly give as much as might maintain a whole family for
      many years. Could they have been made to understand this, the passion of
      the Spaniards would not have surprised them.
    


    
      PART III.—Of the variations in the Proportion between the respective
      Values of that sort of Produce which always affords Rent, and of that
      which sometimes does, and sometimes does not, afford Rent.
    
      The increasing abundance of food, in consequence of the increasing
      improvement and cultivation, must necessarily increase the demand for
      every part of the produce of land which is not food, and which can be
      applied either to use or to ornament. In the whole progress of
      improvement, it might, therefore, be expected there should be only one
      variation in the comparative values of those two different sorts of
      produce. The value of that sort which sometimes does, and sometimes does
      not afford rent, should constantly rise in proportion to that which always
      affords some rent. As art and industry advance, the materials of clothing
      and lodging, the useful fossils and materials of the earth, the precious
      metals and the precious stones, should gradually come to be more and more
      in demand, should gradually exchange for a greater and a greater quantity
      of food; or, in other words, should gradually become dearer and dearer.
      This, accordingly, has been the case with most of these things upon most
      occasions, and would have been the case with all of them upon all
      occasions, if particular accidents had not, upon some occasions, increased
      the supply of some of them in a still greater proportion than the demand.
    
      The value of a free-stone quarry, for example, will necessarily increase
      with the increasing improvement and population of the country round about
      it, especially if it should be the only one in the neighbourhood. But the
      value of a silver mine, even though there should not be another within a
      thousand miles of it, will not necessarily increase with the improvement
      of the country in which it is situated. The market for the produce of a
      free-stone quarry can seldom extend more than a few miles round about it,
      and the demand must generally be in proportion to the improvement and
      population of that small district; but the market for the produce of a
      silver mine may extend over the whole known world. Unless the world in
      general, therefore, be advancing in improvement and population, the demand
      for silver might not be at all increased by the improvement even of a
      large country in the neighbourhood of the mine. Even though the world in
      general were improving, yet if, in the course of its improvements, new
      mines should be discovered, much more fertile than any which had been
      known before, though the demand for silver would necessarily increase, yet
      the supply might increase in so much a greater proportion, that the real
      price of that metal might gradually fall; that is, any given quantity, a
      pound weight of it, for example, might gradually purchase or command a
      smaller and a smaller quantity of labour, or exchange for a smaller and a
      smaller quantity of corn, the principal part of the subsistence of the
      labourer.
    
      The great market for silver is the commercial and civilized part of the
      world.
    
      If, by the general progress of improvement, the demand of this market
      should increase, while, at the same time, the supply did not increase in
      the same proportion, the value of silver would gradually rise in
      proportion to that of corn. Any given quantity of silver would exchange
      for a greater and a greater quantity of corn; or, in other words, the
      average money price of corn would gradually become cheaper and cheaper.
    
      If, on the contrary, the supply, by some accident, should increase, for
      many years together, in a greater proportion than the demand, that metal
      would gradually become cheaper and cheaper; or, in other words, the
      average money price of corn would, in spite of all improvements, gradually
      become dearer and dearer.
    
      But if, on the other hand, the supply of that metal should increase nearly
      in the same proportion as the demand, it would continue to purchase or
      exchange for nearly the same quantity of corn; and the average money price
      of corn would, in spite of all improvements. continue very nearly the
      same.
    
      These three seem to exhaust all the possible combinations of events which
      can happen in the progress of improvement; and during the course of the
      four centuries preceding the present, if we may judge by what has happened
      both in France and Great Britain, each of those three different
      combinations seems to have taken place in the European market, and nearly
      in the same order, too, in which I have here set them down.
    
      _Digression concerning the Variations in the value of Silver during the
      Course of the Four last Centuries._
    


    
      First Period.—In 1350, and for some time before, the average price
      of the quarter of wheat in England seems not to have been estimated lower
      than four ounces of silver, Tower weight, equal to about twenty shillings
      of our present money. From this price it seems to have fallen gradually to
      two ounces of silver, equal to about ten shillings of our present money,
      the price at which we find it estimated in the beginning of the sixteenth
      century, and at which it seems to have continued to be estimated till
      about 1570.
    
      In 1350, being the 25th of Edward III. was enacted what is called the
      Statute of Labourers. In the preamble, it complains much of the insolence
      of servants, who endeavoured to raise their wages upon their masters. It
      therefore ordains, that all servants and labourers should, for the future,
      be contented with the same wages and liveries (liveries in those times
      signified not only clothes, but provisions) which they had been accustomed
      to receive in the 20th year of the king, and the four preceding years;
      that, upon this account, their livery-wheat should nowhere be estimated
      higher than tenpence a-bushel, and that it should always be in the option
      of the master to deliver them either the wheat or the money. Tenpence:
      a-bushel, therefore, had, in the 25th of Edward III. been reckoned a very
      moderate price of wheat, since it required a particular statute to oblige
      servants to accept of it in exchange for their usual livery of provisions;
      and it had been reckoned a reasonable price ten years before that, or in
      the 16th year of the king, the term to which the statute refers. But in
      the 16th year of Edward III. tenpence contained about half an ounce of
      silver, Tower weight, and was nearly equal to half-a-crown of our present
      money. Four ounces of silver, Tower weight, therefore, equal to six
      shillings and eightpence of the money of those times, and to near twenty
      shillings of that of the present, must have been reckoned a moderate price
      for the quarter of eight bushels.
    
      This statute is surely a better evidence of what was reckoned, in those
      times, a moderate price of grain, than the prices of some particular
      years, which have generally been recorded by historians and other writers,
      on account of their extraordinary dearness or cheapness, and from which,
      therefore, it is difficult to form any judgment concerning what may have
      been the ordinary price. There are, besides, other reasons for believing
      that, in the beginning of the fourteenth century, and for some time
      before, the common price of wheat was not less than four ounces of silver
      the quarter, and that of other grain in proportion.
    
      In 1309, Ralph de Born, prior of St Augustine’s, Canterbury, gave a feast
      upon his installation-day, of which William Thorn has preserved, not only
      the bill of fare, but the prices of many particulars. In that feast were
      consumed, 1st, fifty-three quarters of wheat, which cost nineteen pounds,
      or seven shillings, and twopence a-quarter, equal to about one-and-twenty
      shillings and sixpence of our present money; 2dly, fifty-eight quarters of
      malt, which cost seventeen pounds ten shillings, or six shillings
      a-quarter, equal to about eighteen shillings of our present money; 3dly,
      twenty quarters of oats, which cost four pounds, or four shillings
      a-quarter, equal to about twelve shillings of our present money. The
      prices of malt and oats seem here to lie higher than their ordinary
      proportion to the price of wheat.
    
      These prices are not recorded, on account of their extraordinary dearness
      or cheapness, but are mentioned accidentally, as the prices actually paid
      for large quantities of grain consumed at a feast, which was famous for
      its magnificence.
    
      In 1262, being the 51st of Henry III. was revived an ancient statute,
      called the assize of bread and ale, which, the king says in the preamble,
      had been made in the times of his progenitors, some time kings of England.
      It is probably, therefore, as old at least as the time of his grandfather,
      Henry II. and may have been as old as the Conquest. It regulates the price
      of bread according as the prices of wheat may happen to be, from one
      shilling to twenty shillings the quarter of the money of those times. But
      statutes of this kind are generally presumed to provide with equal care
      for all deviations from the middle price, for those below it, as well as
      for those above it. Ten shillings, therefore, containing six ounces of
      silver, Tower weight, and equal to about thirty shillings of our present
      money, must, upon this supposition, have been reckoned the middle price of
      the quarter of wheat when this statute was first enacted, and must have
      continued to be so in the 51st of Henry III. We cannot, therefore, be very
      wrong in supposing that the middle price was not less than one-third of
      the highest price at which this statute regulates the price of bread, or
      than six shillings and eightpence of the money of those times, containing
      four ounces of silver, Tower weight.
    
      From these different facts, therefore, we seem to have some reason to
      conclude that, about the middle of the fourteenth century, and for a
      considerable time before, the average or ordinary price of the quarter of
      wheat was not supposed to be less than four ounces of silver, Tower
      weight.
    
      From about the middle of the fourteenth to the beginning of the sixteenth
      century, what was reckoned the reasonable and moderate, that is, the
      ordinary or average price of wheat, seems to have sunk gradually to about
      one half of this price; so as at last to have fallen to about two ounces
      of silver, Tower weight, equal to about ten shillings of our present
      money. It continued to be estimated at this price till about 1570.
    
      In the household book of Henry, the fifth earl of Northumberland, drawn up
      in 1512 there are two different estimations of wheat. In one of them it is
      computed at six shilling and eightpence the quarter, in the other at five
      shillings and eightpence only. In 1512, six shillings and eightpence
      contained only two ounces of silver, Tower weight, and were equal to about
      ten shillings of our present money.
    
      From the 25th of Edward III. to the beginning of the reign of Elizabeth,
      during the space of more than two hundred years, six shillings and
      eightpence, it appears from several different statutes, had continued to
      be considered as what is called the moderate and reasonable, that is, the
      ordinary or average price of wheat. The quantity of silver, however,
      contained in that nominal sum was, during the course of this period,
      continually diminishing in consequence of some alterations which were made
      in the coin. But the increase of the value of silver had, it seems, so far
      compensated the diminution of the quantity of it contained in the same
      nominal sum, that the legislature did not think it worth while to attend
      to this circumstance.
    
      Thus, in 1436, it was enacted, that wheat might be exported without a
      licence when the price was so low as six shillings and eightpence: and in
      1463, it was enacted, that no wheat should be imported if the price was
      not above six shillings and eightpence the quarter: The legislature had
      imagined, that when the price was so low, there could be no inconveniency
      in exportation, but that when it rose higher, it became prudent to allow
      of importation. Six shillings and eightpence, therefore, containing about
      the same quantity of silver as thirteen shillings and fourpence of our
      present money (one-third part less than the same nominal sum contained in
      the time of Edward III), had, in those times, been considered as what is
      called the moderate and reasonable price of wheat.
    
      In 1554, by the 1st and 2nd of Philip and Mary, and in 1558, by the 1st of
      Elizabeth, the exportation of wheat was in the same manner prohibited,
      whenever the price of the quarter should exceed six shillings and
      eightpence, which did not then contain two penny worth more silver than
      the same nominal sum does at present. But it had soon been found, that to
      restrain the exportation of wheat till the price was so very low, was, in
      reality, to prohibit it altogether. In 1562, therefore, by the 5th of
      Elizabeth, the exportation of wheat was allowed from certain ports,
      whenever the price of the quarter should not exceed ten shillings,
      containing nearly the same quantity of silver as the like nominal sum does
      at present. This price had at this time, therefore, been considered as
      what is called the moderate and reasonable price of wheat. It agrees
      nearly with the estimation of the Northumberland book in 1512.
    
      That in France the average price of grain was, in the same manner, much
      lower in the end of the fifteenth and beginning of the sixteenth century,
      than in the two centuries preceding, has been observed both by Mr Dupré de
      St Maur, and by the elegant author of the Essay on the Policy of Grain.
      Its price, during the same period, had probably sunk in the same manner
      through the greater part of Europe.
    
      This rise in the value of silver, in proportion to that of corn, may
      either have been owing altogether to the increase of the demand for that
      metal, in consequence of increasing improvement and cultivation, the
      supply, in the mean time, continuing the same as before; or, the demand
      continuing the same as before, it may have been owing altogether to the
      gradual diminution of the supply: the greater part of the mines which were
      then known in the world being much exhausted, and, consequently, the
      expense of working them much increased; or it may have been owing partly
      to the one, and partly to the other of those two circumstances. In the end
      of the fifteenth and beginning of the sixteenth centuries, the greater
      part of Europe was approaching towards a more settled form of government
      than it had enjoyed for several ages before. The increase of security
      would naturally increase industry and improvement; and the demand for the
      precious metals, as well as for every other luxury and ornament, would
      naturally increase with the increase of riches. A greater annual produce
      would require a greater quantity of coin to circulate it; and a greater
      number of rich people would require a greater quantity of plate and other
      ornaments of silver. It is natural to suppose, too, that the greater part
      of the mines which then supplied the European market with silver might be
      a good deal exhausted, and have become more expensive in the working. They
      had been wrought, many of them, from the time of the Romans.
    
      It has been the opinion, however, of the greater part of those who have
      written upon the prices of commodities in ancient times, that, from the
      Conquest, perhaps from the invasion of Julius Caesar, till the discovery
      of the mines of America, the value of silver was continually diminishing.
      This opinion they seem to have been led into, partly by the observations
      which they had occasion to make upon the prices both of corn and of some
      other parts of the rude produce of land, and partly by the popular notion,
      that as the quantity of silver naturally increases in every country with
      the increase of wealth, so its value diminishes as it quantity increases.
    
      In their observations upon the prices of corn, three different
      circumstances seem frequently to have misled them.
    
      First, in ancient times, almost all rents were paid in kind; in a certain
      quantity of corn, cattle, poultry, etc. It sometimes happened, however,
      that the landlord would stipulate, that he should be at liberty to demand
      of the tenant, either the annual payment in kind or a certain sum of money
      instead of it. The price at which the payment in kind was in this manner
      exchanged for a certain sum of money, is in Scotland called the conversion
      price. As the option is always in the landlord to take either the
      substance or the price, it is necessary, for the safety of the tenant,
      that the conversion price should rather be below than above the average
      market price. In many places, accordingly, it is not much above one half
      of this price. Through the greater part of Scotland this custom still
      continues with regard to poultry, and in some places with regard to
      cattle. It might probably have continued to take place, too, with regard
      to corn, had not the institution of the public fiars put an end to it.
      These are annual valuations, according to the judgment of an assize, of
      the average price of all the different sorts of grain, and of all the
      different qualities of each, according to the actual market price in every
      different county. This institution rendered it sufficiently safe for the
      tenant, and much more convenient for the landlord, to convert, as they
      call it, the corn rent, rather at what should happen to be the price of
      the fiars of each year, than at any certain fixed price. But the writers
      who have collected the prices of corn in ancient times seem frequently to
      have mistaken what is called in Scotland the conversion price for the
      actual market price. Fleetwood acknowledges, upon one occasion, that he
      had made this mistake. As he wrote his book, however, for a particular
      purpose, he does not think proper to make this acknowledgment till after
      transcribing this conversion price fifteen times. The price is eight
      shillings the quarter of wheat. This sum in 1423, the year at which he
      begins with it, contained the same quantity of silver as sixteen shillings
      of our present money. But in 1562, the year at which he ends with it, it
      contained no more than the same nominal sum does at present.
    
      Secondly, they have been misled by the slovenly manner in which some
      ancient statutes of assize had been sometimes transcribed by lazy copiers,
      and sometimes, perhaps, actually composed by the legislature.
    
      The ancient statutes of assize seem to have begun always with determining
      what ought to be the price of bread and ale when the price of wheat and
      barley were at the lowest; and to have proceeded gradually to determine
      what it ought to be, according as the prices of those two sorts of grain
      should gradually rise above this lowest price. But the transcribers of
      those statutes seem frequently to have thought it sufficient to copy the
      regulation as far as the three or four first and lowest prices; saving in
      this manner their own labour, and judging, I suppose, that this was enough
      to show what proportion ought to be observed in all higher prices.
    
      Thus, in the assize of bread and ale, of the 51st of Henry III. the price
      of bread was regulated according to the different prices of wheat, from
      one shilling to twenty shillings the quarter of the money of those times.
      But in the manuscripts from which all the different editions of the
      statutes, preceding that of Mr Ruffhead, were printed, the copiers had
      never transcribed this regulation beyond the price of twelve shillings.
      Several writers, therefore, being misled by this faulty transcription,
      very naturally conclude that the middle price, or six shillings the
      quarter, equal to about eighteen shillings of our present money, was the
      ordinary or average price of wheat at that time.
    
      In the statute of Tumbrel and Pillory, enacted nearly about the same time,
      the price of ale is regulated according to every sixpence rise in the
      price of barley, from two shillings, to four shillings the quarter. That
      four shillings, however, was not considered as the highest price to which
      barley might frequently rise in those times, and that these prices were
      only given as an example of the proportion which ought to be observed in
      all other prices, whether higher or lower, we may infer from the last
      words of the statute: “Et sic deinceps crescetur vel diminuetur per sex
      denarios.” The expression is very slovenly, but the meaning is plain
      enough, “that the price of ale is in this manner to be increased or
      diminished according to every sixpence rise or fall in the price of
      barley.” In the composition of this statute, the legislature itself seems
      to have been as negligent as the copiers were in the transcription of the
      other.
    
      In an ancient manuscript of the Regiam Majestatem, an old Scotch law book,
      there is a statute of assize, in which the price of bread is regulated
      according to all the different prices of wheat, from tenpence to three
      shillings the Scotch boll, equal to about half an English quarter. Three
      shillings Scotch, at the time when this assize is supposed to have been
      enacted, were equal to about nine shillings sterling of our present money.
      Mr Ruddiman seems {See his Preface to Anderson’s Diplomata Scotiae.} to
      conclude from this, that three shillings was the highest price to which
      wheat ever rose in those times, and that tenpence, a shilling, or at most
      two shillings, were the ordinary prices. Upon consulting the manuscript,
      however, it appears evidently, that all these prices are only set down as
      examples of the proportion which ought to be observed between the
      respective prices of wheat and bread. The last words of the statute are
      “reliqua judicabis secundum praescripta, habendo respectum ad pretium
      bladi.”—“You shall judge of the remaining cases, according to what
      is above written, having respect to the price of corn.”
    
      Thirdly, they seem to have been misled too, by the very low price at which
      wheat was sometimes sold in very ancient times; and to have imagined, that
      as its lowest price was then much lower than in later times its ordinary
      price must likewise have been much lower. They might have found, however,
      that in those ancient times its highest price was fully as much above, as
      its lowest price was below any thing that had ever been known in later
      times. Thus, in 1270, Fleetwood gives us two prices of the quarter of
      wheat. The one is four pounds sixteen shillings of the money of those
      times, equal to fourteen pounds eight shillings of that of the present;
      the other is six pounds eight shillings, equal to nineteen pounds four
      shillings of our present money. No price can be found in the end of the
      fifteenth, or beginning of the sixteenth century, which approaches to the
      extravagance of these. The price of corn, though at all times liable to
      variation varies most in those turbulent and disorderly societies, in
      which the interruption of all commerce and communication hinders the
      plenty of one part of the country from relieving the scarcity of another.
      In the disorderly state of England under the Plantagenets, who governed it
      from about the middle of the twelfth till towards the end of the fifteenth
      century, one district might be in plenty, while another, at no great
      distance, by having its crop destroyed, either by some accident of the
      seasons, or by the incursion of some neighbouring baron, might be
      suffering all the horrors of a famine; and yet if the lands of some
      hostile lord were interposed between them, the one might not be able to
      give the least assistance to the other. Under the vigorous administration
      of the Tudors, who governed England during the latter part of the
      fifteenth, and through the whole of the sixteenth century, no baron was
      powerful enough to dare to disturb the public security.
    
      The reader will find at the end of this chapter all the prices of wheat
      which have been collected by Fleetwood, from 1202 to 1597, both inclusive,
      reduced to the money of the present times, and digested, according to the
      order of time, into seven divisions of twelve years each. At the end of
      each division, too, he will find the average price of the twelve years of
      which it consists. In that long period of time, Fleetwood has been able to
      collect the prices of no more than eighty years; so that four years are
      wanting to make out the last twelve years. I have added, therefore, from
      the accounts of Eton college, the prices of 1598, 1599, 1600, and 1601. It
      is the only addition which I have made. The reader will see, that from the
      beginning of the thirteenth till after the middle of the sixteenth
      century, the average price of each twelve years grows gradually lower and
      lower; and that towards the end of the sixteenth century it begins to rise
      again. The prices, indeed, which Fleetwood has been able to collect, seem
      to have been those chiefly which were remarkable for extraordinary
      dearness or cheapness; and I do not pretend that any very certain
      conclusion can be drawn from them. So far, however, as they prove any
      thing at all, they confirm the account which I have been endeavouring to
      give. Fleetwood himself, however, seems, with most other writers, to have
      believed, that, during all this period, the value of silver, in
      consequence of its increasing abundance, was continually diminishing. The
      prices of corn, which he himself has collected, certainly do not agree
      with this opinion. They agree perfectly with that of Mr Dupré de St Maur,
      and with that which I have been endeavouring to explain. Bishop Fleetwood
      and Mr Dupré de St Maur are the two authors who seem to have collected,
      with the greatest diligence and fidelity, the prices of things in ancient
      times. It is somewhat curious that, though their opinions are so very
      different, their facts, so far as they relate to the price of corn at
      least, should coincide so very exactly.
    
      It is not, however, so much from the low price of corn, as from that of
      some other parts of the rude produce of land, that the most judicious
      writers have inferred the great value of silver in those very ancient
      times. Corn, it has been said, being a sort of manufacture, was, in those
      rude ages, much dearer in proportion than the greater part of other
      commodities; it is meant, I suppose, than the greater part of
      unmanufactured commodities, such as cattle, poultry, game of all kinds,
      etc. That in those times of poverty and barbarism these were
      proportionably much cheaper than corn, is undoubtedly true. But this
      cheapness was not the effect of the high value of silver, but of the low
      value of those commodities. It was not because silver would in such times
      purchase or represent a greater quantity of labour, but because such
      commodities would purchase or represent a much smaller quantity than in
      times of more opulence and improvement. Silver must certainly be cheaper
      in Spanish America than in Europe; in the country where it is produced,
      than in the country to which it is brought, at the expense of a long
      carriage both by land and by sea, of a freight, and an insurance.
      One-and-twenty pence halfpenny sterling, however, we are told by Ulloa,
      was, not many years ago, at Buenos Ayres, the price of an ox chosen from a
      herd of three or four hundred. Sixteen shillings sterling, we are told by
      Mr Byron, was the price of a good horse in the capital of Chili. In a
      country naturally fertile, but of which the far greater part is altogether
      uncultivated, cattle, poultry, game of all kinds, etc. as they can be
      acquired with a very small quantity of labour, so they will purchase or
      command but a very small quantity. The low money price for which they may
      be sold, is no proof that the real value of silver is there very high, but
      that the real value of those commodities is very low.
    
      Labour, it must always be remembered, and not any particular commodity, or
      set of commodities, is the real measure of the value both of silver and of
      all other commodities.
    
      But in countries almost waste, or but thinly inhabited, cattle, poultry,
      game of all kinds, etc. as they are the spontaneous productions of Nature,
      so she frequently produces them in much greater quantities than the
      consumption of the inhabitants requires. In such a state of things, the
      supply commonly exceeds the demand. In different states of society, in
      different states of improvement, therefore, such commodities will
      represent, or be equivalent, to very different quantities of labour.
    
      In every state of society, in every stage of improvement, corn is the
      production of human industry. But the average produce of every sort of
      industry is always suited, more or less exactly, to the average
      consumption; the average supply to the average demand. In every different
      stage of improvement, besides, the raising of equal quantities of corn in
      the same soil and climate, will, at an average, require nearly equal
      quantities of labour; or, what comes to the same thing, the price of
      nearly equal quantities; the continual increase of the productive powers
      of labour, in an improved state of cultivation, being more or less
      counterbalanced by the continual increasing price of cattle, the principal
      instruments of agriculture. Upon all these accounts, therefore, we may
      rest assured, that equal quantities of corn will, in every state of
      society, in every stage of improvement, more nearly represent, or be
      equivalent to, equal quantities of labour, than equal quantities of any
      other part of the rude produce of land. Corn, accordingly, it has already
      been observed, is, in all the different stages of wealth and improvement,
      a more accurate measure of value than any other commodity or set of
      commodities. In all those different stages, therefore, we can judge better
      of the real value of silver, by comparing it with corn, than by comparing
      it with any other commodity or set of commodities.
    
      Corn, besides, or whatever else is the common and favourite vegetable food
      of the people, constitutes, in every civilized country, the principal part
      of the subsistence of the labourer. In consequence of the extension of
      agriculture, the land of every country produces a much greater quantity of
      vegetable than of animal food, and the labourer everywhere lives chiefly
      upon the wholesome food that is cheapest and most abundant. Butcher’s
      meat, except in the most thriving countries, or where labour is most
      highly rewarded, makes but an insignificant part of his subsistence;
      poultry makes a still smaller part of it, and game no part of it. In
      France, and even in Scotland, where labour is somewhat better rewarded
      than in France, the labouring poor seldom eat butcher’s meat, except upon
      holidays, and other extraordinary occasions. The money price of labour,
      therefore, depends much more upon the average money price of corn, the
      subsistence of the labourer, than upon that of butcher’s meat, or of any
      other part of the rude produce of land. The real value of gold and silver,
      therefore, the real quantity of labour which they can purchase or command,
      depends much more upon the quantity of corn which they can purchase or
      command, than upon that of butcher’s meat, or any other part of the rude
      produce of land.
    
      Such slight observations, however, upon the prices either of corn or of
      other commodities, would not probably have misled so many intelligent
      authors, had they not been influenced at the same time by the popular
      notion, that as the quantity of silver naturally increases in every
      country with the increase of wealth, so its value diminishes as its
      quantity increases. This notion, however, seems to be altogether
      groundless.
    
      The quantity of the precious metals may increase in any country from two
      different causes; either, first, from the increased abundance of the mines
      which supply it; or, secondly, from the increased wealth of the people,
      from the increased produce of their annual labour. The first of these
      causes is no doubt necessarily connected with the diminution of the value
      of the precious metals; but the second is not.
    
      When more abundant mines are discovered, a greater quantity of the
      precious metals is brought to market; and the quantity of the necessaries
      and conveniencies of life for which they must be exchanged being the same
      as before, equal quantities of the metals must be exchanged for smaller
      quantities of commodities. So far, therefore, as the increase of the
      quantity of the precious metals in any country arises from the increased
      abundance of the mines, it is necessarily connected with some diminution
      of their value.
    
      When, on the contrary, the wealth of any country increases, when the
      annual produce of its labour becomes gradually greater and greater, a
      greater quantity of coin becomes necessary in order to circulate a greater
      quantity of commodities: and the people, as they can afford it, as they
      have more commodities to give for it, will naturally purchase a greater
      and a greater quantity of plate. The quantity of their coin will increase
      from necessity; the quantity of their plate from vanity and ostentation,
      or from the same reason that the quantity of fine statues, pictures, and
      of every other luxury and curiosity, is likely to increase among them. But
      as statuaries and painters are not likely to be worse rewarded in times of
      wealth and prosperity, than in times of poverty and depression, so gold
      and silver are not likely to be worse paid for.
    
      The price of gold and silver, when the accidental discovery of more
      abundant mines does not keep it down, as it naturally rises with the
      wealth of every country, so, whatever be the state of the mines, it is at
      all times naturally higher in a rich than in a poor country. Gold and
      silver, like all other commodities, naturally seek the market where the
      best price is given for them, and the best price is commonly given for
      every thing in the country which can best afford it. Labour, it must be
      remembered, is the ultimate price which is paid for every thing; and in
      countries where labour is equally well rewarded, the money price of labour
      will be in proportion to that of the subsistence of the labourer. But gold
      and silver will naturally exchange for a greater quantity of subsistence
      in a rich than in a poor country; in a country which abounds with
      subsistence, than in one which is but indifferently supplied with it. If
      the two countries are at a great distance, the difference may be very
      great; because, though the metals naturally fly from the worse to the
      better market, yet it may be difficult to transport them in such
      quantities as to bring their price nearly to a level in both. If the
      countries are near, the difference will be smaller, and may sometimes be
      scarce perceptible; because in this case the transportation will be easy.
      China is a much richer country than any part of Europe, and the difference
      between the price of subsistence in China and in Europe is very great.
      Rice in China is much cheaper than wheat is any where in Europe. England
      is a much richer country than Scotland, but the difference between the
      money price of corn in those two countries is much smaller, and is but
      just perceptible. In proportion to the quantity or measure, Scotch corn
      generally appears to be a good deal cheaper than English; but, in
      proportion to its quality, it is certainly somewhat dearer. Scotland
      receives almost every year very large supplies from England, and every
      commodity must commonly be somewhat dearer in the country to which it is
      brought than in that from which it comes. English corn, therefore, must be
      dearer in Scotland than in England; and yet in proportion to its quality,
      or to the quantity and goodness of the flour or meal which can be made
      from it, it cannot commonly be sold higher there than the Scotch corn
      which comes to market in competition with it.
    
      The difference between the money price of labour in China and in Europe,
      is still greater than that between the money price of subsistence; because
      the real recompence of labour is higher in Europe than in China, the
      greater part of Europe being in an improving state, while China seems to
      be standing still. The money price of labour is lower in Scotland than in
      England, because the real recompence of labour is much lower: Scotland,
      though advancing to greater wealth, advances much more slowly than
      England. The frequency of emigration from Scotland, and the rarity of it
      from England, sufficiently prove that the demand for labour is very
      different in the two countries. The proportion between the real recompence
      of labour in different countries, it must be remembered, is naturally
      regulated, not by their actual wealth or poverty, but by their advancing,
      stationary, or declining condition.
    
      Gold and silver, as they are naturally of the greatest value among the
      richest, so they are naturally of the least value among the poorest
      nations. Among savages, the poorest of all nations, they are scarce of any
      value.
    
      In great towns, corn is always dearer than in remote parts of the country.
      This, however, is the effect, not of the real cheapness of silver, but of
      the real dearness of corn. It does not cost less labour to bring silver to
      the great town than to the remote parts of the country; but it costs a
      great deal more to bring corn.
    
      In some very rich and commercial countries, such as Holland and the
      territory of Genoa, corn is dear for the same reason that it is dear in
      great towns. They do not produce enough to maintain their inhabitants.
      They are rich in the industry and skill of their artificers and
      manufacturers, in every sort of machinery which can facilitate and abridge
      labour; in shipping, and in all the other instruments and means of
      carriage and commerce: but they are poor in corn, which, as it must be
      brought to them from distant countries, must, by an addition to its price,
      pay for the carriage from those countries. It does not cost less labour to
      bring silver to Amsterdam than to Dantzic; but it costs a great deal more
      to bring corn. The real cost of silver must be nearly the same in both
      places; but that of corn must be very different. Diminish the real
      opulence either of Holland or of the territory of Genoa, while the number
      of their inhabitants remains the same; diminish their power of supplying
      themselves from distant countries; and the price of corn, instead of
      sinking with that diminution in the quantity of their silver, which must
      necessarily accompany this declension, either as its cause or as its
      effect, will rise to the price of a famine. When we are in want of
      necessaries, we must part with all superfluities, of which the value, as
      it rises in times of opulence and prosperity, so it sinks in times of
      poverty and distress. It is otherwise with necessaries. Their real price,
      the quantity of labour which they can purchase or command, rises in times
      of poverty and distress, and sinks in times of opulence and prosperity,
      which are always times of great abundance; for they could not otherwise be
      times of opulence and prosperity. Corn is a necessary, silver is only a
      superfluity.
    
      Whatever, therefore, may have been the increase in the quantity of the
      precious metals, which, during the period between the middle of the
      fourteenth and that of the sixteenth century, arose from the increase of
      wealth and improvement, it could have no tendency to diminish their value,
      either in Great Britain, or in my other part of Europe. If those who have
      collected the prices of things in ancient times, therefore, had, during
      this period, no reason to infer the diminution of the value of silver from
      any observations which they had made upon the prices either of corn, or of
      other commodities, they had still less reason to infer it from any
      supposed increase of wealth and improvement.
    
      Second Period.—But how various soever may have been the opinions of
      the learned concerning the progress of the value of silver during the
      first period, they are unanimous concerning it during the second.
    
      From about 1570 to about 1640, during a period of about seventy years, the
      variation in the proportion between the value of silver and that of corn
      held a quite opposite course. Silver sunk in its real value, or would
      exchange for a smaller quantity of labour than before; and corn rose in
      its nominal price, and, instead of being commonly sold for about two
      ounces of silver the quarter, or about ten shillings of our present money,
      came to be sold for six and eight ounces of silver the quarter, or about
      thirty and forty shillings of our present money.
    
      The discovery of the abundant mines of America seems to have been the sole
      cause of this diminution in the value of silver, in proportion to that of
      corn. It is accounted for, accordingly, in the same manner by every body;
      and there never has been any dispute, either about the fact, or about the
      cause of it. The greater part of Europe was, during this period, advancing
      in industry and improvement, and the demand for silver must consequently
      have been increasing; but the increase of the supply had, it seems, so far
      exceeded that of the demand, that the value of that metal sunk
      considerably. The discovery of the mines of America, it is to be observed,
      does not seem to have had any very sensible effect upon the prices of
      things in England till after 1570; though even the mines of Potosi had
      been discovered more than twenty years before.
    
      From 1595 to 1620, both inclusive, the average price of the quarter of
      nine bushels of the best wheat, at Windsor market, appears, from the
      accounts of Eton college, to have been £ 2:1:6 9/13. From which sum,
      neglecting the fraction, and deducting a ninth, or 4s. 7 1/3d., the price
      of the quarter of eight bushels comes out to have been £ 1:16:10 2/3. And
      from this sum, neglecting likewise the fraction, and deducting a ninth, or
      4s. 1 1/9d., for the difference between the price of the best wheat and
      that of the middle wheat, the price of the middle wheat comes out to have
      been about £ 1:12:8 8/9, or about six ounces and one-third of an ounce of
      silver.
    
      From 1621 to 1636, both inclusive, the average price of the same measure
      of the best wheat, at the same market, appears, from the same accounts, to
      have been £ 2:10s.; from which, making the like deductions as in the
      foregoing case, the average price of the quarter of eight bushels of
      middle wheat comes out to have been £ 1:19:6, or about seven ounces and
      two-thirds of an ounce of silver.
    
      Third Period.—Between 1630 and 1640, or about 1636, the effect of
      the discovery of the mines of America, in reducing the value of silver,
      appears to have been completed, and the value of that metal seems never to
      have sunk lower in proportion to that of corn than it was about that time.
      It seems to have risen somewhat in the course of the present century, and
      it had probably begun to do so, even some time before the end of the last.
    
      From 1637 to 1700, both inclusive, being the sixty-four last years of the
      last century the average price of the quarter of nine bushels of the best
      wheat, at Windsor market, appears, from the same accounts, to have been £
      2:11:0 1/3, which is only 1s. 0 1/3d. dearer than it had been during the
      sixteen years before. But, in the course of these sixty-four years, there
      happened two events, which must have produced a much greater scarcity of
      corn than what the course of the seasons would otherwise have occasioned,
      and which, therefore, without supposing any further reduction in the
      value of silver, will much more than account for this very small
      enhancement of price.
    
      The first of these events was the civil war, which, by discouraging
      tillage and interrupting commerce, must have raised the price of corn much
      above what the course of the seasons would otherwise have occasioned. It
      must have had this effect, more or less, at all the different markets in
      the kingdom, but particularly at those in the neighbourhood of London,
      which require to be supplied from the greatest distance. In 1648,
      accordingly, the price of the best wheat, at Windsor market, appears, from
      the same accounts, to have been £ 4:5s., and, in 1649, to have been £ 4,
      the quarter of nine bushels. The excess of those two years above £ 2:10s.
      (the average price of the sixteen years preceding 1637) is £ 3:5s., which,
      divided among the sixty four last years of the last century, will alone
      very nearly account for that small enhancement of price which seems to
      have taken place in them. These, however, though the highest, are by no
      means the only high prices which seem to have been occasioned by the civil
      wars.
    
      The second event was the bounty upon the exportation of corn, granted in
      1688. The bounty, it has been thought by many people, by encouraging
      tillage, may, in a long course of years, have occasioned a greater
      abundance, and, consequently, a greater cheapness of corn in the home
      market, than what would otherwise have taken place there. How far the
      bounty could produce this effect at any time I shall examine hereafter: I
      shall only observe at present, that between 1688 and 1700, it had not time
      to produce any such effect. During this short period, its only effect must
      have been, by encouraging the exportation of the surplus produce of every
      year, and thereby hindering the abundance of one year from compensating
      the scarcity of another, to raise the price in the home market. The
      scarcity which prevailed in England, from 1693 to 1699, both inclusive,
      though no doubt principally owing to the badness of the seasons, and,
      therefore, extending through a considerable part of Europe, must have been
      somewhat enhanced by the bounty. In 1699, accordingly, the further
      exportation of corn was prohibited for nine months.
    
      There was a third event which occurred in the course of the same period,
      and which, though it could not occasion any scarcity of corn, nor,
      perhaps, any augmentation in the real quantity of silver which was usually
      paid for it, must necessarily have occasioned some augmentation in the
      nominal sum. This event was the great debasement of the silver coin, by
      clipping and wearing. This evil had begun in the reign of Charles II. and
      had gone on continually increasing till 1695; at which time, as we may
      learn from Mr Lowndes, the current silver coin was, at an average, near
      five-and-twenty per cent. below its standard value. But the nominal sum
      which constitutes the market price of every commodity is necessarily
      regulated, not so much by the quantity of silver, which, according to the
      standard, ought to be contained in it, as by that which, it is found by
      experience, actually is contained in it. This nominal sum, therefore, is
      necessarily higher when the coin is much debased by clipping and wearing,
      than when near to its standard value.
    
      In the course of the present century, the silver coin has not at any time
      been more below its standard weight than it is at present. But though very
      much defaced, its value has been kept up by that of the gold coin, for
      which it is exchanged. For though, before the late recoinage, the gold
      coin was a good deal defaced too, it was less so than the silver. In 1695,
      on the contrary, the value of the silver coin was not kept up by the gold
      coin; a guinea then commonly exchanging for thirty shillings of the worn
      and clipt silver. Before the late recoinage of the gold, the price of
      silver bullion was seldom higher than five shillings and sevenpence an
      ounce, which is but fivepence above the mint price. But in 1695, the
      common price of silver bullion was six shillings and fivepence an ounce,
      {Lowndes’s Essay on the Silver Coin, 68.} which is fifteen pence above the
      mint price. Even before the late recoinage of the gold, therefore, the
      coin, gold and silver together, when compared with silver bullion, was not
      supposed to be more than eight per cent. below its standard value, In
      1695, on the contrary, it had been supposed to be near five-and-twenty per
      cent. below that value. But in the beginning of the present century, that
      is, immediately after the great recoinage in King William’s time, the
      greater part of the current silver coin must have been still nearer to its
      standard weight than it is at present. In the course of the present
      century, too, there has been no great public calamity, such as a civil
      war, which could either discourage tillage, or interrupt the interior
      commerce of the country. And though the bounty which has taken place
      through the greater part of this century, must always raise the price of
      corn somewhat higher than it otherwise would be in the actual state of
      tillage; yet, as in the course of this century, the bounty has had full
      time to produce all the good effects commonly imputed to it to encourage
      tillage, and thereby to increase the quantity of corn in the home market,
      it may, upon the principles of a system which I shall explain and examine
      hereafter, be supposed to have done something to lower the price of that
      commodity the one way, as well as to raise it the other. It is by many
      people supposed to have done more. In the sixty-four years of the present
      century, accordingly, the average price of the quarter of nine bushels of
      the best wheat, at Windsor market, appears, by the accounts of Eton
      college, to have been £ 2:0:6 10/32, which is about ten shillings and
      sixpence, or more than five-and-twenty percent. cheaper than it had been
      during the sixty-four last years of the last century; and about nine
      shillings and sixpence cheaper than it had been during the sixteen years
      preceding 1636, when the discovery of the abundant mines of America may be
      supposed to have produced its full effect; and about one shilling cheaper
      than it had been in the twenty-six years preceding 1620, before that
      discovery can well be supposed to have produced its full effect. According
      to this account, the average price of middle wheat, during these
      sixty-four first years of the present century, comes out to have been
      about thirty-two shillings the quarter of eight bushels.
    
      The value of silver, therefore, seems to have risen somewhat in proportion
      to that of corn during the course of the present century, and it had
      probably begun to do so even some time before the end of the last.
    
      In 1687, the price of the quarter of nine bushels of the best wheat, at
      Windsor market, was £ 1:5:2, the lowest price at which it had ever been
      from 1595.
    
      In 1688, Mr Gregory King, a man famous for his knowledge in matters of
      this kind, estimated the average price of wheat, in years of moderate
      plenty, to be to the grower 3s. 6d. the bushel, or eight-and-twenty
      shillings the quarter. The grower’s price I understand to be the same with
      what is sometimes called the contract price, or the price at which a
      farmer contracts for a certain number of years to deliver a certain
      quantity of corn to a dealer. As a contract of this kind saves the farmer
      the expense and trouble of marketing, the contract price is generally
      lower than what is supposed to be the average market price. Mr King had
      judged eight-and-twenty shillings the quarter to be at that time the
      ordinary contract price in years of moderate plenty. Before the scarcity
      occasioned by the late extraordinary course of bad seasons, it was, I have
      been assured, the ordinary contract price in all common years.
    
      In 1688 was granted the parliamentary bounty upon the exportation of corn.
      The country gentlemen, who then composed a still greater proportion of the
      legislature than they do at present, had felt that the money price of corn
      was falling. The bounty was an expedient to raise it artificially to the
      high price at which it had frequently been sold in the times of Charles I.
      and II. It was to take place, therefore, till wheat was so high as
      fortyeight shillings the quarter; that is, twenty shillings, or 5-7ths
      dearer than Mr King had, in that very year, estimated the grower’s price
      to be in times of moderate plenty. If his calculations deserve any part of
      the reputation which they have obtained very universally, eight-and-forty
      shillings the quarter was a price which, without some such expedient as
      the bounty, could not at that time be expected, except in years of
      extraordinary scarcity. But the government of King William was not then
      fully settled. It was in no condition to refuse anything to the country
      gentlemen, from whom it was, at that very time, soliciting the first
      establishment of the annual land-tax.
    
      The value of silver, therefore, in proportion to that of corn, had
      probably risen somewhat before the end of the last century; and it seems
      to have continued to do so during the course of the greater part of the
      present, though the necessary operation of the bounty must have hindered
      that rise from being so sensible as it otherwise would have been in the
      actual state of tillage.
    
      In plentiful years, the bounty, by occasioning an extraordinary
      exportation, necessarily raises the price of corn above what it otherwise
      would be in those years. To encourage tillage, by keeping up the price of
      corn, even in the most plentiful years, was the avowed end of the
      institution.
    
      In years of great scarcity, indeed, the bounty has generally been
      suspended. It must, however, have had some effect upon the prices of many
      of those years. By the extraordinary exportation which it occasions in
      years of plenty, it must frequently hinder the plenty of one year from
      compensating the scarcity of another.
    
      Both in years of plenty and in years of scarcity, therefore, the bounty
      raises the price of corn above what it naturally would be in the actual
      state of tillage. If during the sixty-four first years of the present
      century, therefore, the average price has been lower than during the
      sixty-four last years of the last century, it must, in the same state of
      tillage, have been much more so, had it not been for this operation of the
      bounty.
    
      But, without the bounty, it may be said the state of tillage would not
      have been the same. What may have been the effects of this institution
      upon the agriculture of the country, I shall endeavour to explain
      hereafter, when I come to treat particularly of bounties. I shall only
      observe at present, that this rise in the value of silver, in proportion
      to that of corn, has not been peculiar to England. It has been observed to
      have taken place in France during the same period, and nearly in the same
      proportion, too, by three very faithful, diligent, and laborious
      collectors of the prices of corn, Mr Dupré de St Maur, Mr Messance, and
      the author of the Essay on the Police of Grain. But in France, till 1764,
      the exportation of grain was by law prohibited; and it is somewhat
      difficult to suppose, that nearly the same diminution of price which took
      place in one country, notwithstanding this prohibition, should, in
      another, be owing to the extraordinary encouragement given to exportation.
    
      It would be more proper, perhaps, to consider this variation in the
      average money price of corn as the effect rather of some gradual rise in
      the real value of silver in the European market, than of any fall in the
      real average value of corn. Corn, it has already been observed, is, at
      distant periods of time, a more accurate measure of value than either
      silver or, perhaps, any other commodity. When, after the discovery of the
      abundant mines of America, corn rose to three and four times its former
      money price, this change was universally ascribed, not to any rise in the
      real value of corn, but to a fall in the real value of silver. If, during
      the sixty-four first years of the present century, therefore, the average
      money price of corn has fallen somewhat below what it had been during the
      greater part of the last century, we should, in the same manner, impute
      this change, not to any fall in the real value of corn, but to some rise
      in the real value of silver in the European market.
    
      The high price of corn during these ten or twelve years past, indeed, has
      occasioned a suspicion that the real value of silver still continues to
      fall in the European market. This high price of corn, however, seems
      evidently to have been the effect of the extraordinary unfavourableness of
      the seasons, and ought, therefore, to be regarded, not as a permanent, but
      as a transitory and occasional event. The seasons, for these ten or twelve
      years past, have been unfavourable through the greater part of Europe; and
      the disorders of Poland have very much increased the scarcity in all those
      countries, which, in dear years, used to be supplied from that market. So
      long a course of bad seasons, though not a very common event, is by no
      means a singular one; and whoever has inquired much into the history of
      the prices of corn in former times, will be at no loss to recollect
      several other examples of the same kind. Ten years of extraordinary
      scarcity, besides, are not more wonderful than ten years of extraordinary
      plenty. The low price of corn, from 1741 to 1750, both inclusive, may very
      well be set in opposition to its high price during these last eight or ten
      years. From 1741 to 1750, the average price of the quarter of nine bushels
      of the best wheat, at Windsor market, it appears from the accounts of Eton
      college, was only £ 1:13:9 4/5, which is nearly 6s.3d. below the average
      price of the sixty-four first years of the present century. The average
      price of the quarter of eight bushels of middle wheat comes out, according
      to this account, to have been, during these ten years, only £ 1:6:8.
    
      Between 1741 and 1750, however, the bounty must have hindered the price of
      corn from falling so low in the home market as it naturally would have
      done. During these ten years, the quantity of all sorts of grain exported,
      it appears from the custom-house books, amounted to no less than 8,029,156
      quarters, one bushel. The bounty paid for this amounted to £
      1,514,962:17:4 1/2. In 1749, accordingly, Mr Pelham, at that time prime
      minister, observed to the house of commons, that, for the three years
      preceding, a very extraordinary sum had been paid as bounty for the
      exportation of corn. He had good reason to make this observation, and in
      the following year he might have had still better. In that single year,
      the bounty paid amounted to no less than £ 324,176:10:6. {See Tracts on
      the Corn Trade, Tract 3,} It is unnecessary to observe how much this
      forced exportation must have raised the price of corn above what it
      otherwise would have been in the home market.
    
      At the end of the accounts annexed to this chapter the reader will find
      the particular account of those ten years separated from the rest. He will
      find there, too, the particular account of the preceding ten years, of
      which the average is likewise below, though not so much below, the general
      average of the sixty-four first years of the century. The year 1740,
      however, was a year of extraordinary scarcity. These twenty years
      preceding 1750 may very well be set in opposition to the twenty preceding
      1770. As the former were a good deal below the general average of the
      century, notwithstanding the intervention of one or two dear years; so the
      latter have been a good deal above it, notwithstanding the intervention of
      one or two cheap ones, of 1759, for example. If the former have not been
      as much below the general average as the latter have been above it, we
      ought probably to impute it to the bounty. The change has evidently been
      too sudden to be ascribed to any change in the value of silver, which is
      always slow and gradual. The suddenness of the effect can be accounted for
      only by a cause which can operate suddenly, the accidental variations of
      the seasons.
    
      The money price of labour in Great Britain has, indeed, risen during the
      course of the present century. This, however, seems to be the effect, not
      so much of any diminution in the value of silver in the European market,
      as of an increase in the demand for labour in Great Britain, arising from
      the great, and almost universal prosperity of the country. In France, a
      country not altogether so prosperous, the money price of labour has, since
      the middle of the last century, been observed to sink gradually with the
      average money price of corn. Both in the last century and in the present,
      the day wages of common labour are there said to have been pretty
      uniformly about the twentieth part of the average price of the septier of
      wheat; a measure which contains a little more than four Winchester
      bushels. In Great Britain, the real recompence of labour, it has already
      been shewn, the real quantities of the necessaries and conveniencies of
      life which are given to the labourer, has increased considerably during
      the course of the present century. The rise in its money price seems to
      have been the effect, not of any diminution of the value of silver in the
      general market of Europe, but of a rise in the real price of labour, in
      the particular market of Great Britain, owing to the peculiarly happy
      circumstances of the country.
    
      For some time after the first discovery of America, silver would continue
      to sell at its former, or not much below its former price. The profits of
      mining would for some time be very great, and much above their natural
      rate. Those who imported that metal into Europe, however, would soon find
      that the whole annual importation could not be disposed of at this high
      price. Silver would gradually exchange for a smaller and a smaller
      quantity of goods. Its price would sink gradually lower and lower, till it
      fell to its natural price; or to what was just sufficient to pay,
      according to their natural rates, the wages of the labour, the profits of
      the stock, and the rent of the land, which must be paid in order to bring
      it from the mine to the market. In the greater part of the silver mines of
      Peru, the tax of the king of Spain, amounting to a tenth of the gross
      produce, eats up, it has already been observed, the whole rent of the
      land. This tax was originally a half; it soon afterwards fell to a third,
      then to a fifth, and at last to a tenth, at which late it still continues.
      In the greater part of the silver mines of Peru, this, it seems, is all
      that remains, after replacing the stock of the undertaker of the work,
      together with its ordinary profits; and it seems to be universally
      acknowledged that these profits, which were once very high, are now as low
      as they can well be, consistently with carrying on the works.
    
      The tax of the king of Spain was reduced to a fifth of the registered
      silver in 1504 {Solorzano, vol, ii.}, one-and-forty years before 1545, the
      date of the discovery of the mines of Potosi. In the course of ninety
      years, or before 1636, these mines, the most fertile in all America, had
      time sufficient to produce their full effect, or to reduce the value of
      silver in the European market as low as it could well fall, while it
      continued to pay this tax to the king of Spain. Ninety years is time
      sufficient to reduce any commodity, of which there is no monopoly, to its
      natural price, or to the lowest price at which, while it pays a particular
      tax, it can continue to be sold for any considerable time together.
    
      The price of silver in the European market might, perhaps, have fallen
      still lower, and it might have become necessary either to reduce the tax
      upon it, not only to one-tenth, as in 1736, but to one twentieth, in the
      same manner as that upon gold, or to give up working the greater part of
      the American mines which are now wrought. The gradual increase of the
      demand for silver, or the gradual enlargement of the market for the
      produce of the silver mines of America, is probably the cause which has
      prevented this from happening, and which has not only kept up the value of
      silver in the European market, but has perhaps even raised it somewhat
      higher than it was about the middle of the last century.
    
      Since the first discovery of America, the market for the produce of its
      silver mines has been growing gradually more and more extensive.
    
      First, the market of Europe has become gradually more and more extensive.
      Since the discovery of America, the greater part of Europe has been much
      improved. England, Holland, France, and Germany; even Sweden, Denmark, and
      Russia, have all advanced considerably, both in agriculture and in
      manufactures. Italy seems not to have gone backwards. The fall of Italy
      preceded the conquest of Peru. Since that time it seems rather to have
      recovered a little. Spain and Portugal, indeed, are supposed to have gone
      backwards. Portugal, however, is but a very small part of Europe, and the
      declension of Spain is not, perhaps, so great as is commonly imagined. In
      the beginning of the sixteenth century, Spain was a very poor country,
      even in comparison with France, which has been so much improved since that
      time. It was the well known remark of the emperor Charles V. who had
      travelled so frequently through both countries, that every thing abounded
      in France, but that every thing was wanting in Spain. The increasing
      produce of the agriculture and manufactures of Europe must necessarily
      have required a gradual increase in the quantity of silver coin to
      circulate it; and the increasing number of wealthy individuals must have
      required the like increase in the quantity of their plate and other
      ornaments of silver.
    
      Secondly, America is itself a new market, for the produce of its own
      silver mines; and as its advances in agriculture, industry, and
      population, are much more rapid than those of the most thriving countries
      in Europe, its demand must increase much more rapidly. The English
      colonies are altogether a new market, which, partly for coin, and partly
      for plate, requires a continual augmenting supply of silver through a
      great continent where there never was any demand before. The greater part,
      too, of the Spanish and Portuguese colonies, are altogether new markets.
      New Granada, the Yucatan, Paraguay, and the Brazils, were, before
      discovered by the Europeans, inhabited by savage nations, who had neither
      arts nor agriculture. A considerable degree of both has now been
      introduced into all of them. Even Mexico and Peru, though they cannot be
      considered as altogether new markets, are certainly much more extensive
      ones than they ever were before. After all the wonderful tales which have
      been published concerning the splendid state of those countries in ancient
      times, whoever reads, with any degree of sober judgment, the history of
      their first discovery and conquest, will evidently discern that, in arts,
      agriculture, and commerce, their inhabitants were much more ignorant than
      the Tartars of the Ukraine are at present. Even the Peruvians, the more
      civilized nation of the two, though they made use of gold and silver as
      ornaments, had no coined money of any kind. Their whole commerce was
      carried on by barter, and there was accordingly scarce any division of
      labour among them. Those who cultivated the ground, were obliged to build
      their own houses, to make their own household furniture, their own
      clothes, shoes, and instruments of agriculture. The few artificers among
      them are said to have been all maintained by the sovereign, the nobles,
      and the priests, and were probably their servants or slaves. All the
      ancient arts of Mexico and Peru have never furnished one single
      manufacture to Europe. The Spanish armies, though they scarce ever
      exceeded five hundred men, and frequently did not amount to half that
      number, found almost everywhere great difficulty in procuring subsistence.
      The famines which they are said to have occasioned almost wherever they
      went, in countries, too, which at the same time are represented as very
      populous and well cultivated, sufficiently demonstrate that the story of
      this populousness and high cultivation is in a great measure fabulous. The
      Spanish colonies are under a government in many respects less favourable
      to agriculture, improvement, and population, than that of the English
      colonies. They seem, however, to be advancing in all those much more
      rapidly than any country in Europe. In a fertile soil and happy climate,
      the great abundance and cheapness of land, a circumstance common to all
      new colonies, is, it seems, so great an advantage, as to compensate many
      defects in civil government. Frezier, who visited Peru in 1713, represents
      Lima as containing between twenty-five and twenty-eight thousand
      inhabitants. Ulloa, who resided in the same country between 1740 and 1746,
      represents it as containing more than fifty thousand. The difference in
      their accounts of the populousness of several other principal towns of
      Chili and Peru is nearly the same; and as there seems to be no reason to
      doubt of the good information of either, it marks an increase which is
      scarce inferior to that of the English colonies. America, therefore, is a
      new market for the produce of its own silver mines, of which the demand
      must increase much more rapidly than that of the most thriving country in
      Europe.
    
      Thirdly, the East Indies is another market for the produce of the silver
      mines of America, and a market which, from the time of the first discovery
      of those mines, has been continually taking off a greater and a greater
      quantity of silver. Since that time, the direct trade between America and
      the East Indies, which is carried on by means of the Acapulco ships, has
      been continually augmenting, and the indirect intercourse by the way of
      Europe has been augmenting in a still greater proportion. During the
      sixteenth century, the Portuguese were the only European nation who
      carried on any regular trade to the East Indies. In the last years of that
      century, the Dutch began to encroach upon this monopoly, and in a few
      years expelled them from their principal settlements in India. During the
      greater part of the last century, those two nations divided the most
      considerable part of the East India trade between them; the trade of the
      Dutch continually augmenting in a still greater proportion than that of
      the Portuguese declined. The English and French carried on some trade with
      India in the last century, but it has been greatly augmented in the course
      of the present. The East India trade of the Swedes and Danes began in the
      course of the present century. Even the Muscovites now trade regularly
      with China, by a sort of caravans which go over land through Siberia and
      Tartary to Pekin. The East India trade of all these nations, if we except
      that of the French, which the last war had well nigh annihilated, has been
      almost continually augmenting. The increasing consumptions of East India
      goods in Europe is, it seems, so great, as to afford a gradual increase of
      employment to them all. Tea, for example, was a drug very little used in
      Europe, before the middle of the last century. At present, the value of
      the tea annually imported by the English East India company, for the use
      of their own countrymen, amounts to more than a million and a half a year;
      and even this is not enough; a great deal more being constantly smuggled
      into the country from the ports of Holland, from Gottenburgh in Sweden,
      and from the coast of France, too, as long as the French East India
      company was in prosperity. The consumption of the porcelain of China, of
      the spiceries of the Moluccas, of the piece goods of Bengal, and of
      innumerable other articles, has increased very nearly in a like
      proportion. The tonnage, accordingly, of all the European shipping
      employed in the East India trade, at any one time during the last century,
      was not, perhaps, much greater than that of the English East India company
      before the late reduction of their shipping.
    
      But in the East Indies, particularly in China and Indostan, the value of
      the precious metals, when the Europeans first began to trade to those
      countries, was much higher than in Europe; and it still continues to be
      so. In rice countries, which generally yield two, sometimes three crops in
      the year, each of them more plentiful than any common crop of corn, the
      abundance of food must be much greater than in any corn country of equal
      extent. Such countries are accordingly much more populous. In them, too,
      the rich, having a greater superabundance of food to dispose of beyond
      what they themselves can consume, have the means of purchasing a much
      greater quantity of the labour of other people. The retinue of a grandee
      in China or Indostan accordingly is, by all accounts, much more numerous
      and splendid than that of the richest subjects in Europe. The same
      superabundance of food, of which they have the disposal, enables them to
      give a greater quantity of it for all those singular and rare productions
      which nature furnishes but in very small quantities; such as the precious
      metals and the precious stones, the great objects of the competition of
      the rich. Though the mines, therefore, which supplied the Indian market,
      had been as abundant as those which supplied the European, such
      commodities would naturally exchange for a greater quantity of food in
      India than in Europe. But the mines which supplied the Indian market with
      the precious metals seem to have been a good deal less abundant, and those
      which supplied it with the precious stones a good deal more so, than the
      mines which supplied the European. The precious metals, therefore, would
      naturally exchange in India for a somewhat greater quantity of the
      precious stones, and for a much greater quantity of food than in Europe.
      The money price of diamonds, the greatest of all superfluities, would be
      somewhat lower, and that of food, the first of all necessaries, a great
      deal lower in the one country than in the other. But the real price of
      labour, the real quantity of the necessaries of life which is given to the
      labourer, it has already been observed, is lower both in China and
      Indostan, the two great markets of India, than it is through the greater
      part of Europe. The wages of the labourer will there purchase a smaller
      quantity of food: and as the money price of food is much lower in India
      than in Europe, the money price of labour is there lower upon a double
      account; upon account both of the small quantity of food which it will
      purchase, and of the low price of that food. But in countries of equal art
      and industry, the money price of the greater part of manufactures will be
      in proportion to the money price of labour; and in manufacturing art and
      industry, China and Indostan, though inferior, seem not to be much
      inferior to any part of Europe. The money price of the greater part of
      manufactures, therefore, will naturally be much lower in those great
      empires than it is anywhere in Europe. Through the greater part of Europe,
      too, the expense of land-carriage increases very much both the real and
      nominal price of most manufactures. It costs more labour, and therefore
      more money, to bring first the materials, and afterwards the complete
      manufacture to market. In China and Indostan, the extent and variety of
      inland navigations save the greater part of this labour, and consequently
      of this money, and thereby reduce still lower both the real and the
      nominal price of the greater part of their manufactures. Upon all these
      accounts, the precious metals are a commodity which it always has been,
      and still continues to be, extremely advantageous to carry from Europe to
      India. There is scarce any commodity which brings a better price there; or
      which, in proportion to the quantity of labour and commodities which it
      costs in Europe, will purchase or command a greater quantity of labour and
      commodities in India. It is more advantageous, too, to carry silver
      thither than gold; because in China, and the greater part of the other
      markets of India, the proportion between fine silver and fine gold is but
      as ten, or at most as twelve to one; whereas in Europe it is as fourteen
      or fifteen to one. In China, and the greater part of the other markets of
      India, ten, or at most twelve ounces of silver, will purchase an ounce of
      gold; in Europe, it requires from fourteen to fifteen ounces. In the
      cargoes, therefore, of the greater part of European ships which sail to
      India, silver has generally been one of the most valuable articles. It is
      the most valuable article in the Acapulco ships which sail to Manilla. The
      silver of the new continent seems, in this manner, to be one of the
      principal commodities by which the commerce between the two extremities of
      the old one is carried on; and it is by means of it, in a great measure,
      that those distant parts of the world are connected with one another.
    
      In order to supply so very widely extended a market, the quantity of
      silver annually brought from the mines must not only be sufficient to
      support that continued increase, both of coin and of plate, which is
      required in all thriving countries; but to repair that continual waste and
      consumption of silver which takes place in all countries where that metal
      is used.
    
      The continual consumption of the precious metals in coin by wearing, and
      in plate both by wearing and cleaning, is very sensible; and in
      commodities of which the use is so very widely extended, would alone
      require a very great annual supply. The consumption of those metals in
      some particular manufactures, though it may not perhaps be greater upon
      the whole than this gradual consumption, is, however, much more sensible,
      as it is much more rapid. In the manufactures of Birmingham alone, the
      quantity of gold and silver annually employed in gilding and plating, and
      thereby disqualified from ever afterwards appearing in the shape of those
      metals, is said to amount to more than fifty thousand pounds sterling. We
      may from thence form some notion how great must be the annual consumption
      in all the different parts of the world, either in manufactures of the
      same kind with those of Birmingham, or in laces, embroideries, gold and
      silver stuffs, the gilding of books, furniture, etc. A considerable
      quantity, too, must be annually lost in transporting those metals from one
      place to another both by sea and by land. In the greater part of the
      governments of Asia, besides, the almost universal custom of concealing
      treasures in the bowels of the earth, of which the knowledge frequently
      dies with the person who makes the concealment, must occasion the loss of
      a still greater quantity.
    
      The quantity of gold and silver imported at both Cadiz and Lisbon
      (including not only what comes under register, but what may be supposed to
      be smuggled) amounts, according to the best accounts, to about six
      millions sterling a-year.
    
      According to Mr Meggens {Postscript to the Universal Merchant p. 15 and
      16. This postscript was not printed till 1756, three years after the
      publication of the book, which has never had a second edition. The
      postscript is, therefore, to be found in few copies; it corrects several
      errors in the book.}, the annual importation of the precious metals into
      Spain, at an average of six years, viz. from 1748 to 1753, both inclusive,
      and into Portugal, at an average of seven years, viz. from 1747 to 1753,
      both inclusive, amounted in silver to 1,101,107 pounds weight, and in gold
      to 49,940 pounds weight. The silver, at sixty two shillings the pound
      troy, amounts to £ 3,413,431:10s. sterling. The gold, at forty-four
      guineas and a half the pound troy, amounts to £ 2,333,446:14s. sterling.
      Both together amount to £ 5,746,878:4s. sterling. The account of what was
      imported under register, he assures us, is exact. He gives us the detail
      of the particular places from which the gold and silver were brought, and
      of the particular quantity of each metal, which, according to the
      register, each of them afforded. He makes an allowance, too, for the
      quantity of each metal which, he supposes, may have been smuggled. The
      great experience of this judicious merchant renders his opinion of
      considerable weight.
    
      According to the eloquent, and sometimes well-informed, author of the
      Philosophical and Political History of the Establishment of the Europeans
      in the two Indies, the annual importation of registered gold and silver
      into Spain, at an average of eleven years, viz. from 1754 to 1764, both
      inclusive, amounted to 13,984,185 3/5 piastres of ten reals. On account of
      what may have been smuggled, however, the whole annual importation, he
      supposes, may have amounted to seventeen millions of piastres, which, at
      4s. 6d. the piastre, is equal to £ 3,825,000 sterling. He gives the
      detail, too, of the particular places from which the gold and silver were
      brought, and of the particular quantities of each metal, which according
      to the register, each of them afforded. He informs us, too, that if we
      were to judge of the quantity of gold annually imported from the Brazils
      to Lisbon, by the amount of the tax paid to the king of Portugal, which it
      seems, is one-fifth of the standard metal, we might value it at eighteen
      millions of cruzadoes, or forty-five millions of French livres, equal to
      about twenty millions sterling. On account of what may have been smuggled,
      however, we may safely, he says, add to this sum an eighth more, or £
      250,000 sterling, so that the whole will amount to £ 2,250,000 sterling.
      According to this account, therefore, the whole annual importation of the
      precious metals into both Spain and Portugal, mounts to about £ 6,075,000
      sterling.
    
      Several other very well authenticated, though manuscript accounts, I have
      been assured, agree in making this whole annual importation amount, at an
      average, to about six millions sterling; sometimes a little more,
      sometimes a little less.
    
      The annual importation of the precious metals into Cadiz and Lisbon,
      indeed, is not equal to the whole annual produce of the mines of America.
      Some part is sent annually by the Acapulco ships to Manilla; some part is
      employed in a contraband trade, which the Spanish colonies carry on with
      those of other European nations; and some part, no doubt, remains in the
      country. The mines of America, besides, are by no means the only gold and
      silver mines in the world. They, are, however, by far the most abundant.
      The produce of all the other mines which are known is insignificant, it is
      acknowledged, in comparison with theirs; and the far greater part of
      their produce, it is likewise acknowledged, is annually imported into
      Cadiz and Lisbon. But the consumption of Birmingham alone, at the rate of
      fifty thousand pounds a-year, is equal to the hundred-and-twentieth part
      of this annual importation, at the rate of six millions a-year. The whole
      annual consumption of gold and silver, therefore, in all the different
      countries of the world where those metals are used, may, perhaps, be
      nearly equal to the whole annual produce. The remainder may be no more
      than sufficient to supply the increasing demand of all thriving countries.
      It may even have fallen so far short of this demand, as somewhat to raise
      the price of those metals in the European market.
    
      The quantity of brass and iron annually brought from the mine to the
      market, is out of all proportion greater than that of gold and silver. We
      do not, however, upon this account, imagine that those coarse metals are
      likely to multiply beyond the demand, or to become gradually cheaper and
      cheaper. Why should we imagine that the precious metals are likely to do
      so? The coarse metals, indeed, though harder, are put to much harder uses,
      and, as they are of less value, less care is employed in their
      preservation. The precious metals, however, are not necessarily immortal
      any more than they, but are liable, too, to be lost, wasted, and consumed,
      in a great variety of ways.
    
      The price of all metals, though liable to slow and gradual variations,
      varies less from year to year than that of almost any other part of the
      rude produce of land: and the price of the precious metals is even less
      liable to sudden variations than that of the coarse ones. The durableness
      of metals is the foundation of this extraordinary steadiness of price. The
      corn which was brought to market last year will be all, or almost all,
      consumed, long before the end of this year. But some part of the iron
      which was brought from the mine two or three hundred years ago, may be
      still in use, and, perhaps, some part of the gold which was brought from
      it two or three thousand years ago. The different masses of corn, which,
      in different years, must supply the consumption of the world, will always
      be nearly in proportion to the respective produce of those different
      years. But the proportion between the different masses of iron which may
      be in use in two different years, will be very little affected by any
      accidental difference in the produce of the iron mines of those two years;
      and the proportion between the masses of gold will be still less affected
      by any such difference in the produce of the gold mines. Though the
      produce of the greater part of metallic mines, therefore, varies, perhaps,
      still more from year to year than that of the greater part of corn fields,
      those variations have not the same effect upon the price of the one
      species of commodities as upon that of the other.
    
      _Variations in the Proportion between the respective Values of Gold and
      Silver._
    


    
      Before the discovery of the mines of America, the value of fine gold to
      fine silver was regulated in the different mines of Europe, between the
      proportions of one to ten and one to twelve; that is, an ounce of fine
      gold was supposed to be worth from ten to twelve ounces of fine silver.
      About the middle of the last century, it came to be regulated, between the
      proportions of one to fourteen and one to fifteen; that is, an ounce of
      fine gold came to be supposed worth between fourteen and fifteen ounces of
      fine silver. Gold rose in its nominal value, or in the quantity of silver
      which was given for it. Both metals sunk in their real value, or in the
      quantity of labour which they could purchase; but silver sunk more than
      gold. Though both the gold and silver mines of America exceeded in
      fertility all those which had ever been known before, the fertility of the
      silver mines had, it seems, been proportionally still greater than that of
      the gold ones.
    
      The great quantities of silver carried annually from Europe to India,
      have, in some of the English settlements, gradually reduced the value of
      that metal in proportion to gold. In the mint of Calcutta, an ounce of
      fine gold is supposed to be worth fifteen ounces of fine silver, in the
      same manner as in Europe. It is in the mint, perhaps, rated too high for
      the value which it bears in the market of Bengal. In China, the proportion
      of gold to silver still continues as one to ten, or one to twelve. In
      Japan, it is said to be as one to eight.
    
      The proportion between the quantities of gold and silver annually imported
      into Europe, according to Mr Meggens’ account, is as one to twenty-two
      nearly; that is, for one ounce of gold there are imported a little more
      than twenty-two ounces of silver. The great quantity of silver sent
      annually to the East Indies reduces, he supposes, the quantities of those
      metals which remain in Europe to the proportion of one to fourteen or
      fifteen, the proportion of their values. The proportion between their
      values, he seems to think, must necessarily be the same as that between
      their quantities, and would therefore be as one to twenty-two, were it not
      for this greater exportation of silver.
    
      But the ordinary proportion between the respective values of two
      commodities is not necessarily the same as that between the quantities of
      them which are commonly in the market. The price of an ox, reckoned at ten
      guineas, is about three score times the price of a lamb, reckoned at 3s.
      6d. It would be absurd, however, to infer from thence, that there are
      commonly in the market three score lambs for one ox; and it would be just
      as absurd to infer, because an ounce of gold will commonly purchase from
      fourteen or fifteen ounces of silver, that there are commonly in the
      market only fourteen or fifteen ounces of silver for one ounce of gold.
    
      The quantity of silver commonly in the market, it is probable, is much
      greater in proportion to that of gold, than the value of a certain
      quantity of gold is to that of an equal quantity of silver. The whole
      quantity of a cheap commodity brought to market is commonly not only
      greater, but of greater value, than the whole quantity of a dear one. The
      whole quantity of bread annually brought to market, is not only greater,
      but of greater value, than the whole quantity of butcher’s meat; the whole
      quantity of butcher’s meat, than the whole quantity of poultry; and the
      whole quantity of poultry, than the whole quantity of wild fowl. There are
      so many more purchasers for the cheap than for the dear commodity, that,
      not only a greater quantity of it, but a greater value can commonly be
      disposed of. The whole quantity, therefore, of the cheap commodity, must
      commonly be greater in proportion to the whole quantity of the dear one,
      than the value of a certain quantity of the dear one, is to the value of
      an equal quantity of the cheap one. When we compare the precious metals
      with one another, silver is a cheap, and gold a dear commodity. We ought
      naturally to expect, therefore, that there should always be in the market,
      not only a greater quantity, but a greater value of silver than of gold.
      Let any man, who has a little of both, compare his own silver with his
      gold plate, and he will probably find, that not only the quantity, but the
      value of the former, greatly exceeds that of the latter. Many people,
      besides, have a good deal of silver who have no gold plate, which, even
      with those who have it, is generally confined to watch-cases, snuff-boxes,
      and such like trinkets, of which the whole amount is seldom of great
      value. In the British coin, indeed, the value of the gold preponderates
      greatly, but it is not so in that of all countries. In the coin of some
      countries, the value of the two metals is nearly equal. In the Scotch
      coin, before the union with England, the gold preponderated very little,
      though it did somewhat {See Ruddiman’s Preface to Anderson’s Diplomata,
      etc. Scotiae.}, as it appears by the accounts of the mint. In the coin of
      many countries the silver preponderates. In France, the largest sums are
      commonly paid in that metal, and it is there difficult to get more gold
      than what is necessary to carry about in your pocket. The superior value,
      however, of the silver plate above that of the gold, which takes place in
      all countries, will much more than compensate the preponderancy of the
      gold coin above the silver, which takes place only in some countries.
    
      Though, in one sense of the word, silver always has been, and probably
      always will be, much cheaper than gold; yet, in another sense, gold may
      perhaps, in the present state of the Spanish market, be said to be
      somewhat cheaper than silver. A commodity may be said to be dear or cheap
      not only according to the absolute greatness or smallness of its usual
      price, but according as that price is more or less above the lowest for
      which it is possible to bring it to market for any considerable time
      together. This lowest price is that which barely replaces, with a moderate
      profit, the stock which must be employed in bringing the commodity
      thither. It is the price which affords nothing to the landlord, of which
      rent makes not any component part, but which resolves itself altogether
      into wages and profit. But, in the present state of the Spanish market,
      gold is certainly somewhat nearer to this lowest price than silver. The
      tax of the king of Spain upon gold is only one-twentieth part of the
      standard metal, or five per cent.; whereas his tax upon silver amounts to
      one-tenth part of it, or to ten per cent. In these taxes, too, it has
      already been observed, consists the whole rent of the greater part of the
      gold and silver mines of Spanish America; and that upon gold is still
      worse paid than that upon silver. The profits of the undertakers of gold
      mines, too, as they more rarely make a fortune, must, in general, be still
      more moderate than those of the undertakers of silver mines. The price of
      Spanish gold, therefore, as it affords both less rent and less profit,
      must, in the Spanish market, be somewhat nearer to the lowest price for
      which it is possible to bring it thither, than the price of Spanish
      silver. When all expenses are computed, the whole quantity of the one
      metal, it would seem, cannot, in the Spanish market, be disposed of so
      advantageously as the whole quantity of the other. The tax, indeed, of the
      king of Portugal upon the gold of the Brazils, is the same with the
      ancient tax of the king of Spain upon the silver of Mexico and Peru; or
      one-fifth part of the standard metal. It may therefore be uncertain,
      whether, to the general market of Europe, the whole mass of American gold
      comes at a price nearer to the lowest for which it is possible to bring it
      thither, than the whole mass of American silver.
    
      The price of diamonds and other precious stones may, perhaps, be still
      nearer to the lowest price at which it is possible to bring them to
      market, than even the price of gold.
    
      Though it is not very probable that any part of a tax, which is not only
      imposed upon one of the most proper subjects of taxation, a mere luxury
      and superfluity, but which affords so very important a revenue as the tax
      upon silver, will ever be given up as long as it is possible to pay it;
      yet the same impossibility of paying it, which, in 1736. made it necessary
      to reduce it from one-fifth to one-tenth, may in time make it necessary to
      reduce it still further; in the same manner as it made it necessary to
      reduce the tax upon gold to one-twentieth. That the silver mines of
      Spanish America, like all other mines, become gradually more expensive in
      the working, on account of the greater depths at which it is necessary to
      carry on the works, and of the greater expense of drawing out the water,
      and of supplying them with fresh air at those depths, is acknowledged by
      everybody who has inquired into the state of those mines.
    
      These causes, which are equivalent to a growing scarcity of silver (for a
      commodity may be said to grow scarcer when it becomes more difficult and
      expensive to collect a certain quantity of it), must, in time, produce one
      or other of the three following events: The increase of the expense must
      either, first, be compensated altogether by a proportionable increase in
      the price of the metal; or, secondly, it must be compensated altogether by
      a proportionable diminution of the tax upon silver; or, thirdly, it must
      be compensated partly by the one and partly by the other of those two
      expedients. This third event is very possible. As gold rose in its price
      in proportion to silver, notwithstanding a great diminution of the tax
      upon gold, so silver might rise in its price in proportion to labour and
      commodities, notwithstanding an equal diminution of the tax upon silver.
    
      Such successive reductions of the tax, however, though they may not
      prevent altogether, must certainly retard, more or less, the rise of the
      value of silver in the European market. In consequence of such reductions,
      many mines may be wrought which could not be wrought before, because they
      could not afford to pay the old tax; and the quantity of silver annually
      brought to market, must always be somewhat greater, and, therefore, the
      value of any given quantity somewhat less, than it otherwise would have
      been. In consequence of the reduction in 1736, the value of silver in the
      European market, though it may not at this day be lower than before that
      reduction, is, probably, at least ten per cent. lower than it would have
      been, had the court of Spain continued to exact the old tax. That,
      notwithstanding this reduction, the value of silver has, during the course
      of the present century, begun to rise somewhat in the European market, the
      facts and arguments which have been alleged above, dispose me to believe,
      or more properly to suspect and conjecture; for the best opinion which I
      can form upon this subject, scarce, perhaps, deserves the name of belief.
      The rise, indeed, supposing there has been any, has hitherto been so very
      small, that after all that has been said, it may, perhaps, appear to many
      people uncertain, not only whether this event has actually taken place,
      but whether the contrary may not have taken place, or whether the value of
      silver may not still continue to fall in the European market.
    
      It must be observed, however, that whatever may be the supposed annual
      importation of gold and silver, there must be a certain period at which
      the annual consumption of those metals will be equal to that annual
      importation. Their consumption must increase as their mass increases, or
      rather in a much greater proportion. As their mass increases, their value
      diminishes. They are more used, and less cared for, and their consumption
      consequently increases in a greater proportion than their mass. After a
      certain period, therefore, the annual consumption of those metals must, in
      this manner, become equal to their annual importation, provided that
      importation is not continually increasing; which, in the present times, is
      not supposed to be the case.
    
      If, when the annual consumption has become equal to the annual
      importation, the annual importation should gradually diminish, the annual
      consumption may, for some time, exceed the annual importation. The mass of
      those metals may gradually and insensibly diminish, and their value
      gradually and insensibly rise, till the annual importation becoming again
      stationary, the annual consumption will gradually and insensibly
      accommodate itself to what that annual importation can maintain.


      _Grounds of the suspicion that the Value of Silver still continues to
      decrease._


      The increase of the wealth of Europe, and the popular notion, that as the
      quantity of the precious metals naturally increases with the increase of
      wealth, so their value diminishes as their quantity increases, may,
      perhaps, dispose many people to believe that their value still continues
      to fall in the European market; and the still gradually increasing price
      of many parts of the rude produce of land may confirm them still farther
      in this opinion.
    
      That that increase in the quantity of the precious metals, which arises in
      any country from the increase of wealth, has no tendency to diminish their
      value, I have endeavoured to shew already. Gold and silver naturally
      resort to a rich country, for the same reason that all sorts of luxuries
      and curiosities resort to it; not because they are cheaper there than in
      poorer countries, but because they are dearer, or because a better price
      is given for them. It is the superiority of price which attracts them; and
      as soon as that superiority ceases, they necessarily cease to go thither.
    
      If you except corn, and such other vegetables as are raised altogether by
      human industry, that all other sorts of rude produce, cattle, poultry,
      game of all kinds, the useful fossils and minerals of the earth, etc.
      naturally grow dearer, as the society advances in wealth and improvement,
      I have endeavoured to shew already. Though such commodities, therefore,
      come to exchange for a greater quantity of silver than before, it will not
      from thence follow that silver has become really cheaper, or will purchase
      less labour than before; but that such commodities have become really
      dearer, or will purchase more labour than before. It is not their nominal
      price only, but their real price, which rises in the progress of
      improvement. The rise of their nominal price is the effect, not of any
      degradation of the value of silver, but of the rise in their real price.


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


      These different sorts of rude produce may be divided into three classes.
      The first comprehends those which it is scarce in the power of human
      industry to multiply at all. The second, those which it can multiply in
      proportion to the demand. The third, those in which the efficacy of
      industry is either limited or uncertain. In the progress of wealth and
      improvement, the real price of the first may rise to any degree of
      extravagance, and seems not to be limited by any certain boundary. That of
      the second, though it may rise greatly, has, however, a certain boundary,
      beyond which it cannot well pass for any considerable time together. That
      of the third, though its natural tendency is to rise in the progress of
      improvement, yet in the same degree of improvement it may sometimes happen
      even to fall, sometimes to continue the same, and sometimes to rise more
      or less, according as different accidents render the efforts of human
      industry, in multiplying this sort of rude produce, more or less
      successful.
    
      First Sort.—The first sort of rude produce, of which the price rises
      in the progress of improvement, is that which it is scarce in the power of
      human industry to multiply at all. It consists in those things which
      nature produces only in certain quantities, and which being of a very
      perishable nature, it is impossible to accumulate together the produce of
      many different seasons. Such are the greater part of rare and singular
      birds and fishes, many different sorts of game, almost all wild-fowl, all
      birds of passage in particular, as well as many other things. When wealth,
      and the luxury which accompanies it, increase, the demand for these is
      likely to increase with them, and no effort of human industry may be able
      to increase the supply much beyond what it was before this increase of the
      demand. The quantity of such commodities, therefore, remaining the same,
      or nearly the same, while the competition to purchase them is continually
      increasing, their price may rise to any degree of extravagance, and seems
      not to be limited by any certain boundary. If woodcocks should become so
      fashionable as to sell for twenty guineas a-piece, no effort of human
      industry could increase the number of those brought to market, much beyond
      what it is at present. The high price paid by the Romans, in the time of
      their greatest grandeur, for rare birds and fishes, may in this manner
      easily be accounted for. These prices were not the effects of the low
      value of silver in those times, but of the high value of such rarities and
      curiosities as human industry could not multiply at pleasure. The real
      value of silver was higher at Rome, for sometime before, and after the
      fall of the republic, than it is through the greater part of Europe at
      present. Three sestertii equal to about sixpence sterling, was the price
      which the republic paid for the modius or peck of the tithe wheat of
      Sicily. This price, however, was probably below the average market price,
      the obligation to deliver their wheat at this rate being considered as a
      tax upon the Sicilian farmers. When the Romans, therefore, had occasion to
      order more corn than the tithe of wheat amounted to, they were bound by
      capitulation to pay for the surplus at the rate of four sestertii, or
      eightpence sterling the peck; and this had probably been reckoned the
      moderate and reasonable, that is, the ordinary or average contract price
      of those times; it is equal to about one-and-twenty shillings the quarter.
      Eight-and-twenty shillings the quarter was, before the late years of
      scarcity, the ordinary contract price of English wheat, which in quality
      is inferior to the Sicilian, and generally sells for a lower price in the
      European market. The value of silver, therefore, in those ancient times,
      must have been to its value in the present, as three to four inversely;
      that is, three ounces of silver would then have purchased the same
      quantity of labour and commodities which four ounces will do at present.
      When we read in Pliny, therefore, that Seius {Lib. X, c. 29.} bought a
      white nightingale, as a present for the empress Agrippina, at the price of
      six thousand sestertii, equal to about fifty pounds of our present money;
      and that Asinius Celer {Lib. IX, c. 17.} purchased a surmullet at the
      price of eight thousand sestertii, equal to about sixty-six pounds
      thirteen shillings and fourpence of our present money; the extravagance of
      those prices, how much soever it may surprise us, is apt, notwithstanding,
      to appear to us about one third less than it really was. Their real price,
      the quantity of labour and subsistence which was given away for them, was
      about one-third more than their nominal price is apt to express to us in
      the present times. Seius gave for the nightingale the command of a
      quantity of labour and subsistence, equal to what £ 66:13: 4d. would
      purchase in the present times; and Asinius Celer gave for a surmullet the
      command of a quantity equal to what £ 88:17: 9d. would purchase. What
      occasioned the extravagance of those high prices was, not so much the
      abundance of silver, as the abundance of labour and subsistence, of which
      those Romans had the disposal, beyond what was necessary for their own
      use. The quantity of silver, of which they had the disposal, was a good
      deal less than what the command of the same quantity of labour and
      subsistence would have procured to them in the present times.
    
      Second sort.—The second sort of rude produce, of which the price
      rises in the progress of improvement, is that which human industry can
      multiply in proportion to the demand. It consists in those useful plants
      and animals, which, in uncultivated countries, nature produces with such
      profuse abundance, that they are of little or no value, and which, as
      cultivation advances, are therefore forced to give place to some more
      profitable produce. During a long period in the progress of improvement,
      the quantity of these is continually diminishing, while, at the same time,
      the demand for them is continually increasing. Their real value,
      therefore, the real quantity of labour which they will purchase or
      command, gradually rises, till at last it gets so high as to render them
      as profitable a produce as any thing else which human industry can raise
      upon the most fertile and best cultivated land. When it has got so high,
      it cannot well go higher. If it did, more land and more industry would
      soon be employed to increase their quantity.
    
      When the price of cattle, for example, rises so high, that it is as
      profitable to cultivate land in order to raise food for them as in order
      to raise food for man, it cannot well go higher. If it did, more corn land
      would soon be turned into pasture. The extension of tillage, by
      diminishing the quantity of wild pasture, diminishes the quantity of
      butcher’s meat, which the country naturally produces without labour or
      cultivation; and, by increasing the number of those who have either corn,
      or, what comes to the same thing, the price of corn, to give in exchange
      for it, increases the demand. The price of butcher’s meat, therefore, and,
      consequently, of cattle, must gradually rise, till it gets so high, that
      it becomes as profitable to employ the most fertile and best cultivated
      lands in raising food for them as in raising corn. But it must always be
      late in the progress of improvement before tillage can be so far extended
      as to raise the price of cattle to this height; and, till it has got to
      this height, if the country is advancing at all, their price must be
      continually rising. There are, perhaps, some parts of Europe in which the
      price of cattle has not yet got to this height. It had not got to this
      height in any part of Scotland before the Union. Had the Scotch cattle
      been always confined to the market of Scotland, in a country in which the
      quantity of land, which can be applied to no other purpose but the feeding
      of cattle, is so great in proportion to what can be applied to other
      purposes, it is scarce possible, perhaps, that their price could ever have
      risen so high as to render it profitable to cultivate land for the sake of
      feeding them. In England, the price of cattle, it has already been
      observed, seems, in the neighbourhood of London, to have got to this
      height about the beginning of the last century; but it was much later,
      probably, before it got through the greater part of the remoter counties,
      in some of which, perhaps, it may scarce yet have got to it. Of all the
      different substances, however, which compose this second sort of rude
      produce, cattle is, perhaps, that of which the price, in the progress of
      improvement, rises first to this height.
    
      Till the price of cattle, indeed, has got to this height, it seems scarce
      possible that the greater part, even of those lands which are capable of
      the highest cultivation, can be completely cultivated. In all farms too
      distant from any town to carry manure from it, that is, in the far greater
      part of those of every extensive country, the quantity of well cultivated
      land must be in proportion to the quantity of manure which the farm itself
      produces; and this, again, must be in proportion to the stock of cattle
      which are maintained upon it. The land is manured, either by pasturing the
      cattle upon it, or by feeding them in the stable, and from thence carrying
      out their dung to it. But unless the price of the cattle be sufficient to
      pay both the rent and profit of cultivated land, the farmer cannot afford
      to pasture them upon it; and he can still less afford to feed them in the
      stable. It is with the produce of improved and cultivated land only that
      cattle can be fed in the stable; because, to collect the scanty and
      scattered produce of waste and unimproved lands, would require too much
      labour, and be too expensive. If the price of the cattle, therefore, is
      not sufficient to pay for the produce of improved and cultivated land,
      when they are allowed to pasture it, that price will be still less
      sufficient to pay for that produce, when it must be collected with a good
      deal of additional labour, and brought into the stable to them. In these
      circumstances, therefore, no more cattle can with profit be fed in the
      stable than what are necessary for tillage. But these can never afford
      manure enough for keeping constantly in good condition all the lands which
      they are capable of cultivating. What they afford, being insufficient for
      the whole farm, will naturally be reserved for the lands to which it can
      be most advantageously or conveniently applied; the most fertile, or
      those, perhaps, in the neighbourhood of the farm-yard. These, therefore,
      will be kept constantly in good condition, and fit for tillage. The rest
      will, the greater part of them, be allowed to lie waste, producing scarce
      any thing but some miserable pasture, just sufficient to keep alive a few
      straggling, half-starved cattle; the farm, though much overstocked in
      proportion to what would be necessary for its complete cultivation, being
      very frequently overstocked in proportion to its actual produce. A portion
      of this waste land, however, after having been pastured in this wretched
      manner for six or seven years together, may be ploughed up, when it will
      yield, perhaps, a poor crop or two of bad oats, or of some other coarse
      grain; and then, being entirely exhausted, it must be rested and pastured
      again as before, and another portion ploughed up, to be in the same manner
      exhausted and rested again in its turn. Such, accordingly, was the general
      system of management all over the low country of Scotland before the
      Union. The lands which were kept constantly well manured and in good
      condition seldom exceeded a third or fourth part of the whole farm, and
      sometimes did not amount to a fifth or a sixth part of it. The rest were
      never manured, but a certain portion of them was in its turn,
      notwithstanding, regularly cultivated and exhausted. Under this system of
      management, it is evident, even that part of the lands of Scotland which
      is capable of good cultivation, could produce but little in comparison of
      what it may be capable of producing. But how disadvantageous soever this
      system may appear, yet, before the Union, the low price of cattle seems to
      have rendered it almost unavoidable. If, notwithstanding a great rise in
      the price, it still continues to prevail through a considerable part of
      the country, it is owing in many places, no doubt, to ignorance and
      attachment to old customs, but, in most places, to the unavoidable
      obstructions which the natural course of things opposes to the immediate
      or speedy establishment of a better system: first, to the poverty of the
      tenants, to their not having yet had time to acquire a stock of cattle
      sufficient to cultivate their lands more completely, the same rise of
      price, which would render it advantageous for them to maintain a greater
      stock, rendering it more difficult for them to acquire it; and, secondly,
      to their not having yet had time to put their lands in condition to
      maintain this greater stock properly, supposing they were capable of
      acquiring it. The increase of stock and the improvement of land are two
      events which must go hand in hand, and of which the one can nowhere much
      outrun the other. Without some increase of stock, there can be scarce any
      improvement of land, but there can be no considerable increase of stock,
      but in consequence of a considerable improvement of land; because
      otherwise the land could not maintain it. These natural obstructions to
      the establishment of a better system, cannot be removed but by a long
      course of frugality and industry; and half a century or a century more,
      perhaps, must pass away before the old system, which is wearing out
      gradually, can be completely abolished through all the different parts of
      the country. Of all the commercial advantages, however, which Scotland has
      derived from the Union with England, this rise in the price of cattle is,
      perhaps, the greatest. It has not only raised the value of all highland
      estates, but it has, perhaps, been the principal cause of the improvement
      of the low country.
    
      In all new colonies, the great quantity of waste land, which can for many
      years be applied to no other purpose but the feeding of cattle, soon
      renders them extremely abundant; and in every thing great cheapness is the
      necessary consequence of great abundance. Though all the cattle of the
      European colonies in America were originally carried from Europe, they
      soon multiplied so much there, and became of so little value, that even
      horses were allowed to run wild in the woods, without any owner thinking
      it worth while to claim them. It must be a long time after the first
      establishment of such colonies, before it can become profitable to feed
      cattle upon the produce of cultivated land. The same causes, therefore,
      the want of manure, and the disproportion between the stock employed in
      cultivation and the land which it is destined to cultivate, are likely to
      introduce there a system of husbandry, not unlike that which still
      continues to take place in so many parts of Scotland. Mr Kalm, the Swedish
      traveller, when he gives an account of the husbandry of some of the
      English colonies in North America, as he found it in 1749, observes,
      accordingly, that he can with difficulty discover there the character of
      the English nation, so well skilled in all the different branches of
      agriculture. They make scarce any manure for their corn fields, he says;
      but when one piece of ground has been exhausted by continual cropping,
      they clear and cultivate another piece of fresh land; and when that is
      exhausted, proceed to a third. Their cattle are allowed to wander through
      the woods and other uncultivated grounds, where they are half-starved;
      having long ago extirpated almost all the annual grasses, by cropping them
      too early in the spring, before they had time to form their flowers, or to
      shed their seeds. {Kalm’s Travels, vol 1, pp. 343, 344.} The annual
      grasses were, it seems, the best natural grasses in that part of North
      America; and when the Europeans first settled there, they used to grow
      very thick, and to rise three or four feet high. A piece of ground which,
      when he wrote, could not maintain one cow, would in former times, he was
      assured, have maintained four, each of which would have given four times
      the quantity of milk which that one was capable of giving. The poorness of
      the pasture had, in his opinion, occasioned the degradation of their
      cattle, which degenerated sensibly from one generation to another. They
      were probably not unlike that stunted breed which was common all over
      Scotland thirty or forty years ago, and which is now so much mended
      through the greater part of the low country, not so much by a change of
      the breed, though that expedient has been employed in some places, as by a
      more plentiful method of feeding them.
    
      Though it is late, therefore, in the progress of improvement, before
      cattle can bring such a price as to render it profitable to cultivate land
      for the sake of feeding them; yet of all the different parts which compose
      this second sort of rude produce, they are perhaps the first which bring
      this price; because, till they bring it, it seems impossible that
      improvement can be brought near even to that degree of perfection to which
      it has arrived in many parts of Europe.
    
      As cattle are among the first, so perhaps venison is among the last parts
      of this sort of rude produce which bring this price. The price of venison
      in Great Britain, how extravagant soever it may appear, is not near
      sufficient to compensate the expense of a deer park, as is well known to
      all those who have had any experience in the feeding of deer. If it was
      otherwise, the feeding of deer would soon become an article of common
      farming, in the same manner as the feeding of those small birds, called
      turdi, was among the ancient Romans. Varro and Columella assure us, that
      it was a most profitable article. The fattening of ortolans, birds of
      passage which arrive lean in the country, is said to be so in some parts
      of France. If venison continues in fashion, and the wealth and luxury of
      Great Britain increase as they have done for some time past, its price may
      very probably rise still higher than it is at present.
    
      Between that period in the progress of improvement, which brings to its
      height the price of so necessary an article as cattle, and that which
      brings to it the price of such a superfluity as venison, there is a very
      long interval, in the course of which many other sorts of rude produce
      gradually arrive at their highest price, some sooner and some later,
      according to different circumstances.
    
      Thus, in every farm, the offals of the barn and stable will maintain a
      certain number of poultry. These, as they are fed with what would
      otherwise be lost, are a mere save-all; and as they cost the farmer scarce
      any thing, so he can afford to sell them for very little. Almost all that
      he gets is pure gain, and their price can scarce be so low as to
      discourage him from feeding this number. But in countries ill cultivated,
      and therefore but thinly inhabited, the poultry, which are thus raised
      without expense, are often fully sufficient to supply the whole demand. In
      this state of things, therefore, they are often as cheap as butcher’s
      meat, or any other sort of animal food. But the whole quantity of poultry
      which the farm in this manner produces without expense, must always be
      much smaller than the whole quantity of butcher’s meat which is reared
      upon it; and in times of wealth and luxury, what is rare, with only nearly
      equal merit, is always preferred to what is common. As wealth and luxury
      increase, therefore, in consequence of improvement and cultivation, the
      price of poultry gradually rises above that of butcher’s meat, till at
      last it gets so high, that it becomes profitable to cultivate land for the
      sake of feeding them. When it has got to this height, it cannot well go
      higher. If it did, more land would soon be turned to this purpose. In
      several provinces of France, the feeding of poultry is considered as a
      very important article in rural economy, and sufficiently profitable to
      encourage the farmer to raise a considerable quantity of Indian corn and
      buckwheat for this purpose. A middling farmer will there sometimes have
      four hundred fowls in his yard. The feeding of poultry seems scarce yet to
      be generally considered as a matter of so much importance in England. They
      are certainly, however, dearer in England than in France, as England
      receives considerable supplies from France. In the progress of
      improvements, the period at which every particular sort of animal food is
      dearest, must naturally be that which immediately precedes the general
      practice of cultivating land for the sake of raising it. For some time
      before this practice becomes general, the scarcity must necessarily raise
      the price. After it has become general, new methods of feeding are
      commonly fallen upon, which enable the farmer to raise upon the same
      quantity of ground a much greater quantity of that particular sort of
      animal food. The plenty not only obliges him to sell cheaper, but, in
      consequence of these improvements, he can afford to sell cheaper; for if
      he could not afford it, the plenty would not be of long continuance. It
      has been probably in this manner that the introduction of clover, turnips,
      carrots, cabbages, etc. has contributed to sink the common price of
      butcher’s meat in the London market, somewhat below what it was about the
      beginning of the last century.
    
      The hog, that finds his food among ordure, and greedily devours many
      things rejected by every other useful animal, is, like poultry, originally
      kept as a save-all. As long as the number of such animals, which can thus
      be reared at little or no expense, is fully sufficient to supply the
      demand, this sort of butcher’s meat comes to market at a much lower price
      than any other. But when the demand rises beyond what this quantity can
      supply, when it becomes necessary to raise food on purpose for feeding and
      fattening hogs, in the same manner as for feeding and fattening other
      cattle, the price necessarily rises, and becomes proportionably either
      higher or lower than that of other butcher’s meat, according as the nature
      of the country, and the state of its agriculture, happen to render the
      feeding of hogs more or less expensive than that of other cattle. In
      France, according to Mr Buffon, the price of pork is nearly equal to that
      of beef. In most parts of Great Britain it is at present somewhat higher.
    
      The great rise in the price both of hogs and poultry, has, in Great
      Britain, been frequently imputed to the diminution of the number of
      cottagers and other small occupiers of land; an event which has in every
      part of Europe been the immediate forerunner of improvement and better
      cultivation, but which at the same time may have contributed to raise the
      price of those articles, both somewhat sooner and somewhat faster than it
      would otherwise have risen. As the poorest family can often maintain a cat
      or a dog without any expense, so the poorest occupiers of land can
      commonly maintain a few poultry, or a sow and a few pigs, at very little.
      The little offals of their own table, their whey, skimmed milk, and butter
      milk, supply those animals with a part of their food, and they find the
      rest in the neighbouring fields, without doing any sensible damage to any
      body. By diminishing the number of those small occupiers, therefore, the
      quantity of this sort of provisions, which is thus produced at little or
      no expense, must certainly have been a good deal diminished, and their
      price must consequently have been raised both sooner and faster than it
      would otherwise have risen. Sooner or later, however, in the progress of
      improvement, it must at any rate have risen to the utmost height to which
      it is capable of rising; or to the price which pays the labour and expense
      of cultivating the land which furnishes them with food, as well as these
      are paid upon the greater part of other cultivated land.
    
      The business of the dairy, like the feeding of hogs and poultry, is
      originally carried on as a save-all. The cattle necessarily kept upon the
      farm produce more milk than either the rearing of their own young, or the
      consumption of the farmer’s family requires; and they produce most at one
      particular season. But of all the productions of land, milk is perhaps the
      most perishable. In the warm season, when it is most abundant, it will
      scarce keep four-and-twenty hours. The farmer, by making it into fresh
      butter, stores a small part of it for a week; by making it into salt
      butter, for a year; and by making it into cheese, he stores a much greater
      part of it for several years. Part of all these is reserved for the use of
      his own family; the rest goes to market, in order to find the best price
      which is to be had, and which can scarce be so low is to discourage him
      from sending thither whatever is over and above the use of his own family.
      If it is very low indeed, he will be likely to manage his dairy in a very
      slovenly and dirty manner, and will scarce, perhaps, think it worth while
      to have a particular room or building on purpose for it, but will suffer
      the business to be carried on amidst the smoke, filth, and nastiness of
      his own kitchen, as was the case of almost all the farmers’ dairies in
      Scotland thirty or forty years ago, and as is the case of many of them
      still. The same causes which gradually raise the price of butcher’s meat,
      the increase of the demand, and, in consequence of the improvement of the
      country, the diminution of the quantity which can be fed at little or no
      expense, raise, in the same manner, that of the produce of the dairy, of
      which the price naturally connects with that of butcher’s meat, or with
      the expense of feeding cattle. The increase of price pays for more labour,
      care, and cleanliness. The dairy becomes more worthy of the farmer’s
      attention, and the quality of its produce gradually improves. The price at
      last gets so high, that it becomes worth while to employ some of the most
      fertile and best cultivated lands in feeding cattle merely for the purpose
      of the dairy; and when it has got to this height, it cannot well go
      higher. If it did, more land would soon be turned to this purpose. It
      seems to have got to this height through the greater part of England,
      where much good land is commonly employed in this manner. If you except
      the neighbourhood of a few considerable towns, it seems not yet to have
      got to this height anywhere in Scotland, where common farmers seldom
      employ much good land in raising food for cattle, merely for the purpose
      of the dairy. The price of the produce, though it has risen very
      considerably within these few years, is probably still too low to admit of
      it. The inferiority of the quality, indeed, compared with that of the
      produce of English dairies, is fully equal to that of the price. But this
      inferiority of quality is, perhaps, rather the effect of this lowness of
      price, than the cause of it. Though the quality was much better, the
      greater part of what is brought to market could not, I apprehend, in the
      present circumstances of the country, be disposed of at a much better
      price; and the present price, it is probable, would not pay the expense of
      the land and labour necessary for producing a much better quality. Through
      the greater part of England, notwithstanding the superiority of price, the
      dairy is not reckoned a more profitable employment of land than the
      raising of corn, or the fattening of cattle, the two great objects of
      agriculture. Through the greater part of Scotland, therefore, it cannot
      yet be even so profitable.
    
      The lands of no country, it is evident, can ever be completely cultivated
      and improved, till once the price of every produce, which human industry
      is obliged to raise upon them, has got so high as to pay for the expense
      of complete improvement and cultivation. In order to do this, the price of
      each particular produce must be sufficient, first, to pay the rent of good
      corn land, as it is that which regulates the rent of the greater part of
      other cultivated land; and, secondly, to pay the labour and expense of the
      farmer, as well as they are commonly paid upon good corn land; or, in
      other words, to replace with the ordinary profits the stock which he
      employs about it. This rise in the price of each particular produce; must
      evidently be previous to the improvement and cultivation of the land which
      is destined for raising it. Gain is the end of all improvement; and
      nothing could deserve that name, of which loss was to be the necessary
      consequence. But loss must be the necessary consequence of improving land
      for the sake of a produce of which the price could never bring back the
      expense. If the complete improvement and cultivation of the country be, as
      it most certainly is, the greatest of all public advantages, this rise in
      the price of all those different sorts of rude produce, instead of being
      considered as a public calamity, ought to be regarded as the necessary
      forerunner and attendant of the greatest of all public advantages.
    
      This rise, too, in the nominal or money price of all those different sorts
      of rude produce, has been the effect, not of any degradation in the value
      of silver, but of a rise in their real price. They have become worth, not
      only a greater quantity of silver, but a greater quantity of labour and
      subsistence than before. As it costs a greater quantity of labour and
      subsistence to bring them to market, so, when they are brought thither
      they represent, or are equivalent to a greater quantity.
    
      Third Sort.—The third and last sort of rude produce, of which the
      price naturally rises in the progress of improvement, is that in which the
      efficacy of human industry, in augmenting the quantity, is either limited
      or uncertain. Though the real price of this sort of rude produce,
      therefore, naturally tends to rise in the progress of improvement, yet,
      according as different accidents happen to render the efforts of human
      industry more or less successful in augmenting the quantity, it may happen
      sometimes even to fall, sometimes to continue the same, in very different
      periods of improvement, and sometimes to rise more or less in the same
      period.
    
      There are some sorts of rude produce which nature has rendered a kind of
      appendages to other sorts; so that the quantity of the one which any
      country can afford, is necessarily limited by that of the other. The
      quantity of wool or of raw hides, for example, which any country can
      afford, is necessarily limited by the number of great and small cattle
      that are kept in it. The state of its improvement, and the nature of its
      agriculture, again necessarily determine this number.
    
      The same causes which, in the progress of improvement, gradually raise the
      price of butcher’s meat, should have the same effect, it may be thought,
      upon the prices of wool and raw hides, and raise them, too, nearly in the
      same proportion. It probably would be so, if, in the rude beginnings of
      improvement, the market for the latter commodities was confined within as
      narrow bounds as that for the former. But the extent of their respective
      markets is commonly extremely different.
    
      The market for butcher’s meat is almost everywhere confined to the country
      which produces it. Ireland, and some part of British America, indeed,
      carry on a considerable trade in salt provisions; but they are, I believe,
      the only countries in the commercial world which do so, or which export to
      other countries any considerable part of their butcher’s meat.
    
      The market for wool and raw hides, on the contrary, is, in the rude
      beginnings of improvement, very seldom confined to the country which
      produces them. They can easily be transported to distant countries; wool
      without any preparation, and raw hides with very little; and as they are
      the materials of many manufactures, the industry of other countries may
      occasion a demand for them, though that of the country which produces them
      might not occasion any.
    
      In countries ill cultivated, and therefore but thinly inhabited, the price
      of the wool and the hide bears always a much greater proportion to that of
      the whole beast, than in countries where, improvement and population being
      further advanced, there is more demand for butcher’s meat. Mr Hume
      observes, that in the Saxon times, the fleece was estimated at two-fifths
      of the value of the whole sheep and that this was much above the
      proportion of its present estimation. In some provinces of Spain, I have
      been assured, the sheep is frequently killed merely for the sake of the
      fleece and the tallow. The carcase is often left to rot upon the ground,
      or to be devoured by beasts and birds of prey. If this sometimes happens
      even in Spain, it happens almost constantly in Chili, at Buenos Ayres, and
      in many other parts of Spanish America, where the horned cattle are almost
      constantly killed merely for the sake of the hide and the tallow. This,
      too, used to happen almost constantly in Hispaniola, while it was infested
      by the buccaneers, and before the settlement, improvement, and
      populousness of the French plantations ( which now extend round the coast
      of almost the whole western half of the island) had given some value to
      the cattle of the Spaniards, who still continue to possess, not only the
      eastern part of the coast, but the whole inland mountainous part of the
      country.
    
      Though, in the progress of improvement and population, the price of the
      whole beast necessarily rises, yet the price of the carcase is likely to
      be much more affected by this rise than that of the wool and the hide. The
      market for the carcase being in the rude state of society confined always
      to the country which produces it, must necessarily be extended in
      proportion to the improvement and population of that country. But the
      market for the wool and the hides, even of a barbarous country, often
      extending to the whole commercial world, it can very seldom be enlarged in
      the same proportion. The state of the whole commercial world can seldom be
      much affected by the improvement of any particular country; and the market
      for such commodities may remain the same, or very nearly the same, after
      such improvements, as before. It should, however, in the natural course of
      things, rather, upon the whole, be somewhat extended in consequence of
      them. If the manufactures, especially, of which those commodities are the
      materials, should ever come to flourish in the country, the market, though
      it might not be much enlarged, would at least be brought much nearer to
      the place of growth than before; and the price of those materials might at
      least be increased by what had usually been the expense of transporting
      them to distant countries. Though it might not rise, therefore, in the
      same proportion as that of butcher’s meat, it ought naturally to rise
      somewhat, and it ought certainly not to fall.
    
      In England, however, notwithstanding the flourishing state of its woollen
      manufacture, the price of English wool has fallen very considerably since
      the time of Edward III. There are many authentic records which demonstrate
      that, during the reign of that prince (towards the middle of the
      fourteenth century, or about 1339), what was reckoned the moderate and
      reasonable price of the tod, or twenty-eight pounds of English wool, was
      not less than ten shillings of the money of those times {See Smith’s
      Memoirs of Wool, vol. i c. 5, 6, 7. also vol. ii.}, containing, at the
      rate of twenty-pence the ounce, six ounces of silver, Tower weight, equal
      to about thirty shillings of our present money. In the present times,
      one-and-twenty shillings the tod may be reckoned a good price for very
      good English wool. The money price of wool, therefore, in the time of
      Edward III. was to its money price in the present times as ten to seven.
      The superiority of its real price was still greater. At the rate of six
      shillings and eightpence the quarter, ten shillings was in those ancient
      times the price of twelve bushels of wheat. At the rate of twenty-eight
      shillings the quarter, one-and-twenty shillings is in the present times
      the price of six bushels only. The proportion between the real price of
      ancient and modern times, therefore, is as twelve to six, or as two to
      one. In those ancient times, a tod of wool would have purchased twice the
      quantity of subsistence which it will purchase at present, and
      consequently twice the quantity of labour, if the real recompence of
      labour had been the same in both periods.
    
      This degradation, both in the real and nominal value of wool, could never
      have happened in consequence of the natural course of things. It has
      accordingly been the effect of violence and artifice. First, of the
      absolute prohibition of exporting wool from England: secondly, of the
      permission of importing it from Spain, duty free: thirdly, of the
      prohibition of exporting it from Ireland to another country but England.
      In consequence of these regulations, the market for English wool, instead
      of being somewhat extended, in consequence of the improvement of England,
      has been confined to the home market, where the wool of several other
      countries is allowed to come into competition with it, and where that of
      Ireland is forced into competition with it. As the woollen manufactures,
      too, of Ireland, are fully as much discouraged as is consistent with
      justice and fair dealing, the Irish can work up but a smaller part of
      their own wool at home, and are therefore obliged to send a greater
      proportion of it to Great Britain, the only market they are allowed.
    
      I have not been able to find any such authentic records concerning the
      price of raw hides in ancient times. Wool was commonly paid as a subsidy
      to the king, and its valuation in that subsidy ascertains, at least in
      some degree, what was its ordinary price. But this seems not to have been
      the case with raw hides. Fleetwood, however, from an account in 1425,
      between the prior of Burcester Oxford and one of his canons, gives us
      their price, at least as it was stated upon that particular occasion, viz.
      five ox hides at twelve shillings; five cow hides at seven shillings and
      threepence; thirtysix sheep skins of two years old at nine shillings;
      sixteen calf skins at two shillings. In 1425, twelve shillings contained
      about the same quantity of silver as four-and-twenty shillings of our
      present money. An ox hide, therefore, was in this account valued at the
      same quantity of silver as 4s. 4/5ths of our present money. Its nominal
      price was a good deal lower than at present. But at the rate of six
      shillings and eightpence the quarter, twelve shillings would in those
      times have purchased fourteen bushels and four-fifths of a bushel of
      wheat, which, at three and sixpence the bushel, would in the present times
      cost 51s. 4d. An ox hide, therefore, would in those times have purchased
      as much corn as ten shillings and threepence would purchase at present.
      Its real value was equal to ten shillings and threepence of our present
      money. In those ancient times, when the cattle were half starved during
      the greater part of the winter, we cannot suppose that they were of a very
      large size. An ox hide which weighs four stone of sixteen pounds of
      avoirdupois, is not in the present times reckoned a bad one; and in those
      ancient times would probably have been reckoned a very good one. But at
      half-a-crown the stone, which at this moment (February 1773) I understand
      to be the common price, such a hide would at present cost only ten
      shillings. Through its nominal price, therefore, is higher in the present
      than it was in those ancient times, its real price, the real quantity of
      subsistence which it will purchase or command, is rather somewhat lower.
      The price of cow hides, as stated in the above account, is nearly in the
      common proportion to that of ox hides. That of sheep skins is a good deal
      above it. They had probably been sold with the wool. That of calves skins,
      on the contrary, is greatly below it. In countries where the price of
      cattle is very low, the calves, which are not intended to be reared in
      order to keep up the stock, are generally killed very young, as was the
      case in Scotland twenty or thirty years ago. It saves the milk, which
      their price would not pay for. Their skins, therefore, are commonly good
      for little.
    
      The price of raw hides is a good deal lower at present than it was a few
      years ago; owing probably to the taking off the duty upon seal skins, and
      to the allowing, for a limited time, the importation of raw hides from
      Ireland, and from the plantations, duty free, which was done in 1769. Take
      the whole of the present century at an average, their real price has
      probably been somewhat higher than it was in those ancient times. The
      nature of the commodity renders it not quite so proper for being
      transported to distant markets as wool. It suffers more by keeping. A
      salted hide is reckoned inferior to a fresh one, and sells for a lower
      price. This circumstance must necessarily have some tendency to sink the
      price of raw hides produced in a country which does not manufacture them,
      but is obliged to export them, and comparatively to raise that of those
      produced in a country which does manufacture them. It must have some
      tendency to sink their price in a barbarous, and to raise it in an
      improved and manufacturing country. It must have had some tendency,
      therefore, to sink it in ancient, and to raise it in modern times. Our
      tanners, besides, have not been quite so successful as our clothiers, in
      convincing the wisdom of the nation, that the safety of the commonwealth
      depends upon the prosperity of their particular manufacture. They have
      accordingly been much less favoured. The exportation of raw hides has,
      indeed, been prohibited, and declared a nuisance; but their importation
      from foreign countries has been subjected to a duty; and though this duty
      has been taken off from those of Ireland and the plantations (for the
      limited time of five years only), yet Ireland has not been confined to the
      market of Great Britain for the sale of its surplus hides, or of those
      which are not manufactured at home. The hides of common cattle have, but
      within these few years, been put among the enumerated commodities which
      the plantations can send nowhere but to the mother country; neither has
      the commerce of Ireland been in this case oppressed hitherto, in order to
      support the manufactures of Great Britain.
    
      Whatever regulations tend to sink the price, either of wool or of raw
      hides, below what it naturally would be, must, in an improved and
      cultivated country, have some tendency to raise the price of butcher’s
      meat. The price both of the great and small cattle, which are fed on
      improved and cultivated land, must be sufficient to pay the rent which the
      landlord, and the profit which the farmer, has reason to expect from
      improved and cultivated land. If it is not, they will soon cease to feed
      them. Whatever part of this price, therefore, is not paid by the wool and
      the hide, must be paid by the carcase. The less there is paid for the one,
      the more must be paid for the other. In what manner this price is to be
      divided upon the different parts of the beast, is indifferent to the
      landlords and farmers, provided it is all paid to them. In an improved and
      cultivated country, therefore, their interest as landlords and farmers
      cannot be much affected by such regulations, though their interest as
      consumers may, by the rise in the price of provisions. It would be quite
      otherwise, however, in an unimproved and uncultivated country, where the
      greater part of the lands could be applied to no other purpose but the
      feeding of cattle, and where the wool and the hide made the principal part
      of the value of those cattle. Their interest as landlords and farmers
      would in this case be very deeply affected by such regulations, and their
      interest as consumers very little. The fall in the price of the wool and
      the hide would not in this case raise the price of the carcase; because
      the greater part of the lands of the country being applicable to no other
      purpose but the feeding of cattle, the same number would still continue to
      be fed. The same quantity of butcher’s meat would still come to market.
      The demand for it would be no greater than before. Its price, therefore,
      would be the same as before. The whole price of cattle would fall, and
      along with it both the rent and the profit of all those lands of which
      cattle was the principal produce, that is, of the greater part of the
      lands of the country. The perpetual prohibition of the exportation of
      wool, which is commonly, but very falsely, ascribed to Edward III., would,
      in the then circumstances of the country, have been the most destructive
      regulation which could well have been thought of. It would not only have
      reduced the actual value of the greater part of the lands in the kingdom,
      but by reducing the price of the most important species of small cattle,
      it would have retarded very much its subsequent improvement.
    
      The wool of Scotland fell very considerably in its price in consequence of
      the union with England, by which it was excluded from the great market of
      Europe, and confined to the narrow one of Great Britain. The value of the
      greater part of the lands in the southern counties of Scotland, which are
      chiefly a sheep country, would have been very deeply affected by this
      event, had not the rise in the price of butcher’s meat fully compensated
      the fall in the price of wool.
    
      As the efficacy of human industry, in increasing the quantity either of
      wool or of raw hides, is limited, so far as it depends upon the produce of
      the country where it is exerted; so it is uncertain so far as it depends
      upon the produce of other countries. It so far depends not so much upon
      the quantity which they produce, as upon that which they do not
      manufacture; and upon the restraints which they may or may not think
      proper to impose upon the exportation of this sort of rude produce. These
      circumstances, as they are altogether independent of domestic industry, so
      they necessarily render the efficacy of its efforts more or less
      uncertain. In multiplying this sort of rude produce, therefore, the
      efficacy of human industry is not only limited, but uncertain.
    
      In multiplying another very important sort of rude produce, the quantity
      of fish that is brought to market, it is likewise both limited and
      uncertain. It is limited by the local situation of the country, by the
      proximity or distance of its different provinces from the sea, by the
      number of its lakes and rivers, and by what may be called the fertility or
      barrenness of those seas, lakes, and rivers, as to this sort of rude
      produce. As population increases, as the annual produce of the land and
      labour of the country grows greater and greater, there come to be more
      buyers of fish; and those buyers, too, have a greater quantity and variety
      of other goods, or, what is the same thing, the price of a greater
      quantity and variety of other goods, to buy with. But it will generally be
      impossible to supply the great and extended market, without employing a
      quantity of labour greater than in proportion to what had been requisite
      for supplying the narrow and confined one. A market which, from requiring
      only one thousand, comes to require annually ten thousand ton of fish, can
      seldom be supplied, without employing more than ten times the quantity of
      labour which had before been sufficient to supply it. The fish must
      generally be sought for at a greater distance, larger vessels must be
      employed, and more expensive machinery of every kind made use of. The real
      price of this commodity, therefore, naturally rises in the progress of
      improvement. It has accordingly done so, I believe, more or less in every
      country.
    
      Though the success of a particular day’s fishing may be a very uncertain
      matter, yet the local situation of the country being supposed, the general
      efficacy of industry in bringing a certain quantity of fish to market,
      taking the course of a year, or of several years together, it may,
      perhaps, be thought is certain enough; and it, no doubt, is so. As it
      depends more, however, upon the local situation of the country, than upon
      the state of its wealth and industry; as upon this account it may in
      different countries be the same in very different periods of improvement,
      and very different in the same period; its connection with the state of
      improvement is uncertain; and it is of this sort of uncertainty that I am
      here speaking.
    
      In increasing the quantity of the different minerals and metals which are
      drawn from the bowels of the earth, that of the more precious ones
      particularly, the efficacy of human industry seems not to be limited, but
      to be altogether uncertain.
    
      The quantity of the precious metals which is to be found in any country,
      is not limited by any thing in its local situation, such as the fertility
      or barrenness of its own mines. Those metals frequently abound in
      countries which possess no mines. Their quantity, in every particular
      country, seems to depend upon two different circumstances; first, upon its
      power of purchasing, upon the state of its industry, upon the annual
      produce of its land and labour, in consequence of which it can afford to
      employ a greater or a smaller quantity of labour and subsistence, in
      bringing or purchasing such superfluities as gold and silver, either from
      its own mines, or from those of other countries; and, secondly, upon the
      fertility or barrenness of the mines which may happen at any particular
      time to supply the commercial world with those metals. The quantity of
      those metals in the countries most remote from the mines, must be more or
      less affected by this fertility or barrenness, on account of the easy and
      cheap transportation of those metals, of their small bulk and great value.
      Their quantity in China and Indostan must have been more or less affected
      by the abundance of the mines of America.
    
      So far as their quantity in any particular country depends upon the former
      of those two circumstances (the power of purchasing), their real price,
      like that of all other luxuries and superfluities, is likely to rise with
      the wealth and improvement of the country, and to fall with its poverty
      and depression. Countries which have a great quantity of labour and
      subsistence to spare, can afford to purchase any particular quantity of
      those metals at the expense of a greater quantity of labour and
      subsistence, than countries which have less to spare.
    
      So far as their quantity in any particular country depends upon the latter
      of those two circumstances (the fertility or barrenness of the mines which
      happen to supply the commercial world), their real price, the real
      quantity of labour and subsistence which they will purchase or exchange
      for, will, no doubt, sink more or less in proportion to the fertility, and
      rise in proportion to the barrenness of those mines.
    
      The fertility or barrenness of the mines, however, which may happen at any
      particular time to supply the commercial world, is a circumstance which,
      it is evident, may have no sort of connection with the state of industry
      in a particular country. It seems even to have no very necessary
      connection with that of the world in general. As arts and commerce,
      indeed, gradually spread themselves over a greater and a greater part of
      the earth, the search for new mines, being extended over a wider surface,
      may have somewhat a better chance for being successful than when confined
      within narrower bounds. The discovery of new mines, however, as the old
      ones come to be gradually exhausted, is a matter of the greatest
      uncertainty, and such as no human skill or industry can insure. All
      indications, it is acknowledged, are doubtful; and the actual discovery
      and successful working of a new mine can alone ascertain the reality of
      its value, or even of its existence. In this search there seem to be no
      certain limits, either to the possible success, or to the possible
      disappointment of human industry. In the course of a century or two, it is
      possible that new mines may be discovered, more fertile than any that have
      ever yet been known; and it is just equally possible, that the most
      fertile mine then known may be more barren than any that was wrought
      before the discovery of the mines of America. Whether the one or the other
      of those two events may happen to take place, is of very little importance
      to the real wealth and prosperity of the world, to the real value of the
      annual produce of the land and labour of mankind. Its nominal value, the
      quantity of gold and silver by which this annual produce could be
      expressed or represented, would, no doubt, be very different; but its real
      value, the real quantity of labour which it could purchase or command,
      would be precisely the same. A shilling might, in the one case, represent
      no more labour than a penny does at present; and a penny, in the other,
      might represent as much as a shilling does now. But in the one case, he
      who had a shilling in his pocket would be no richer than he who has a
      penny at present; and in the other, he who had a penny would be just as
      rich as he who has a shilling now. The cheapness and abundance of gold and
      silver plate would be the sole advantage which the world could derive from
      the one event; and the dearness and scarcity of those trifling
      superfluities, the only inconveniency it could suffer from the other.
    


    
      Conclusion of the Digression concerning the Variations in the Value of
      Silver.
    
      The greater part of the writers who have collected the money price of
      things in ancient times, seem to have considered the low money price of
      corn, and of goods in general, or, in other words, the high value of gold
      and silver, as a proof, not only of the scarcity of those metals, but of
      the poverty and barbarism of the country at the time when it took place.
      This notion is connected with the system of political economy, which
      represents national wealth as consisting in the abundance and national
      poverty in the scarcity, of gold and silver; a system which I shall
      endeavour to explain and examine at great length in the fourth book of
      this Inquiry. I shall only observe at present, that the high value of the
      precious metals can be no proof of the poverty or barbarism of any
      particular country at the time when it took place. It is a proof only of
      the barrenness of the mines which happened at that time to supply the
      commercial world. A poor country, as it cannot afford to buy more, so it
      can as little afford to pay dearer for gold and silver than a rich one;
      and the value of those metals, therefore, is not likely to be higher in
      the former than in the latter. In China, a country much richer than any
      part of Europe, the value of the precious metals is much higher than in
      any part of Europe. As the wealth of Europe, indeed, has increased greatly
      since the discovery of the mines of America, so the value of gold and
      silver has gradually diminished. This diminution of their value, however,
      has not been owing to the increase of the real wealth of Europe, of the
      annual produce of its land and labour, but to the accidental discovery of
      more abundant mines than any that were known before. The increase of the
      quantity of gold and silver in Europe, and the increase of its
      manufactures and agriculture, are two events which, though they have
      happened nearly about the same time, yet have arisen from very different
      causes, and have scarce any natural connection with one another. The one
      has arisen from a mere accident, in which neither prudence nor policy
      either had or could have any share; the other, from the fall of the feudal
      system, and from the establishment of a government which afforded to
      industry the only encouragement which it requires, some tolerable security
      that it shall enjoy the fruits of its own labour. Poland, where the feudal
      system still continues to take place, is at this day as beggarly a country
      as it was before the discovery of America. The money price of corn,
      however, has risen; the real value of the precious metals has fallen in
      Poland, in the same manner as in other parts of Europe. Their quantity,
      therefore, must have increased there as in other places, and nearly in the
      same proportion to the annual produce of its land and labour. This
      increase of the quantity of those metals, however, has not, it seems,
      increased that annual produce, has neither improved the manufactures and
      agriculture of the country, nor mended the circumstances of its
      inhabitants. Spain and Portugal, the countries which possess the mines,
      are, after Poland, perhaps the two most beggarly countries in Europe. The
      value of the precious metals, however, must be lower in Spain and Portugal
      than in any other part of Europe, as they come from those countries to all
      other parts of Europe, loaded, not only with a freight and an insurance,
      but with the expense of smuggling, their exportation being either
      prohibited or subjected to a duty. In proportion to the annual produce of
      the land and labour, therefore, their quantity must be greater in those
      countries than in any other part of Europe; those countries, however, are
      poorer than the greater part of Europe. Though the feudal system has been
      abolished in Spain and Portugal, it has not been succeeded by a much
      better.
    
      As the low value of gold and silver, therefore, is no proof of the wealth
      and flourishing state of the country where it takes place; so neither is
      their high value, or the low money price either of goods in general, or of
      corn in particular, any proof of its poverty and barbarism.
    
      But though the low money price, either of goods in general, or of corn in
      particular, be no proof of the poverty or barbarism of the times, the low
      money price of some particular sorts of goods, such as cattle, poultry,
      game of all kinds, etc. in proportion to that of corn, is a most decisive
      one. It clearly demonstrates, first, their great abundance in proportion
      to that of corn, and, consequently, the great extent of the land which
      they occupied in proportion to what was occupied by corn; and, secondly,
      the low value of this land in proportion to that of corn land, and,
      consequently, the uncultivated and unimproved state of the far greater
      part of the lands of the country. It clearly demonstrates, that the stock
      and population of the country did not bear the same proportion to the
      extent of its territory, which they commonly do in civilized countries;
      and that society was at that time, and in that country, but in its
      infancy. From the high or low money price, either of goods in general, or
      of corn in particular, we can infer only, that the mines, which at that
      time happened to supply the commercial world with gold and silver, were
      fertile or barren, not that the country was rich or poor. But from the
      high or low money price of some sorts of goods in proportion to that of
      others, we can infer, with a degree of probability that approaches almost
      to certainty, that it was rich or poor, that the greater part of its lands
      were improved or unimproved, and that it was either in a more or less
      barbarous state, or in a more or less civilized one.
    
      Any rise in the money price of goods which proceeded altogether from the
      degradation of the value of silver, would affect all sorts of goods
      equally, and raise their price universally, a third, or a fourth, or a
      fifth part higher, according as silver happened to lose a third, or a
      fourth, or a fifth part of its former value. But the rise in the price of
      provisions, which has been the subject of so much reasoning and
      conversation, does not affect all sorts of provisions equally. Taking the
      course of the present century at an average, the price of corn, it is
      acknowledged, even by those who account for this rise by the degradation
      of the value of silver, has risen much less than that of some other sorts
      of provisions. The rise in the price of those other sorts of provisions,
      therefore, cannot be owing altogether to the degradation of the value of
      silver. Some other causes must be taken into the account; and those which
      have been above assigned, will, perhaps, without having recourse to the
      supposed degradation of the value of silver, sufficiently explain this
      rise in those particular sorts of provisions, of which the price has
      actually risen in proportion to that of corn.
    
      As to the price of corn itself, it has, during the sixty-four first years
      of the present century, and before the late extraordinary course of bad
      seasons, been somewhat lower than it was during the sixty-four last years
      of the preceding century. This fact is attested, not only by the accounts
      of Windsor market, but by the public fiars of all the different counties
      of Scotland, and by the accounts of several different markets in France,
      which have been collected with great diligence and fidelity by Mr
      Messance, and by Mr Dupré de St Maur. The evidence is more complete than
      could well have been expected in a matter which is naturally so very
      difficult to be ascertained.
    
      As to the high price of corn during these last ten or twelve years, it can
      be sufficiently accounted for from the badness of the seasons, without
      supposing any degradation in the value of silver.
    
      The opinion, therefore, that silver is continually sinking in its value,
      seems not to be founded upon any good observations, either upon the prices
      of corn, or upon those of other provisions.
    
      The same quantity of silver, it may perhaps be said, will, in the present
      times, even according to the account which has been here given, purchase a
      much smaller quantity of several sorts of provisions than it would have
      done during some part of the last century; and to ascertain whether this
      change be owing to a rise in the value of those goods, or to a fall in the
      value of silver, is only to establish a vain and useless distinction,
      which can be of no sort of service to the man who has only a certain
      quantity of silver to go to market with, or a certain fixed revenue in
      money. I certainly do not pretend that the knowledge of this distinction
      will enable him to buy cheaper. It may not, however, upon that account be
      altogether useless.
    
      It may be of some use to the public, by affording an easy proof of the
      prosperous condition of the country. If the rise in the price of some
      sorts of provisions be owing altogether to a fall in the value of silver,
      it is owing to a circumstance, from which nothing can be inferred but the
      fertility of the American mines. The real wealth of the country, the
      annual produce of its land and labour, may, notwithstanding this
      circumstance, be either gradually declining, as in Portugal and Poland; or
      gradually advancing, as in most other parts of Europe. But if this rise in
      the price of some sorts of provisions be owing to a rise in the real value
      of the land which produces them, to its increased fertility, or, in
      consequence of more extended improvement and good cultivation, to its
      having been rendered fit for producing corn; it is owing to a circumstance
      which indicates, in the clearest manner, the prosperous and advancing
      state of the country. The land constitutes by far the greatest, the most
      important, and the most durable part of the wealth of every extensive
      country. It may surely be of some use, or, at least, it may give some
      satisfaction to the public, to have so decisive a proof of the increasing
      value of by far the greatest, the most important, and the most durable
      part of its wealth.
    
      It may, too, be of some use to the public, in regulating the pecuniary
      reward of some of its inferior servants. If this rise in the price of some
      sorts of provisions be owing to a fall in the value of silver, their
      pecuniary reward, provided it was not too large before, ought certainly to
      be augmented in proportion to the extent of this fall. If it is not
      augmented, their real recompence will evidently be so much diminished. But
      if this rise of price is owing to the increased value, in consequence of
      the improved fertility of the land which produces such provisions, it
      becomes a much nicer matter to judge, either in what proportion any
      pecuniary reward ought to be augmented, or whether it ought to be
      augmented at all. The extension of improvement and cultivation, as it
      necessarily raises more or less, in proportion to the price of corn, that
      of every sort of animal food, so it as necessarily lowers that of, I
      believe, every sort of vegetable food. It raises the price of animal food;
      because a great part of the land which produces it, being rendered fit for
      producing corn, must afford to the landlord and farmer the rent and
      profit of corn land. It lowers the price of vegetable food; because, by
      increasing the fertility of the land, it increases its abundance. The
      improvements of agriculture, too, introduce many sorts of vegetable food,
      which requiring less land, and not more labour than corn, come much
      cheaper to market. Such are potatoes and maize, or what is called Indian
      corn, the two most important improvements which the agriculture of Europe,
      perhaps, which Europe itself, has received from the great extension of its
      commerce and navigation. Many sorts of vegetable food, besides, which in
      the rude state of agriculture are confined to the kitchen-garden, and
      raised only by the spade, come, in its improved state, to be introduced
      into common fields, and to be raised by the plough; such as turnips,
      carrots, cabbages, etc. If, in the progress of improvement, therefore, the
      real price of one species of food necessarily rises, that of another as
      necessarily falls; and it becomes a matter of more nicety to judge how far
      the rise in the one may be compensated by the fall in the other. When the
      real price of butcher’s meat has once got to its height (which, with
      regard to every sort, except perhaps that of hogs flesh, it seems to have
      done through a great part of England more than a century ago), any rise
      which can afterwards happen in that of any other sort of animal food,
      cannot much affect the circumstances of the inferior ranks of people. The
      circumstances of the poor, through a great part of England, cannot surely
      be so much distressed by any rise in the price of poultry, fish,
      wild-fowl, or venison, as they must be relieved by the fall in that of
      potatoes.
    
      In the present season of scarcity, the high price of corn no doubt
      distresses the poor. But in times of moderate plenty, when corn is at its
      ordinary or average price, the natural rise in the price of any other sort
      of rude produce cannot much affect them. They suffer more, perhaps, by the
      artificial rise which has been occasioned by taxes in the price of some
      manufactured commodities, as of salt, soap, leather, candles, malt, beer,
      ale, etc.


      _Effects of the Progress of Improvement upon the real Price of
      Manufactures._


      It is the natural effect of improvement, however, to diminish gradually
      the real price of almost all manufactures. That of the manufacturing
      workmanship diminishes, perhaps, in all of them without exception. In
      consequence of better machinery, of greater dexterity, and of a more
      proper division and distribution of work, all of which are the natural
      effects of improvement, a much smaller quantity of labour becomes
      requisite for executing any particular piece of work; and though, in
      consequence of the flourishing circumstances of the society, the real
      price of labour should rise very considerably, yet the great diminution of
      the quantity will generally much more than compensate the greatest rise
      which can happen in the price.
    
      There are, indeed, a few manufactures, in which the necessary rise in the
      real price of the rude materials will more than compensate all the
      advantages which improvement can introduce into the execution of the work.
      In carpenters’ and joiners’ work, and in the coarser sort of cabinet work,
      the necessary rise in the real price of barren timber, in consequence of
      the improvement of land, will more than compensate all the advantages
      which can be derived from the best machinery, the greatest dexterity, and
      the most proper division and distribution of work.
    
      But in all cases in which the real price of the rude material either does
      not rise at all, or does not rise very much, that of the manufactured
      commodity sinks very considerably.
    
      This diminution of price has, in the course of the present and preceding
      century, been most remarkable in those manufactures of which the materials
      are the coarser metals. A better movement of a watch, than about the
      middle of the last century could have been bought for twenty pounds, may
      now perhaps be had for twenty shillings. In the work of cutlers and
      locksmiths, in all the toys which are made of the coarser metals, and in
      all those goods which are commonly known by the name of Birmingham and
      Sheffield ware, there has been, during the same period, a very great
      reduction of price, though not altogether so great as in watch-work. It
      has, however, been sufficient to astonish the workmen of every other part
      of Europe, who in many cases acknowledge that they can produce no work of
      equal goodness for double or even for triple the price. There are perhaps
      no manufactures, in which the division of labour can be carried further,
      or in which the machinery employed admits of a greater variety of
      improvements, than those of which the materials are the coarser metals.
    
      In the clothing manufacture there has, during the same period, been no
      such sensible reduction of price. The price of superfine cloth, I have
      been assured, on the contrary, has, within these five-and-twenty or thirty
      years, risen somewhat in proportion to its quality, owing, it was said, to
      a considerable rise in the price of the material, which consists
      altogether of Spanish wool. That of the Yorkshire cloth, which is made
      altogether of English wool, is said, indeed, during the course of the
      present century, to have fallen a good deal in proportion to its quality.
      Quality, however, is so very disputable a matter, that I look upon all
      information of this kind as somewhat uncertain. In the clothing
      manufacture, the division of labour is nearly the same now as it was a
      century ago, and the machinery employed is not very different. There may,
      however, have been some small improvements in both, which may have
      occasioned some reduction of price.
    
      But the reduction will appear much more sensible and undeniable, if we
      compare the price of this manufacture in the present times with what it
      was in a much remoter period, towards the end of the fifteenth century,
      when the labour was probably much less subdivided, and the machinery
      employed much more imperfect, than it is at present.
    
      In 1487, being the 4th of Henry VII., it was enacted, that “whosoever
      shall sell by retail a broad yard of the finest scarlet grained, or of
      other grained cloth of the finest making, above sixteen shillings, shall
      forfeit forty shillings for every yard so sold.” Sixteen shillings,
      therefore, containing about the same quantity of silver as four-and-twenty
      shillings of our present money, was, at that time, reckoned not an
      unreasonable price for a yard of the finest cloth; and as this is a
      sumptuary law, such cloth, it is probable, had usually been sold somewhat
      dearer. A guinea may be reckoned the highest price in the present times.
      Even though the quality of the cloths, therefore, should be supposed
      equal, and that of the present times is most probably much superior, yet,
      even upon this supposition, the money price of the finest cloth appears to
      have been considerably reduced since the end of the fifteenth century. But
      its real price has been much more reduced. Six shillings and eightpence
      was then, and long afterwards, reckoned the average price of a quarter of
      wheat. Sixteen shillings, therefore, was the price of two quarters and
      more than three bushels of wheat. Valuing a quarter of wheat in the
      present times at eight-and-twenty shillings, the real price of a yard of
      fine cloth must, in those times, have been equal to at least three pounds
      six shillings and sixpence of our present money. The man who bought it
      must have parted with the command of a quantity of labour and subsistence
      equal to what that sum would purchase in the present times.
    
      The reduction in the real price of the coarse manufacture, though
      considerable, has not been so great as in that of the fine.
    
      In 1463, being the 3rd of Edward IV. it was enacted, that “no servant in
      husbandry nor common labourer, nor servant to any artificer inhabiting out
      of a city or burgh, shall use or wear in their clothing any cloth above
      two shillings the broad yard.” In the 3rd of Edward IV., two shillings
      contained very nearly the same quantity of silver as four of our present
      money. But the Yorkshire cloth which is now sold at four shillings the
      yard, is probably much superior to any that was then made for the wearing
      of the very poorest order of common servants. Even the money price of
      their clothing, therefore, may, in proportion to the quality, be somewhat
      cheaper in the present than it was in those ancient times. The real price
      is certainly a good deal cheaper. Tenpence was then reckoned what is
      called the moderate and reasonable price of a bushel of wheat. Two
      shillings, therefore, was the price of two bushels and near two pecks of
      wheat, which in the present times, at three shillings and sixpence the
      bushel, would be worth eight shillings and ninepence. For a yard of this
      cloth the poor servant must have parted with the power of purchasing a
      quantity of subsistence equal to what eight shillings and ninepence would
      purchase in the present times. This is a sumptuary law, too, restraining
      the luxury and extravagance of the poor. Their clothing, therefore, had
      commonly been much more expensive.
    
      The same order of people are, by the same law, prohibited from wearing
      hose, of which the price should exceed fourteen-pence the pair, equal to
      about eight-and-twenty pence of our present money. But fourteen-pence was
      in those times the price of a bushel and near two pecks of wheat; which in
      the present times, at three and sixpence the bushel, would cost five
      shillings and threepence. We should in the present times consider this as
      a very high price for a pair of stockings to a servant of the poorest and
      lowest order. He must however, in those times, have paid what was really
      equivalent to this price for them.
    
      In the time of Edward IV. the art of knitting stockings was probably not
      known in any part of Europe. Their hose were made of common cloth, which
      may have been one of the causes of their dearness. The first person that
      wore stockings in England is said to have been Queen Elizabeth. She
      received them as a present from the Spanish ambassador.
    
      Both in the coarse and in the fine woollen manufacture, the machinery
      employed was much more imperfect in those ancient, than it is in the
      present times. It has since received three very capital improvements,
      besides, probably, many smaller ones, of which it may be difficult to
      ascertain either the number or the importance. The three capital
      improvements are, first, the exchange of the rock and spindle for the
      spinning-wheel, which, with the same quantity of labour, will perform more
      than double the quantity of work. Secondly, the use of several very
      ingenious machines, which facilitate and abridge, in a still greater
      proportion, the winding of the worsted and woollen yarn, or the proper
      arrangement of the warp and woof before they are put into the loom; an
      operation which, previous to the invention of those machines, must have
      been extremely tedious and troublesome. Thirdly, the employment of the
      fulling-mill for thickening the cloth, instead of treading it in water.
      Neither wind nor water mills of any kind were known in England so early as
      the beginning of the sixteenth century, nor, so far as I know, in any
      other part of Europe north of the Alps. They had been introduced into
      Italy some time before.
    
      The consideration of these circumstances may, perhaps, in some measure,
      explain to us why the real price both of the coarse and of the fine
      manufacture was so much higher in those ancient than it is in the present
      times. It cost a greater quantity of labour to bring the goods to market.
      When they were brought thither, therefore, they must have purchased, or
      exchanged for the price of, a greater quantity.
    
      The coarse manufacture probably was, in those ancient times, carried on in
      England in the same manner as it always has been in countries where arts
      and manufactures are in their infancy. It was probably a household
      manufacture, in which every different part of the work was occasionally
      performed by all the different members of almost every private family, but
      so as to be their work only when they had nothing else to do, and not to
      be the principal business from which any of them derived the greater part
      of their subsistence. The work which is performed in this manner, it has
      already been observed, comes always much cheaper to market than that which
      is the principal or sole fund of the workman’s subsistence. The fine
      manufacture, on the other hand, was not, in those times, carried on in
      England, but in the rich and commercial country of Flanders; and it was
      probably conducted then, in the same manner as now, by people who derived
      the whole, or the principal part of their subsistence from it. It was,
      besides, a foreign manufacture, and must have paid some duty, the ancient
      custom of tonnage and poundage at least, to the king. This duty, indeed,
      would not probably be very great. It was not then the policy of Europe to
      restrain, by high duties, the importation of foreign manufactures, but
      rather to encourage it, in order that merchants might be enabled to
      supply, at as easy a rate as possible, the great men with the
      conveniencies and luxuries which they wanted, and which the industry of
      their own country could not afford them.
    
      The consideration of these circumstances may, perhaps, in some measure
      explain to us why, in those ancient times, the real price of the coarse
      manufacture was, in proportion to that of the fine, so much lower than in
      the present times.
    


    
      Conclusion of the Chapter.
    
      I shall conclude this very long chapter with observing, that every
      improvement in the circumstances of the society tends, either directly or
      indirectly, to raise the real rent of land to increase the real wealth of
      the landlord, his power of purchasing the labour, or the produce of the
      labour of other people.
    
      The extension of improvement and cultivation tends to raise it directly.
      The landlord’s share of the produce necessarily increases with the
      increase of the produce.
    
      That rise in the real price of those parts of the rude produce of land,
      which is first the effect of the extended improvement and cultivation, and
      afterwards the cause of their being still further extended, the rise in
      the price of cattle, for example, tends, too, to raise the rent of land
      directly, and in a still greater proportion. The real value of the
      landlord’s share, his real command of the labour of other people, not only
      rises with the real value of the produce, but the proportion of his share
      to the whole produce rises with it.
    
      That produce, after the rise in its real price, requires no more labour to
      collect it than before. A smaller proportion of it will, therefore, be
      sufficient to replace, with the ordinary profit, the stock which employs
      that labour. A greater proportion of it must consequently belong to the
      landlord.
    
      All those improvements in the productive powers of labour, which tend
      directly to reduce the rent price of manufactures, tend indirectly to
      raise the real rent of land. The landlord exchanges that part of his rude
      produce, which is over and above his own consumption, or, what comes to
      the same thing, the price of that part of it, for manufactured produce.
      Whatever reduces the real price of the latter, raises that of the former.
      An equal quantity of the former becomes thereby equivalent to a greater
      quantity of the latter; and the landlord is enabled to purchase a greater
      quantity of the conveniencies, ornaments, or luxuries which he has
      occasion for.
    
      Every increase in the real wealth of the society, every increase in the
      quantity of useful labour employed within it, tends indirectly to raise
      the real rent of land. A certain proportion of this labour naturally goes
      to the land. A greater number of men and cattle are employed in its
      cultivation, the produce increases with the increase of the stock which is
      thus employed in raising it, and the rent increases with the produce.
    
      The contrary circumstances, the neglect of cultivation and improvement,
      the fall in the real price of any part of the rude produce of land, the
      rise in the real price of manufactures from the decay of manufacturing art
      and industry, the declension of the real wealth of the society, all tend,
      on the other hand, to lower the real rent of land, to reduce the real
      wealth of the landlord, to diminish his power of purchasing either the
      labour, or the produce of the labour, of other people.
    
      The whole annual produce of the land and labour of every country, or, what
      comes to the same thing, the whole price of that annual produce, naturally
      divides itself, it has already been observed, into three parts; the rent
      of land, the wages of labour, and the profits of stock; and constitutes a
      revenue to three different orders of people; to those who live by rent, to
      those who live by wages, and to those who live by profit. These are the
      three great, original, and constituent, orders of every civilized society,
      from whose revenue that of every other order is ultimately derived.
    
      The interest of the first of those three great orders, it appears from
      what has been just now said, is strictly and inseparably connected with
      the general interest of the society. Whatever either promotes or obstructs
      the one, necessarily promotes or obstructs the other. When the public
      deliberates concerning any regulation of commerce or police, the
      proprietors of land never can mislead it, with a view to promote the
      interest of their own particular order; at least, if they have any
      tolerable knowledge of that interest. They are, indeed, too often
      defective in this tolerable knowledge. They are the only one of the three
      orders whose revenue costs them neither labour nor care, but comes to
      them, as it were, of its own accord, and independent of any plan or
      project of their own. That indolence which is the natural effect of the
      ease and security of their situation, renders them too often, not only
      ignorant, but incapable of that application of mind, which is necessary in
      order to foresee and understand the consequence of any public regulation.
    
      The interest of the second order, that of those who live by wages, is as
      strictly connected with the interest of the society as that of the first.
      The wages of the labourer, it has already been shewn, are never so high as
      when the demand for labour is continually rising, or when the quantity
      employed is every year increasing considerably. When this real wealth of
      the society becomes stationary, his wages are soon reduced to what is
      barely enough to enable him to bring up a family, or to continue the race
      of labourers. When the society declines, they fall even below this. The
      order of proprietors may perhaps gain more by the prosperity of the
      society than that of labourers; but there is no order that suffers so
      cruelly from its decline. But though the interest of the labourer is
      strictly connected with that of the society, he is incapable either of
      comprehending that interest, or of understanding its connexion with his
      own. His condition leaves him no time to receive the necessary
      information, and his education and habits are commonly such as to render
      him unfit to judge, even though he was fully informed. In the public
      deliberations, therefore, his voice is little heard, and less regarded;
      except upon particular occasions, when his clamour is animated, set on,
      and supported by his employers, not for his, but their own particular
      purposes.
    
      His employers constitute the third order, that of those who live by
      profit. It is the stock that is employed for the sake of profit, which
      puts into motion the greater part of the useful labour of every society.
      The plans and projects of the employers of stock regulate and direct all
      the most important operation of labour, and profit is the end proposed by
      all those plans and projects. But the rate of profit does not, like rent
      and wages, rise with the prosperity, and fall with the declension of the
      society. On the contrary, it is naturally low in rich, and high in poor
      countries, and it is always highest in the countries which are going
      fastest to ruin. The interest of this third order, therefore, has not the
      same connexion with the general interest of the society, as that of the
      other two. Merchants and master manufacturers are, in this order, the two
      classes of people who commonly employ the largest capitals, and who by
      their wealth draw to themselves the greatest share of the public
      consideration. As during their whole lives they are engaged in plans and
      projects, they have frequently more acuteness of understanding than the
      greater part of country gentlemen. As their thoughts, however, are
      commonly exercised rather about the interest of their own particular
      branch of business. than about that of the society, their judgment, even
      when given with the greatest candour (which it has not been upon every
      occasion), is much more to be depended upon with regard to the former of
      those two objects, than with regard to the latter. Their superiority over
      the country gentleman is, not so much in their knowledge of the public
      interest, as in their having a better knowledge of their own interest than
      he has of his. It is by this superior knowledge of their own interest that
      they have frequently imposed upon his generosity, and persuaded him to
      give up both his own interest and that of the public, from a very simple
      but honest conviction, that their interest, and not his, was the interest
      of the public. The interest of the dealers, however, in any particular
      branch of trade or manufactures, is always in some respects different
      from, and even opposite to, that of the public. To widen the market, and
      to narrow the competition, is always the interest of the dealers. To widen
      the market may frequently be agreeable enough to the interest of the
      public; but to narrow the competition must always be against it, and can
      only serve to enable the dealers, by raising their profits above what they
      naturally would be, to levy, for their own benefit, an absurd tax upon the
      rest of their fellow-citizens. The proposal of any new law or regulation
      of commerce which comes from this order, ought always to be listened to
      with great precaution, and ought never to be adopted till after having
      been long and carefully examined, not only with the most scrupulous, but
      with the most suspicious attention. It comes from an order of men, whose
      interest is never exactly the same with that of the public, who have
      generally an interest to deceive and even to oppress the public, and who
      accordingly have, upon many occasions, both deceived and oppressed it.
    
      # PRICES OF WHEAT
    

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

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

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

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

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

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

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

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

    

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

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

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

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

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

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

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


BOOK II.
OF THE NATURE, ACCUMULATION, AND EMPLOYMENT OF STOCK.


    
      INTRODUCTION.
    
      In that rude state of society, in which there is no division of labour, in
      which exchanges are seldom made, and in which every man provides every
      thing for himself, it is not necessary that any stock should be
      accumulated, or stored up before-hand, in order to carry on the business
      of the society. Every man endeavours to supply, by his own industry, his
      own occasional wants, as they occur. When he is hungry, he goes to the
      forest to hunt; when his coat is worn out, he clothes himself with the
      skin of the first large animal he kills: and when his hut begins to go to
      ruin, he repairs it, as well as he can, with the trees and the turf that
      are nearest it.
    
      But when the division of labour has once been thoroughly introduced, the
      produce of a man’s own labour can supply but a very small part of his
      occasional wants. The far greater part of them are supplied by the produce
      of other men’s labour, which he purchases with the produce, or, what is
      the same thing, with the price of the produce, of his own. But this
      purchase cannot be made till such time as the produce of his own labour
      has not only been completed, but sold. A stock of goods of different
      kinds, therefore, must be stored up somewhere, sufficient to maintain him,
      and to supply him with the materials and tools of his work, till such time
      at least as both these events can be brought about. A weaver cannot apply
      himself entirely to his peculiar business, unless there is before-hand
      stored up somewhere, either in his own possession, or in that of some
      other person, a stock sufficient to maintain him, and to supply him with
      the materials and tools of his work, till he has not only completed, but
      sold his web. This accumulation must evidently be previous to his applying
      his industry for so long a time to such a peculiar business.
    
      As the accumulation of stock must, in the nature of things, be previous to
      the division of labour, so labour can be more and more subdivided in
      proportion only as stock is previously more and more accumulated. The
      quantity of materials which the same number of people can work up,
      increases in a great proportion as labour comes to be more and more
      subdivided; and as the operations of each workman are gradually reduced to
      a greater degree of simplicity, a variety of new machines come to be
      invented for facilitating and abridging those operations. As the division
      of labour advances, therefore, in order to give constant employment to an
      equal number of workmen, an equal stock of provisions, and a greater stock
      of materials and tools than what would have been necessary in a ruder
      state of things, must be accumulated before-hand. But the number of
      workmen in every branch of business generally increases with the division
      of labour in that branch; or rather it is the increase of their number
      which enables them to class and subdivide themselves in this manner.
    
      As the accumulation of stock is previously necessary for carrying on this
      great improvement in the productive powers of labour, so that accumulation
      naturally leads to this improvement. The person who employs his stock in
      maintaining labour, necessarily wishes to employ it in such a manner as to
      produce as great a quantity of work as possible. He endeavours, therefore,
      both to make among his workmen the most proper distribution of employment,
      and to furnish them with the best machines which he can either invent or
      afford to purchase. His abilities, in both these respects, are generally
      in proportion to the extent of his stock, or to the number of people whom
      it can employ. The quantity of industry, therefore, not only increases in
      every country with the increase of the stock which employs it, but, in
      consequence of that increase, the same quantity of industry produces a
      much greater quantity of work.
    
      Such are in general the effects of the increase of stock upon industry and
      its productive powers.
    
      In the following book, I have endeavoured to explain the nature of stock,
      the effects of its accumulation into capital of different kinds, and the
      effects of the different employments of those capitals. This book is
      divided into five chapters. In the first chapter, I have endeavoured to
      shew what are the different parts or branches into which the stock, either
      of an individual, or of a great society, naturally divides itself. In the
      second, I have endeavoured to explain the nature and operation of money,
      considered as a particular branch of the general stock of the society. The
      stock which is accumulated into a capital, may either be employed by the
      person to whom it belongs, or it may be lent to some other person. In the
      third and fourth chapters, I have endeavoured to examine the manner in
      which it operates in both these situations. The fifth and last chapter
      treats of the different effects which the different employments of capital
      immediately produce upon the quantity, both of national industry, and of
      the annual produce of land and labour.
    


CHAPTER I.
OF THE DIVISION OF STOCK.


    
      When the stock which a man possesses is no more than sufficient to
      maintain him for a few days or a few weeks, he seldom thinks of deriving
      any revenue from it. He consumes it as sparingly as he can, and
      endeavours, by his labour, to acquire something which may supply its place
      before it be consumed altogether. His revenue is, in this case, derived
      from his labour only. This is the state of the greater part of the
      labouring poor in all countries.
    
      But when he possesses stock sufficient to maintain him for months or
      years, he naturally endeavours to derive a revenue from the greater part
      of it, reserving only so much for his immediate consumption as may
      maintain him till this revenue begins to come in. His whole stock,
      therefore, is distinguished into two parts. That part which he expects is
      to afford him this revenue is called his capital. The other is that which
      supplies his immediate consumption, and which consists either, first, in
      that portion of his whole stock which was originally reserved for this
      purpose; or, secondly, in his revenue, from whatever source derived, as it
      gradually comes in; or, thirdly, in such things as had been purchased by
      either of these in former years, and which are not yet entirely consumed,
      such as a stock of clothes, household furniture, and the like. In one or
      other, or all of these three articles, consists the stock which men
      commonly reserve for their own immediate consumption.
    
      There are two different ways in which a capital may be employed so as to
      yield a revenue or profit to its employer.
    
      First, it may be employed in raising, manufacturing, or purchasing goods,
      and selling them again with a profit. The capital employed in this manner
      yields no revenue or profit to its employer, while it either remains in
      his possession, or continues in the same shape. The goods of the merchant
      yield him no revenue or profit till he sells them for money, and the money
      yields him as little till it is again exchanged for goods. His capital is
      continually going from him in one shape, and returning to him in another;
      and it is only by means of such circulation, or successive changes, that
      it can yield him any profit. Such capitals, therefore, may very properly
      be called circulating capitals.
    
      Secondly, it may be employed in the improvement of land, in the purchase
      of useful machines and instruments of trade, or in such like things as
      yield a revenue or profit without changing masters, or circulating any
      further. Such capitals, therefore, may very properly be called fixed
      capitals.
    
      Different occupations require very different proportions between the fixed
      and circulating capitals employed in them.
    
      The capital of a merchant, for example, is altogether a circulating
      capital. He has occasion for no machines or instruments of trade, unless
      his shop or warehouse be considered as such.
    
      Some part of the capital of every master artificer or manufacturer must be
      fixed in the instruments of his trade. This part, however, is very small
      in some, and very great in others, A master tailor requires no other
      instruments of trade but a parcel of needles. Those of the master
      shoemaker are a little, though but a very little, more expensive. Those of
      the weaver rise a good deal above those of the shoemaker. The far greater
      part of the capital of all such master artificers, however, is circulated
      either in the wages of their workmen, or in the price of their materials,
      and repaid, with a profit, by the price of the work.
    
      In other works a much greater fixed capital is required. In a great
      iron-work, for example, the furnace for melting the ore, the forge, the
      slit-mill, are instruments of trade which cannot be erected without a very
      great expense. In coal works, and mines of every kind, the machinery
      necessary, both for drawing out the water, and for other purposes, is
      frequently still more expensive.
    
      That part of the capital of the farmer which is employed in the
      instruments of agriculture is a fixed, that which is employed in the wages
      and maintenance of his labouring servants is a circulating capital. He
      makes a profit of the one by keeping it in his own possession, and of the
      other by parting with it. The price or value of his labouring cattle is a
      fixed capital, in the same manner as that of the instruments of husbandry;
      their maintenance is a circulating capital, in the same manner as that of
      the labouring servants. The farmer makes his profit by keeping the
      labouring cattle, and by parting with their maintenance. Both the price
      and the maintenance of the cattle which are bought in and fattened, not
      for labour, but for sale, are a circulating capital. The farmer makes his
      profit by parting with them. A flock of sheep or a herd of cattle, that,
      in a breeding country, is brought in neither for labour nor for sale, but
      in order to make a profit by their wool, by their milk, and by their
      increase, is a fixed capital. The profit is made by keeping them. Their
      maintenance is a circulating capital. The profit is made by parting with
      it; and it comes back with both its own profit and the profit upon the
      whole price of the cattle, in the price of the wool, the milk, and the
      increase. The whole value of the seed, too, is properly a fixed capital.
      Though it goes backwards and forwards between the ground and the granary,
      it never changes masters, and therefore does not properly circulate. The
      farmer makes his profit, not by its sale, but by its increase.
    
      The general stock of any country or society is the same with that of all
      its inhabitants or members; and, therefore, naturally divides itself into
      the same three portions, each of which has a distinct function or office.
    
      The first is that portion which is reserved for immediate consumption, and
      of which the characteristic is, that it affords no revenue or profit. It
      consists in the stock of food, clothes, household furniture, etc. which
      have been purchased by their proper consumers, but which are not yet
      entirely consumed. The whole stock of mere dwelling-houses, too,
      subsisting at any one time in the country, make a part of this first
      portion. The stock that is laid out in a house, if it is to be the
      dwelling-house of the proprietor, ceases from that moment to serve in the
      function of a capital, or to afford any revenue to its owner. A
      dwelling-house, as such, contributes nothing to the revenue of its
      inhabitant; and though it is, no doubt, extremely useful to him, it is as
      his clothes and household furniture are useful to him, which, however,
      make a part of his expense, and not of his revenue. If it is to be let to
      a tenant for rent, as the house itself can produce nothing, the tenant
      must always pay the rent out of some other revenue, which he derives,
      either from labour, or stock, or land. Though a house, therefore, may
      yield a revenue to its proprietor, and thereby serve in the function of a
      capital to him, it cannot yield any to the public, nor serve in the
      function of a capital to it, and the revenue of the whole body of the
      people can never be in the smallest degree increased by it. Clothes and
      household furniture, in the same manner, sometimes yield a revenue, and
      thereby serve in the function of a capital to particular persons. In
      countries where masquerades are common, it is a trade to let out
      masquerade dresses for a night. Upholsterers frequently let furniture by
      the month or by the year. Undertakers let the furniture of funerals by the
      day and by the week. Many people let furnished houses, and get a rent, not
      only for the use of the house, but for that of the furniture. The revenue,
      however, which is derived from such things, must always be ultimately
      drawn from some other source of revenue. Of all parts of the stock, either
      of an individual or of a society, reserved for immediate consumption, what
      is laid out in houses is most slowly consumed. A stock of clothes may last
      several years; a stock of furniture half a century or a century; but a
      stock of houses, well built and properly taken care of, may last many
      centuries. Though the period of their total consumption, however, is more
      distant, they are still as really a stock reserved for immediate
      consumption as either clothes or household furniture.
    
      The second of the three portions into which the general stock of the
      society divides itself, is the fixed capital; of which the characteristic
      is, that it affords a revenue or profit without circulating or changing
      masters. It consists chiefly of the four following articles.
    
      First, of all useful machines and instruments of trade, which facilitate
      and abridge labour.
    
      Secondly, of all those profitable buildings which are the means of
      procuring a revenue, not only to the proprietor who lets them for a rent,
      but to the person who possesses them, and pays that rent for them; such as
      shops, warehouses, work-houses, farm-houses, with all their necessary
      buildings, stables, granaries, etc. These are very different from mere
      dwelling-houses. They are a sort of instruments of trade, and may be
      considered in the same light.
    
      Thirdly, of the improvements of land, of what has been profitably laid out
      in clearing, draining, inclosing, manuring, and reducing it into the
      condition most proper for tillage and culture. An improved farm may very
      justly be regarded in the same light as those useful machines which
      facilitate and abridge labour, and by means of which an equal circulating
      capital can afford a much greater revenue to its employer. An improved
      farm is equally advantageous and more durable than any of those machines,
      frequently requiring no other repairs than the most profitable application
      of the farmer’s capital employed in cultivating it.
    
      Fourthly, of the acquired and useful abilities of all the inhabitants and
      members of the society. The acquisition of such talents, by the
      maintenance of the acquirer during his education, study, or
      apprenticeship, always costs a real expense, which is a capital fixed and
      realized, as it were, in his person. Those talents, as they make a part of
      his fortune, so do they likewise that of the society to which he belongs.
      The improved dexterity of a workman may be considered in the same light as
      a machine or instrument of trade which facilitates and abridges labour,
      and which, though it costs a certain expense, repays that expense with a
      profit.
    
      The third and last of the three portions into which the general stock of
      the society naturally divides itself, is the circulating capital, of which
      the characteristic is, that it affords a revenue only by circulating or
      changing masters. It is composed likewise of four parts.
    
      First, of the money, by means of which all the other three are circulated
      and distributed to their proper consumers.
    
      Secondly, of the stock of provisions which are in the possession of the
      butcher, the grazier, the farmer, the corn-merchant, the brewer, etc. and
      from the sale of which they expect to derive a profit.
    
      Thirdly, of the materials, whether altogether rude, or more or less
      manufactured, of clothes, furniture, and building which are not yet made
      up into any of those three shapes, but which remain in the hands of the
      growers, the manufacturers, the mercers, and drapers, the
      timber-merchants, the carpenters and joiners, the brick-makers, etc.
    
      Fourthly, and lastly, of the work which is made up and completed, but
      which is still in the hands of the merchant and manufacturer, and not yet
      disposed of or distributed to the proper consumers; such as the finished
      work which we frequently find ready made in the shops of the smith, the
      cabinet-maker, the goldsmith, the jeweller, the china-merchant, etc. The
      circulating capital consists, in this manner, of the provisions,
      materials, and finished work of all kinds that are in the hands of their
      respective dealers, and of the money that is necessary for circulating and
      distributing them to those who are finally to use or to consume them.
    
      Of these four parts, three—provisions, materials, and finished work,
      are either annually or in a longer or shorter period, regularly withdrawn
      from it, and placed either in the fixed capital, or in the stock reserved
      for immediate consumption.
    
      Every fixed capital is both originally derived from, and requires to be
      continually supported by, a circulating capital. All useful machines and
      instruments of trade are originally derived from a circulating capital,
      which furnishes the materials of which they are made, and the maintenance
      of the workmen who make them. They require, too, a capital of the same
      kind to keep them in constant repair.
    
      No fixed capital can yield any revenue but by means of a circulating
      capital. The most useful machines and instruments of trade will produce
      nothing, without the circulating capital, which affords the materials they
      are employed upon, and the maintenance of the workmen who employ them.
      Land, however improved, will yield no revenue without a circulating
      capital, which maintains the labourers who cultivate and collect its
      produce.
    
      To maintain and augment the stock which may be reserved for immediate
      consumption, is the sole end and purpose both of the fixed and circulating
      capitals. It is this stock which feeds, clothes, and lodges the people.
      Their riches or poverty depend upon the abundant or sparing supplies which
      those two capitals can afford to the stock reserved for immediate
      consumption.
    
      So great a part of the circulating capital being continually withdrawn
      from it, in order to be placed in the other two branches of the general
      stock of the society, it must in its turn require continual supplies
      without which it would soon cease to exist. These supplies are principally
      drawn from three sources; the produce of land, of mines, and of fisheries.
      These afford continual supplies of provisions and materials, of which part
      is afterwards wrought up into finished work and by which are replaced the
      provisions, materials, and finished work, continually withdrawn from the
      circulating capital. From mines, too, is drawn what is necessary for
      maintaining and augmenting that part of it which consists in money. For
      though, in the ordinary course of business, this part is not, like the
      other three, necessarily withdrawn from it, in order to be placed in the
      other two branches of the 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 circulating
      capital to cultivate them; and their produce replaces, with a profit not
      only those capitals, but all the others in the society. Thus the farmer
      annually replaces to the manufacturer the provisions which he had
      consumed, and the materials which he had wrought up the year before; and
      the manufacturer replaces to the farmer the finished work which he had
      wasted and worn out in the same time. This is the real exchange that is
      annually made between those two orders of people, though it seldom happens
      that the rude produce of the one, and the manufactured produce of the
      other, are directly bartered for one another; because it seldom happens
      that the farmer sells his corn and his cattle, his flax and his wool, to
      the very same person of whom he chuses to purchase the clothes, furniture,
      and instruments of trade, which he wants. He sells, therefore, his rude
      produce for money, with which he can purchase, wherever it is to be had,
      the manufactured produce he has occasion for. Land even replaces, in part
      at least, the capitals with which fisheries and mines are cultivated. It
      is the produce of land which draws the fish from the waters; and it is the
      produce of the surface of the earth which extracts the minerals from its
      bowels.
    
      The produce of land, mines, and fisheries, when their natural fertility is
      equal, is in proportion to the extent and proper application of the
      capitals employed about them. When the capitals are equal, and equally
      well applied, it is in proportion to their natural fertility.
    
      In all countries where there is a tolerable security, every man of common
      understanding will endeavour to employ whatever stock he can command, in
      procuring either present enjoyment or future profit. If it is employed in
      procuring present enjoyment, it is a stock reserved for immediate
      consumption. If it is employed in procuring future profit, it must procure
      this profit either by staying with him, or by going from him. In the one
      case it is a fixed, in the other it is a circulating capital. A man must
      be perfectly crazy, who, where there is a tolerable security, does not
      employ all the stock which he commands, whether it be his own, or borrowed
      of other people, in some one or other of those three ways.
    
      In those unfortunate countries, indeed, where men are continually afraid
      of the violence of their superiors, they frequently bury or conceal a
      great part of their stock, in order to have it always at hand to carry
      with them to some place of safety, in case of their being threatened with
      any of those disasters to which they consider themselves at all times
      exposed. This is said to be a common practice in Turkey, in Indostan, and,
      I believe, in most other governments of Asia. It seems to have been a
      common practice among our ancestors during the violence of the feudal
      government. Treasure-trove was, in 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 important an object, that it was always considered as
      belonging to the sovereign, and neither to the finder nor to the
      proprietor of the land, unless the right to it had been conveyed to the
      latter by an express clause in his charter. It was put upon the same
      footing with gold and silver mines, which, without a special clause in the
      charter, were never supposed to be comprehended in the general grant of
      the lands, though mines of lead, copper, tin, and coal were, as things of
      smaller consequence.
    


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


    
      It has been shown in the First Book, that the price of the greater part of
      commodities resolves itself into three parts, of which one pays the wages
      of the labour, another the profits of the stock, and a third the rent of
      the land which had been employed in producing and bringing them to market:
      that there are, indeed, some commodities of which the price is made up of
      two of those parts only, the wages of labour, and the profits of stock;
      and a very few in which it consists altogether in one, the wages of
      labour; but that the price of every commodity necessarily resolves itself
      into some one or other, or all, of those three parts; every part of it
      which goes neither to rent nor to wages, being necessarily profit to some
      body.
    
      Since this is the case, it has been observed, with regard to every
      particular commodity, taken separately, it must be so with regard to all
      the commodities which compose the whole annual produce of the land and
      labour of every country, taken complexly. The whole price or exchangeable
      value of that annual produce must resolve itself into the same three
      parts, and be parcelled out among the different inhabitants of the
      country, either as the wages of their labour, the profits of their stock,
      or the rent of their land.
    
      But though the whole value of the annual produce of the land and labour of
      every country, is thus divided among, and constitutes a revenue to, its
      different inhabitants; yet, as in the rent of a private estate, we
      distinguish between the gross rent and the neat rent, so may we likewise
      in the revenue of all the inhabitants of a great country.
    
      The gross rent of a private estate comprehends whatever is paid by the
      farmer; the neat rent, what remains free to the landlord, after deducting
      the expense of management, of repairs, and all other necessary charges; or
      what, without hurting his estate, he can afford to place in his stock
      reserved for immediate consumption, or to spend upon his table, equipage,
      the ornaments of his house and furniture, his private enjoyments and
      amusements. His real wealth is in proportion, not to his gross, but to his
      neat rent.
    
      The gross revenue of all the inhabitants of a great country comprehends
      the whole annual produce of their land and labour; the neat revenue, what
      remains free to them, after deducting the expense of maintaining first,
      their fixed, and, secondly, their circulating capital, or what, without
      encroaching upon their capital, they can place in their stock reserved for
      immediate consumption, or spend upon their subsistence, conveniencies, and
      amusements. Their real wealth, too, is in proportion, not to their gross,
      but to their neat revenue.
    
      The whole expense of maintaining the fixed capital must evidently be
      excluded from the neat revenue of the society. Neither the materials
      necessary for supporting their useful machines and instruments of trade,
      their profitable buildings, etc. nor the produce of the labour necessary
      for fashioning those materials into the proper form, can ever make any
      part of it. The price of that labour may indeed make a part of it; as the
      workmen so employed may place the whole value of their wages in their
      stock reserved for immediate consumption. But in other sorts of labour,
      both the price and the produce go to this stock; the price to that of the
      workmen, the produce to that of other people, whose subsistence,
      conveniencies, and amusements, are augmented by the labour of those
      workmen.
    
      The intention of the fixed capital is to increase the productive powers of
      labour, or to enable the same number of labourers to perform a much
      greater quantity of work. In a farm where all the necessary buildings,
      fences, drains, communications, etc. are in the most perfect good order,
      the same number of labourers and labouring cattle will raise a much
      greater produce, than in one of equal extent and equally good ground, but
      not furnished with equal conveniencies. In manufactures, the same number
      of hands, assisted with the best machinery, will work up a much greater
      quantity of goods than with more imperfect instruments of trade. The
      expense which is properly laid out upon a fixed capital of any kind, is
      always repaid with great profit, and increases the annual produce by a
      much greater value than that of the support which such improvements
      require. This support, however, still requires a certain portion of that
      produce. A certain quantity of materials, and the labour of a certain
      number of workmen, both of which might have been immediately employed to
      augment the food, clothing, and lodging, the subsistence and conveniencies
      of the society, are thus diverted to another employment, highly
      advantageous indeed, but still different from this one. It is upon this
      account that all such improvements in mechanics, as enable the same number
      of workmen to perform an equal quantity of work with cheaper and simpler
      machinery than had been usual before, are always regarded as advantageous
      to every society. A certain quantity of materials, and the labour of a
      certain number of workmen, which had before been employed in supporting a
      more complex and expensive machinery, can afterwards be applied to augment
      the quantity of work which that or any other machinery is useful only for
      performing. The undertaker of some great manufactory, who employs a
      thousand a-year in the maintenance of his machinery, if he can reduce this
      expense to five hundred, will naturally employ the other five hundred in
      purchasing an additional quantity of materials, to be wrought up by an
      additional number of workmen. The quantity of that work, therefore, which
      his machinery was useful only for performing, will naturally be augmented,
      and with it all the advantage and conveniency which the society can derive
      from that work.
    
      The expense of maintaining the fixed capital in a great country, may very
      properly be compared to that of repairs in a private estate. The expense
      of repairs may frequently be necessary for supporting the produce of the
      estate, and consequently both the gross and the neat rent of the landlord.
      When by a more proper direction, however, it can be diminished without
      occasioning any diminution of produce, the gross rent remains at least the
      same as before, and the neat rent is necessarily augmented.
    
      But though the whole expense of maintaining the fixed capital is thus
      necessarily excluded from the neat revenue of the society, it is not the
      same case with that of maintaining the circulating capital. Of the four
      parts of which this latter capital is composed, money, provisions,
      materials, and finished work, the three last, it has already been
      observed, are regularly withdrawn from it, and placed either in the fixed
      capital of the society, or in their stock reserved for immediate
      consumption. Whatever portion of those consumable goods is not employed in
      maintaining the former, goes all to the latter, and makes a part of the
      neat revenue of the society. The maintenance of those three parts of the
      circulating capital, therefore, withdraws no portion of the annual produce
      from the neat revenue of the society, besides what is necessary for
      maintaining the fixed capital.
    
      The circulating capital of a society is in this respect different from
      that of an individual. That of an individual is totally excluded from
      making any part of his neat revenue, which must consist altogether in his
      profits. But though the circulating capital of every individual makes a
      part of that of the society to which he belongs, it is not upon that
      account totally excluded from making a part likewise of their neat
      revenue. Though the whole goods in a merchant’s shop must by no means be
      placed in his own stock reserved for immediate consumption, they may in
      that of other people, who, from a revenue derived from other funds, may
      regularly replace their value to him, together with its profits, without
      occasioning any diminution either of his capital or of theirs.
    
      Money, therefore, is the only part of the circulating capital of a
      society, of which the maintenance can occasion any diminution in their
      neat revenue.
    
      The fixed capital, and that part of the circulating capital which consists
      in money, so far as they affect the revenue of the society, bear a very
      great resemblance to one another.
    
      First, as those machines and instruments of trade, etc. require a certain
      expense, first to erect them, and afterwards to support them, both which
      expenses, though they make a part of the gross, are deductions from the
      neat revenue of the society; so the stock of money which circulates in any
      country must require a certain expense, first to collect it, and
      afterwards to support it; both which expenses, though they make a part of
      the gross, are, in the same manner, deductions from the neat revenue of
      the society. A certain quantity of very valuable materials, gold and
      silver, and of very curious labour, instead of augmenting the stock
      reserved for immediate consumption, the subsistence, conveniencies, and
      amusements of individuals, is employed in supporting that great but
      expensive instrument of commerce, by means of which every individual in
      the society has his subsistence, conveniencies, and amusements, regularly
      distributed to him in their proper proportions.
    
      Secondly, as the machines and instruments of trade, etc. which compose the
      fixed capital either of an individual or of a society, make no part either
      of the gross or of the neat revenue of either; so money, by means of which
      the whole revenue of the society is regularly distributed among all its
      different members, makes itself no part of that revenue. The great wheel
      of circulation is altogether different from the goods which are circulated
      by means of it. The revenue of the society consists altogether in those
      goods, and not in the wheel which circulates them. In computing either the
      gross or the neat revenue of any society, we must always, from the whole
      annual circulation of money and goods, deduct the whole value of the
      money, of which not a single farthing can ever make any part of either.
    
      It is the ambiguity of language only which can make this proposition
      appear either doubtful or paradoxical. When properly explained and
      understood, it is almost self-evident.
    
      When we talk of any particular sum of money, we sometimes mean nothing but
      the metal pieces of which it is composed, and sometimes we include in our
      meaning some obscure reference to the goods which can be had in exchange
      for it, or to the power of purchasing which the possession of it conveys.
      Thus, when we say that the circulating money of England has been computed
      at eighteen millions, we mean only to express the amount of the metal
      pieces, which some writers have computed, or rather have supposed, to
      circulate in that country. But when we say that a man is worth fifty or a
      hundred pounds a-year, we mean commonly to express, not only the amount of
      the metal pieces which are annually paid to him, but the value of the
      goods which he can annually purchase or consume; we mean commonly to
      ascertain what is or ought to be his way of living, or the quantity and
      quality of the necessaries and conveniencies of life in which he can with
      propriety indulge himself.
    
      When, by any particular sum of money, we mean not only to express the
      amount of the metal pieces of which it is composed, but to include in its
      signification some obscure reference to the goods which can be had in
      exchange for them, the wealth or revenue which it in this case denotes, is
      equal only to one of the two values which are thus intimated somewhat
      ambiguously by the same word, and to the latter more properly than to the
      former, to the money’s worth more properly than to the money.
    
      Thus, if a guinea be the weekly pension of a particular person, he can in
      the course of the week purchase with it a certain quantity of subsistence,
      conveniencies, and amusements. In proportion as this quantity is great or
      small, so are his real riches, his real weekly revenue. His weekly revenue
      is certainly not equal both to the guinea and to what can be purchased
      with it, but only to one or other of those two equal values, and to the
      latter more properly than to the former, to the guinea’s worth rather than
      to the guinea.
    
      If the pension of such a person was paid to him, not in gold, but in a
      weekly bill for a guinea, his revenue surely would not so properly consist
      in the piece of paper, as in what he could get for it. A guinea may be
      considered as a bill for a certain quantity of necessaries and
      conveniencies upon all the tradesmen in the neighbourhood. The revenue of
      the person to whom it is paid, does not so properly consist in the piece
      of gold, as in what he can get for it, or in what he can exchange it for.
      If it could be exchanged for nothing, it would, like a bill upon a
      bankrupt, be of no more value than the most useless piece of paper.
    
      Though the weekly or yearly revenue of all the different inhabitants of
      any country, in the same manner, may be, and in reality frequently is,
      paid to them in money, their real riches, however, the real weekly or
      yearly revenue of all of them taken together, must always be great or
      small, in proportion to the quantity of consumable goods which they can
      all of them purchase with this money. The whole revenue of all of them
      taken together is evidently not equal to both the money and the consumable
      goods, but only to one or other of those two values, and to the latter
      more properly than to the former.
    
      Though we frequently, therefore, express a person’s revenue by the metal
      pieces which are annually paid to him, it is because the amount of those
      pieces regulates the extent of his power of purchasing, or the value of
      the goods which he can annually afford to consume. We still consider his
      revenue as consisting in this power of purchasing or consuming, and not in
      the pieces which convey it.
    
      But if this is sufficiently evident, even with regard to an individual, it
      is still more so with regard to a society. The amount of the metal pieces
      which are annually paid to an individual, is often precisely equal to his
      revenue, and is upon that account the shortest and best expression of its
      value. But the amount of the metal pieces which circulate in a society,
      can never be equal to the revenue of all its members. As the same guinea
      which pays the weekly pension of one man to-day, may pay that of another
      to-morrow, and that of a third the day thereafter, the amount of the metal
      pieces which annually circulate in any country, must always be of much
      less value than the whole money pensions annually paid with them. But the
      power of purchasing, or the goods which can successively be bought with
      the whole of those money pensions, as they are successively paid, must
      always be precisely of the same value with those pensions; as must
      likewise be the revenue of the different persons to whom they are paid.
      That revenue, therefore, cannot consist in those metal pieces, of which
      the amount is so much inferior to its value, but in the power of
      purchasing, in the goods which can successively be bought with them as
      they circulate from hand to hand.
    
      Money, therefore, the great wheel of circulation, the great instrument of
      commerce, like all other instruments of trade, though it makes a part, and
      a very valuable part, of the capital, makes no part of the revenue of the
      society to which it belongs; and though the metal pieces of which it is
      composed, in the course of their annual circulation, distribute to every
      man the revenue which properly belongs to him, they make themselves no
      part of that revenue.
    
      Thirdly, and lastly, the machines and instruments of trade, etc. which
      compose the fixed capital, bear this further resemblance to that part of
      the circulating capital which consists in money; that as every saving in
      the expense of erecting and supporting those machines, which does not
      diminish the introductive powers of labour, is an improvement of the neat
      revenue of the society; so every saving in the expense of collecting and
      supporting that part of the circulating capital which consists in money is
      an improvement of exactly the same kind.
    
      It is sufficiently obvious, and it has partly, too, been explained
      already, in what manner every saving in the expense of supporting the
      fixed capital is an improvement of the neat revenue of the society. The
      whole capital of the undertaker of every work is necessarily divided
      between his fixed and his circulating capital. While his whole capital
      remains the same, the smaller the one part, the greater must necessarily
      be the other. It is the circulating capital which furnishes the materials
      and wages of labour, and puts industry into motion. Every saving,
      therefore, in the expense of maintaining the fixed capital, which does not
      diminish the productive powers of labour, must increase the fund which
      puts industry into motion, and consequently the annual produce of land and
      labour, the real revenue of every society.
    
      The substitution of paper in the room of gold and silver money, replaces a
      very expensive instrument of commerce with one much less costly, and
      sometimes equally convenient. Circulation comes to be carried on by a new
      wheel, which it costs less both to erect and to maintain than the old one.
      But in what manner this operation is performed, and in what manner it
      tends to increase either the gross or the neat revenue of the society, is
      not altogether so obvious, and may therefore require some further
      explication.
    
      There are several different sorts of paper money; but the circulating
      notes of banks and bankers are the species which is best known, and which
      seems best adapted for this purpose.
    
      When the people of any particular country have such confidence in the
      fortune, probity and prudence of a particular banker, as to believe that
      he is always ready to pay upon demand such of his promissory notes as are
      likely to be at any time presented to him, those notes come to have the
      same currency as gold and silver money, from the confidence that such
      money can at any time be had for them.
    
      A particular banker lends among his customers his own promissory notes,
      to the extent, we shall suppose, of a hundred thousand pounds. As those
      notes serve all the purposes of money, his debtors pay him the same
      interest as if he had lent them so much money. This interest is the
      source of his gain. Though some of those notes are continually coming
      back upon him for payment, part of them continue to circulate for months
      and years together. Though he has generally in circulation, therefore,
      notes to the extent of a hundred thousand pounds, twenty thousand pounds
      in gold and silver may, frequently, be a sufficient provision for
      answering occasional demands. By this operation, therefore, twenty
      thousand pounds in gold and silver perform all the functions which a
      hundred thousand could otherwise have performed. The same exchanges may
      be made, the same quantity of consumable goods may be circulated and
      distributed to their proper consumers, by means of his promissory notes,
      to the value of a hundred thousand pounds, as by an equal value of gold
      and silver money. Eighty thousand pounds of gold and silver, therefore,
      can in this manner be spared from the circulation of the country; and if
      different operations of the same kind should, at the same time, be
      carried on by many different banks and bankers, the whole circulation may
      thus be conducted with a fifth part only of the gold and silver which
      would otherwise have been requisite.
    
      Let us suppose, for example, that the whole circulating money of some
      particular country amounted, at a particular time, to one million
      sterling, that sum being then sufficient for circulating the whole annual
      produce of their land and labour; let us suppose, too, that some time
      thereafter, different banks and bankers issued promissory notes payable to
      the bearer, to the extent of one million, reserving in their different
      coffers two hundred thousand pounds for answering occasional demands;
      there would remain, therefore, in circulation, eight hundred thousand
      pounds in gold and silver, and a million of bank notes, or eighteen
      hundred thousand pounds of paper and money together. But the annual
      produce of the land and labour of the country had before required only one
      million to circulate and distribute it to its proper consumers, and that
      annual produce cannot be immediately augmented by those operations of
      banking. One million, therefore, will be sufficient to circulate it after
      them. The goods to be bought and sold being precisely the same as before,
      the same quantity of money will be sufficient for buying and selling them.
      The channel of circulation, if I may be allowed such an expression, will
      remain precisely the same as before. One million we have supposed
      sufficient to fill that channel. Whatever, therefore, is poured into it
      beyond this sum, cannot run into it, but must overflow. One million eight
      hundred thousand pounds are poured into it. Eight hundred thousand pounds,
      therefore, must overflow, that sum being over and above what can be
      employed in the circulation of the country. But though this sum cannot be
      employed at home, it is too valuable to be allowed to lie idle. It will,
      therefore, be sent abroad, in order to seek that profitable employment
      which it cannot find at home. But the paper cannot go abroad; because at a
      distance from the banks which issue it, and from the country in which
      payment of it can be exacted by law, it will not be received in common
      payments. Gold and silver, therefore, to the amount of eight hundred
      thousand pounds, will be sent abroad, and the channel of home circulation
      will remain filled with a million of paper instead of a million of those
      metals which filled it before.
    
      But though so great a quantity of gold and silver is thus sent abroad, we
      must not imagine that it is sent abroad for nothing, or that its
      proprietors make a present of it to foreign nations. They will exchange it
      for foreign goods of some kind or another, in order to supply the
      consumption either of some other foreign country, or of their own.
    
      If they employ it in purchasing goods in one foreign country, in order to
      supply the consumption of another, or in what is called the carrying
      trade, whatever profit they make will be in addition to the neat revenue
      of their own country. It is like a new fund, created for carrying on a new
      trade; domestic business being now transacted by paper, and the gold and
      silver being converted into a fund for this new trade.
    
      If they employ it in purchasing foreign goods for home consumption, they
      may either, first, purchase such goods as are likely to be consumed by
      idle people, who produce nothing, such as foreign wines, foreign silks,
      etc.; or, secondly, they may purchase an additional stock of materials,
      tools, and provisions, in order to maintain and employ an additional
      number of industrious people, who reproduce, with a profit, the value of
      their annual consumption.
    
      So far as it is employed in the first way, it promotes prodigality,
      increases expense and consumption, without increasing production, or
      establishing any permanent fund for supporting that expense, and is in
      every respect hurtful to the society.
    
      So far as it is employed in the second way, it promotes industry; and
      though it increases the consumption of the society, it provides a
      permanent fund for supporting that consumption; the people who consume
      reproducing, with a profit, the whole value of their annual consumption.
      The gross revenue of the society, the annual produce of their land and
      labour, is increased by the whole value which the labour of those workmen
      adds to the materials upon which they are employed, and their neat revenue
      by what remains of this value, after deducting what is necessary for
      supporting the tools and instruments of their trade.
    
      That the greater part of the gold and silver which being forced abroad by
      those operations of banking, is employed in purchasing foreign goods for
      home consumption, is, and must be, employed in purchasing those of this
      second kind, seems not only probable, but almost unavoidable. Though some
      particular men may sometimes increase their expense very considerably,
      though their revenue does not increase at all, we maybe assured that no
      class or order of men ever does so; because, though the principles of
      common prudence do not always govern the conduct of every individual, they
      always influence that of the majority of every class or order. But the
      revenue of idle people, considered as a class or order, cannot, in the
      smallest degree, be increased by those operations of banking. Their
      expense in general, therefore, cannot be much increased by them, though
      that of a few individuals among them may, and in reality sometimes is. The
      demand of idle people, therefore, for foreign goods, being the same, or
      very nearly the same as before, a very small part of the money which,
      being forced abroad by those operations of banking, is employed in
      purchasing foreign goods for home consumption, is likely to be employed in
      purchasing those for their use. The greater part of it will naturally be
      destined for the employment of industry, and not for the maintenance of
      idleness.
    
      When we compute the quantity of industry which the circulating capital of
      any society can employ, we must always have regard to those parts of it
      only which consist in provisions, materials, and finished work; the other,
      which consists in money, and which serves only to circulate those three,
      must always be deducted. In order to put industry into motion, three
      things are requisite; materials to work upon, tools to work with, and the
      wages or recompence for the sake of which the work is done. Money is
      neither a material to work upon, nor a tool to work with; and though the
      wages of the workman are commonly paid to him in money, his real revenue,
      like that of all other men, consists, not in the money, but in the money’s
      worth; not in the metal pieces, but in what can be got for them.
    
      The quantity of industry which any capital can employ, must evidently be
      equal to the number of workmen whom it can supply with materials, tools,
      and a maintenance suitable to the nature of the work. Money may be
      requisite for purchasing the materials and tools of the work, as well as
      the maintenance of the workmen; but the quantity of industry which the
      whole capital can employ, is certainly not equal both to the money which
      purchases, and to the materials, tools, and maintenance, which are
      purchased with it, but only to one or other of those two values, and to
      the latter more properly than to the former.
    
      When paper is substituted in the room of gold and silver money, the
      quantity of the materials, tools, and maintenance, which the whole
      circulating capital can supply, may be increased by the whole value of
      gold and silver which used to be employed in purchasing them. The whole
      value of the great wheel of circulation and distribution is added to the
      goods which are circulated and distributed by means of it. The operation,
      in some measure, resembles that of the undertaker of some great work, who,
      in consequence of some improvement in mechanics, takes down his old
      machinery, and adds the difference between its price and that of the new
      to his circulating capital, to the fund from which he furnishes materials
      and wages to his workmen.
    
      What is the proportion which the circulating money of any country bears to
      the whole value of the annual produce circulated by means of it, it is
      perhaps impossible to determine. It has been computed by different authors
      at a fifth, at a tenth, at a twentieth, and at a thirtieth, part of that
      value. But how small soever the proportion which the circulating money may
      bear to the whole value of the annual produce, as but a part, and
      frequently but a small part, of that produce, is ever destined for the
      maintenance of industry, it must always bear a very considerable
      proportion to that part. When, therefore, by the substitution of paper,
      the gold and silver necessary for circulation is reduced to, perhaps, a
      fifth part of the former quantity, if the value of only the greater part
      of the other four-fifths be added to the funds which are destined for the
      maintenance of industry, it must make a very considerable addition to the
      quantity of that industry, and, consequently, to the value of the annual
      produce of land and labour.
    
      An operation of this kind has, within these five-and-twenty or thirty
      years, been performed in Scotland, by the erection of new banking
      companies in almost every considerable town, and even in some country
      villages. The effects of it have been precisely those above described. The
      business of the country is almost entirely carried on by means of the
      paper of those different banking companies, with which purchases and
      payments of all kinds are commonly made. Silver very seldom appears,
      except in the change of a twenty shilling bank note, and gold still
      seldomer. But though the conduct of all those different companies has not
      been unexceptionable, and has accordingly required an act of parliament to
      regulate it, the country, notwithstanding, has evidently derived great
      benefit from their trade. I have heard it asserted, that the trade of the
      city of Glasgow doubled in about fifteen years after the first erection of
      the banks there; and that the trade of Scotland has more than quadrupled
      since the first erection of the two public banks at Edinburgh; of which
      the one, called the Bank of Scotland, was established by act of parliament
      in 1695, and the other, called the Royal Bank, by royal charter in 1727.
      Whether the trade, either of Scotland in general, or of the city of
      Glasgow in particular, has really increased in so great a proportion,
      during so short a period, I do not pretend to know. If either of them has
      increased in this proportion, it seems to be an effect too great to be
      accounted for by the sole operation of this cause. That the trade and
      industry of Scotland, however, have increased very considerably during
      this period, and that the banks have contributed a good deal to this
      increase, cannot be doubted.
    
      The value of the silver money which circulated in Scotland before the
      Union in 1707, and which, immediately after it, was brought into the Bank
      of Scotland, in order to be recoined, amounted to £411,117: 10: 9
      sterling. No account has been got of the gold coin; but it appears from
      the ancient accounts of the mint of Scotland, that the value of the gold
      annually coined somewhat exceeded that of the silver. There were a good
      many people, too, upon this occasion, who, from a diffidence of repayment,
      did not bring their silver into the Bank of Scotland; and there was,
      besides, some English coin, which was not called in. The whole value of
      the gold and silver, therefore, which circulated in Scotland before the
      Union, cannot be estimated at less than a million sterling. It seems to
      have constituted almost the whole circulation of that country; for though
      the circulation of the Bank of Scotland, which had then no rival, was
      considerable, it seems to have made but a very small part of the whole. In
      the present times, the whole circulation of Scotland cannot be estimated
      at less than two millions, of which that part which consists in gold and
      silver, most probably, does not amount to half a million. But though the
      circulating gold and silver of Scotland have suffered so great a
      diminution during this period, its real riches and prosperity do not
      appear to have suffered any. Its agriculture, manufactures, and trade, on
      the contrary, the annual produce of its land and labour, have evidently
      been augmented.
    
      It is chiefly by discounting bills of exchange, that is, by advancing
      money upon them before they are due, that the greater part of banks and
      bankers issue their promissory notes. They deduct always, upon whatever
      sum they advance, the legal interest till the bill shall become due. The
      payment of the bill, when it becomes due, replaces to the bank the value
      of what had been advanced, together with a clear profit of the interest.
      The banker, who advances to the merchant whose bill he discounts, not gold
      and silver, but his own promissory notes, has the advantage of being able
      to discount to a greater amount by the whole value of his promissory
      notes, which he finds, by experience, are commonly in circulation. He is
      thereby enabled to make his clear gain of interest on so much a larger
      sum.
    
      The commerce of Scotland, which at present is not very great, was still
      more inconsiderable when the two first banking companies were established;
      and those companies would have had but little trade, had they confined
      their business to the discounting of bills of exchange. They invented,
      therefore, another method of issuing their promissory notes; by granting
      what they call cash accounts, that is, by giving credit, to the extent of
      a certain sum (two or three thousand pounds for example), to any
      individual who could procure two persons of undoubted credit and good
      landed estate to become surety for him, that whatever money should be
      advanced to him, within the sum for which the credit had been given,
      should be repaid upon demand, together with the legal interest. Credits of
      this kind are, I believe, commonly granted by banks and bankers in all
      different parts of the world. But the easy terms upon which the Scotch
      banking companies accept of repayment are, so far as I know, peculiar to
      them, and have perhaps been the principal cause, both of the great trade
      of those companies, and of the benefit which the country has received from
      it.
    
      Whoever has a credit of this kind with one of those companies, and borrows
      a thousand pounds upon it, for example, may repay this sum piece-meal, by
      twenty and thirty pounds at a time, the company discounting a
      proportionable part of the interest of the great sum, from the day on
      which each of those small sums is paid in, till the whole be in this
      manner repaid. All merchants, therefore, and almost all men of business,
      find it convenient to keep such cash accounts with them, and are thereby
      interested to promote the trade of those companies, by readily receiving
      their notes in all payments, and by encouraging all those with whom they
      have any influence to do the same. The banks, when their customers apply
      to them for money, generally advance it to them in their own promissory
      notes. These the merchants pay away to the manufacturers for goods, the
      manufacturers to the farmers for materials and provisions, the farmers to
      their landlords for rent; the landlords repay them to the merchants for
      the conveniencies and luxuries with which they supply them, and the
      merchants again return them to the banks, in order to balance their cash
      accounts, or to replace what they may have borrowed of them; and thus
      almost the whole money business of the country is transacted by means of
      them. Hence the great trade of those companies.
    
      By means of those cash accounts, every merchant can, without imprudence,
      carry on a greater trade than he otherwise could do. If there are two
      merchants, one in London and the other in Edinburgh, who employ equal
      stocks in the same branch of trade, the Edinburgh merchant can, without
      imprudence, carry on a greater trade, and give employment to a greater
      number of people, than the London merchant. The London merchant must
      always keep by him a considerable sum of money, either in his own coffers,
      or in those of his banker, who gives him no interest for it, in order to
      answer the demands continually coming upon him for payment of the goods
      which he purchases upon credit. Let the ordinary amount of this sum be
      supposed five hundred pounds; the value of the goods in his warehouse must
      always be less, by five hundred pounds, than it would have been, had he
      not been obliged to keep such a sum unemployed. Let us suppose that he
      generally disposes of his whole stock upon hand, or of goods to the value
      of his whole stock upon hand, once in the year. By being obliged to keep
      so great a sum unemployed, he must sell in a year five hundred pounds
      worth less goods than he might otherwise have done. His annual profits
      must be less by all that he could have made by the sale of five hundred
      pounds worth more goods; and the number of people employed in preparing
      his goods for the market must be less by all those that five hundred
      pounds more stock could have employed. The merchant in Edinburgh, on the
      other hand, keeps no money unemployed for answering such occasional
      demands. When they actually come upon him, he satisfies them from his cash
      account with the bank, and gradually replaces the sum borrowed with the
      money or paper which comes in from the occasional sales of his goods. With
      the same stock, therefore, he can, without imprudence, have at all times
      in his warehouse a larger quantity of goods than the London merchant; and
      can thereby both make a greater profit himself, and give constant
      employment to a greater number of industrious people who prepare those
      goods for the market. Hence the great benefit which the country has
      derived from this trade.
    
      The facility of discounting bills of exchange, it may be thought, indeed,
      gives the English merchants a conveniency equivalent to the cash accounts
      of the Scotch merchants. But the Scotch merchants, it must be remembered,
      can discount their bills of exchange as easily as the English merchants;
      and have, besides, the additional conveniency of their cash accounts.
    
      The whole paper money of every kind which can easily circulate in any
      country, never can exceed the value of the gold and silver, of which it
      supplies the place, or which (the commerce being supposed the same) would
      circulate there, if there was no paper money. If twenty shilling notes,
      for example, are the lowest paper money current in Scotland, the whole of
      that currency which can easily circulate there, cannot exceed the sum of
      gold and silver which would be necessary for transacting the annual
      exchanges of twenty shillings value and upwards usually transacted within
      that country. Should the circulating paper at any time exceed that sum, as
      the excess could neither be sent abroad nor be employed in the circulation
      of the country, it must immediately return upon the banks, to be exchanged
      for gold and silver. Many people would immediately perceive that they had
      more of this paper than was necessary for transacting their business at
      home; and as they could not send it abroad, they would immediately demand
      payment for it from the banks. When this superfluous paper was converted
      into gold and silver, they could easily find a use for it, by sending it
      abroad; but they could find none while it remained in the shape of paper.
      There would immediately, therefore, be a run upon the banks to the whole
      extent of this superfluous paper, and if they showed any difficulty or
      backwardness in payment, to a much greater extent; the alarm which this
      would occasion necessarily increasing the run.
    
      Over and above the expenses which are common to every branch of trade,
      such as the expense of house-rent, the wages of servants, clerks,
      accountants, etc. the expenses peculiar to a bank consist chiefly in two
      articles: first, in the expense of keeping at all times in its coffers,
      for answering the occasional demands of the holders of its notes, a large
      sum of money, of which it loses the interest; and, secondly, in the
      expense of replenishing those coffers as fast as they are emptied by
      answering such occasional demands.
    
      A banking company which issues more paper than can be employed in the
      circulation of the country, and of which the excess is continually
      returning upon them for payment, ought to increase the quantity of gold
      and silver which they keep at all times in their coffers, not only in
      proportion to this excessive increase of their circulation, but in a much
      greater proportion; their notes returning upon them much faster than in
      proportion to the excess of their quantity. Such a company, therefore,
      ought to increase the first article of their expense, not only in
      proportion to this forced increase of their business, but in a much
      greater proportion.
    
      The coffers of such a company, too, though they ought to be filled much
      fuller, yet must empty themselves much faster than if their business was
      confined within more reasonable bounds, and must require not only a more
      violent, but a more constant and uninterrupted exertion of expense, in
      order to replenish them, The coin, too, which is thus continually drawn in
      such large quantities from their coffers, cannot be employed in the
      circulation of the country. It comes in place of a paper which is over and
      above what can be employed in that circulation, and is, therefore, over
      and above what can be employed in it too. But as that coin will not be
      allowed to lie idle, it must, in one shape or another, be sent abroad, in
      order to find that profitable employment which it cannot find at home; and
      this continual exportation of gold and silver, by enhancing the
      difficulty, must necessarily enhance still farther the expense of the
      bank, in finding new gold and silver in order to replenish those coffers,
      which empty themselves so very rapidly. Such a company, therefore, must in
      proportion to this forced increase of their business, increase the second
      article of their expense still more than the first.
    
      Let us suppose that all the paper of a particular bank, which the
      circulation of the country can easily absorb and employ, amounts exactly
      to forty thousand pounds, and that, for answering occasional demands, this
      bank is obliged to keep at all times in its coffers ten thousand pounds in
      gold and silver. Should this bank attempt to circulate forty-four thousand
      pounds, the four thousand pounds which are over and above what the
      circulation can easily absorb and employ, will return upon it almost as
      fast as they are issued. For answering occasional demands, therefore, this
      bank ought to keep at all times in its coffers, not eleven thousand pounds
      only, but fourteen thousand pounds. It will thus gain nothing by the
      interest of the four thousand pounds excessive circulation; and it will
      lose the whole expense of continually collecting four thousand pounds in
      gold and silver, which will be continually going out of its coffers as
      fast as they are brought into them.
    
      Had every particular banking company always understood and attended to its
      own particular interest, the circulation never could have been overstocked
      with paper money. But every particular banking company has not always
      understood or attended to its own particular interest, and the circulation
      has frequently been overstocked with paper money.
    
      By issuing too great a quantity of paper, of which the excess was
      continually returning, in order to be exchanged for gold and silver, the
      Bank of England was for many years together obliged to coin gold to the
      extent of between eight hundred thousand pounds and a million a-year; or,
      at an average, about eight hundred and fifty thousand pounds. For this
      great coinage, the bank (in consequence of the worn and degraded state into
      which the gold coin had fallen a few years ago) was frequently obliged to
      purchase gold bullion at the high price of four pounds an ounce, which it
      soon after issued in coin at £3:17:10 1/2 an ounce, losing in this manner
      between two and a half and three per cent. upon the coinage of so very
      large a sum. Though the bank, therefore, paid no seignorage, though the
      government was properly at the expense of this coinage, this liberality of
      government did not prevent altogether the expense of the bank.
    
      The Scotch banks, in consequence of an excess of the same kind, were all
      obliged to employ constantly agents at London to collect money for them,
      at an expense which was seldom below one and a half or two per cent. This
      money was sent down by the waggon, and insured by the carriers at an
      additional expense of three quarters per cent. or fifteen shillings on the
      hundred pounds. Those agents were not always able to replenish the coffers
      of their employers so fast as they were emptied. In this case, the
      resource of the banks was, to draw upon their correspondents in London
      bills of exchange, to the extent of the sum which they wanted. When those
      correspondents afterwards drew upon them for the payment of this sum,
      together with the interest and commission, some of those banks, from the
      distress into which their excessive circulation had thrown them, had
      sometimes no other means of satisfying this draught, but by drawing a
      second set of bills, either upon the same, or upon some other
      correspondents in London; and the same sum, or rather bills for the same
      sum, would in this manner make sometimes more than two or three journeys;
      the debtor bank paying always the interest and commission upon the whole
      accumulated sum. Even those Scotch banks which never distinguished
      themselves by their extreme imprudence, were sometimes obliged to employ
      this ruinous resource.
    
      The gold coin which was paid out, either by the Bank of England or by the
      Scotch banks, in exchange for that part of their paper which was over and
      above what could be employed in the circulation of the country, being
      likewise over and above what could be employed in that circulation, was
      sometimes sent abroad in the shape of coin, sometimes melted down and sent
      abroad in the shape of bullion, and sometimes melted down and sold to the
      Bank of England at the high price of four pounds an ounce. It was the
      newest, the heaviest, and the best pieces only, which were carefully
      picked out of the whole coin, and either sent abroad or melted down. At
      home, and while they remained in the shape of coin, those heavy pieces
      were of no more value than the light; but they were of more value abroad,
      or when melted down into bullion at home. The Bank of England,
      notwithstanding their great annual coinage, found, to their astonishment,
      that there was every year the same scarcity of coin as there had been the
      year before; and that, notwithstanding the great quantity of good and new
      coin which was every year issued from the bank, the state of the coin,
      instead of growing better and better, became every year worse and worse.
      Every year they found themselves under the necessity of coining nearly the
      same quantity of gold as they had coined the year before; and from the
      continual rise in the price of gold bullion, in consequence of the
      continual wearing and clipping of the coin, the expense of this great
      annual coinage became, every year, greater and greater. The Bank of
      England, it is to be observed, by supplying its own coffers with coin, is
      indirectly obliged to supply the whole kingdom, into which coin is
      continually flowing from those coffers in a great variety of ways.
      Whatever coin, therefore, was wanted to support this excessive circulation
      both of Scotch and English paper money, whatever vacuities this excessive
      circulation occasioned in the necessary coin of the kingdom, the Bank of
      England was obliged to supply them. The Scotch banks, no doubt, paid all
      of them very dearly for their own imprudence and inattention: but the Bank
      of England paid very dearly, not only for its own imprudence, but for the
      much greater imprudence of almost all the Scotch banks.
    
      The over-trading of some bold projectors in both parts of the united
      kingdom, was the original cause of this excessive circulation of paper
      money.
    
      What a bank can with propriety advance to a merchant or undertaker of any
      kind, is not either the whole capital with which he trades, or even any
      considerable part of that capital; but that part of it only which he would
      otherwise be obliged to keep by him unemployed and in ready money, for
      answering occasional demands. If the paper money which the bank advances
      never exceeds this value, it can never exceed the value of the gold and
      silver which would necessarily circulate in the country if there was no
      paper money; it can never exceed the quantity which the circulation of the
      country can easily absorb and employ.
    
      When a bank discounts to a merchant a real bill of exchange, drawn by a
      real creditor upon a real debtor, and which, as soon as it becomes due, is
      really paid by that debtor; it only advances to him a part of the value
      which he would otherwise be obliged to keep by him unemployed and in ready
      money, for answering occasional demands. The payment of the bill, when it
      becomes due, replaces to the bank the value of what it had advanced,
      together with the interest. The coffers of the bank, so far as its
      dealings are confined to such customers, resemble a water-pond, from
      which, though a stream is continually running out, yet another is
      continually running in, fully equal to that which runs out; so that,
      without any further care or attention, the pond keeps always equally, or
      very near equally full. Little or no expense can ever be necessary for
      replenishing the coffers of such a bank.
    
      A merchant, without over-trading, may frequently have occasion for a sum
      of ready money, even when he has no bills to discount. When a bank,
      besides discounting his bills, advances him likewise, upon such occasions,
      such sums upon his cash account, and accepts of a piece-meal repayment, as
      the money comes in from the occasional sale of his goods, upon the easy
      terms of the banking companies of Scotland; it dispenses him entirely from
      the necessity of keeping any part of his stock by him unemployed and in
      ready money for answering occasional demands. When such demands actually
      come upon him, he can answer them sufficiently from his cash account. The
      bank, however, in dealing with such customers, ought to observe with great
      attention, whether, in the course of some short period (of four, five,
      six, or eight months, for example), the sum of the repayments which it
      commonly receives from them, is, or is not, fully equal to that of the
      advances which it commonly makes to them. If, within the course of such
      short periods, the sum of the repayments from certain customers is, upon
      most occasions, fully equal to that of the advances, it may safely
      continue to deal with such customers. Though the stream which is in this
      case continually running out from its coffers may be very large, that
      which is continually running into them must be at least equally large, so
      that, without any further care or attention, those coffers are likely to
      be always equally or very near equally full, and scarce ever to require
      any extraordinary expense to replenish them. If, on the contrary, the sum
      of the repayments from certain other customers, falls commonly very much
      short of the advances which it makes to them, it cannot with any safety
      continue to deal with such customers, at least if they continue to deal
      with it in this manner. The stream which is in this case continually
      running out from its coffers, is necessarily much larger than that which
      is continually running in; so that, unless they are replenished by some
      great and continual effort of expense, those coffers must soon be
      exhausted altogether.
    
      The banking companies of Scotland, accordingly, were for a long time very
      careful to require frequent and regular repayments from all their
      customers, and did not care to deal with any person, whatever might be his
      fortune or credit, who did not make, what they called, frequent and
      regular operations with them. By this attention, besides saving almost
      entirely the extraordinary expense of replenishing their coffers, they
      gained two other very considerable advantages.
    
      First, by this attention they were enabled to make some tolerable judgment
      concerning the thriving or declining circumstances of their debtors,
      without being obliged to look out for any other evidence besides what
      their own books afforded them; men being, for the most part, either
      regular or irregular in their repayments, according as their circumstances
      are either thriving or declining. A private man who lends out his money to
      perhaps half a dozen or a dozen of debtors, may, either by himself or his
      agents, observe and inquire both constantly and carefully into the conduct
      and situation of each of them. But a banking company, which lends money to
      perhaps five hundred different people, and of which the attention is
      continually occupied by objects of a very different kind, can have no
      regular information concerning the conduct and circumstances of the
      greater part of its debtors, beyond what its own books afford it. In
      requiring frequent and regular repayments from all their customers, the
      banking companies of Scotland had probably this advantage in view.
    
      Secondly, by this attention they secured themselves from the possibility
      of issuing more paper money than what the circulation of the country could
      easily absorb and employ. When they observed, that within moderate periods
      of time, the repayments of a particular customer were, upon most
      occasions, fully equal to the advances which they had made to him, they
      might be assured that the paper money which they had advanced to him had
      not, at any time, exceeded the quantity of gold and silver which he would
      otherwise have been obliged to keep by him for answering occasional
      demands; and that, consequently, the paper money, which they had
      circulated by his means, had not at any time exceeded the quantity of gold
      and silver which would have circulated in the country, had there been no
      paper money. The frequency, regularity, and amount of his repayments,
      would sufficiently demonstrate that the amount of their advances had at no
      time exceeded that part of his capital which he would otherwise have been
      obliged to keep by him unemployed, and in ready money, for answering
      occasional demands; that is, for the purpose of keeping the rest of his
      capital in constant employment. It is this part of his capital only which,
      within moderate periods of time, is continually returning to every dealer
      in the shape of money, whether paper or coin, and continually going from
      him in the same shape. If the advances of the bank had commonly exceeded
      this part of his capital, the ordinary amount of his repayments could not,
      within moderate periods of time, have equalled the ordinary amount of its
      advances. The stream which, by means of his dealings, was continually
      running into the coffers of the bank, could not have been equal to the
      stream which, by means of the same dealings was continually running out.
      The advances of the bank paper, by exceeding the quantity of gold and
      silver which, had there been no such advances, he would have been obliged
      to keep by him for answering occasional demands, might soon come to exceed
      the whole quantity of gold and silver which ( the commerce being supposed
      the same ) would have circulated in the country, had there been no paper
      money; and, consequently, to exceed the quantity which the circulation of
      the country could easily absorb and employ; and the excess of this paper
      money would immediately have returned upon the bank, in order to be
      exchanged for gold and silver. This second advantage, though equally real,
      was not, perhaps, so well understood by all the different banking
      companies in Scotland as the first.
    
      When, partly by the conveniency of discounting bills, and partly by that
      of cash accounts, the creditable traders of any country can be dispensed
      from the necessity of keeping any part of their stock by them unemployed,
      and in ready money, for answering occasional demands, they can reasonably
      expect no farther assistance from hanks and bankers, who, when they have
      gone thus far, cannot, consistently with their own interest and safety, go
      farther. A bank cannot, consistently with its own interest, advance to a
      trader the whole, or even the greater part of the circulating capital with
      which he trades; because, though that capital is continually returning to
      him in the shape of money, and going from him in the same shape, yet the
      whole of the returns is too distant from the whole of the outgoings, and
      the sum of his repayments could not equal the sum of his advances within
      such moderate periods of time as suit the conveniency of a bank. Still
      less could a bank afford to advance him any considerable part of his fixed
      capital; of the capital which the undertaker of an iron forge, for
      example, employs in erecting his forge and smelting-houses, his
      work-houses, and warehouses, the dwelling-houses of his workmen, etc.; of
      the capital which the undertaker of a mine employs in sinking his shafts,
      in erecting engines for drawing out the water, in making roads and
      waggon-ways, etc.; of the capital which the person who undertakes to
      improve land employs in clearing, draining, inclosing, manuring, and
      ploughing waste and uncultivated fields; in building farmhouses, with all
      their necessary appendages of stables, granaries, etc. The returns of the
      fixed capital are, in almost all cases, much slower than those of the
      circulating capital: and such expenses, even when laid out with the
      greatest prudence and judgment, very seldom return to the undertaker till
      after a period of many years, a period by far too distant to suit the
      conveniency of a bank. Traders and other undertakers may, no doubt with
      great propriety, carry on a very considerable part of their projects with
      borrowed money. In justice to their creditors, however, their own capital
      ought in this case to be sufficient to insure, if I may say so, the
      capital of those creditors; or to render it extremely improbable that
      those creditors should incur any loss, even though the success of the
      project should fall very much short of the expectation of the projectors.
      Even with this precaution, too, the money which is borrowed, and which it
      is meant should not be repaid till after a period of several years, ought
      not to be borrowed of a bank, but ought to be borrowed upon bond or
      mortgage, of such private people as propose to live upon the interest of
      their money, without taking the trouble themselves to employ the capital,
      and who are, upon that account, willing to lend that capital to such
      people of good credit as are likely to keep it for several years. A bank,
      indeed, which lends its money without the expense of stamped paper, or of
      attorneys’ fees for drawing bonds and mortgages, and which accepts of
      repayment upon the easy terms of the banking companies of Scotland, would,
      no doubt, be a very convenient creditor to such traders and undertakers.
      But such traders and undertakers would surely be most inconvenient debtors
      to such a bank.
    
      It is now more than five and twenty years since the paper money issued by
      the different banking companies of Scotland was fully equal, or rather was
      somewhat more than fully equal, to what the circulation of the country
      could easily absorb and employ. Those companies, therefore, had so long
      ago given all the assistance to the traders and other undertakers of
      Scotland which it is possible for banks and bankers, consistently with
      their own interest, to give. They had even done somewhat more. They had
      over-traded a little, and had brought upon themselves that loss, or at
      least that diminution of profit, which, in this particular business, never
      fails to attend the smallest degree of over-trading. Those traders and
      other undertakers, having got so much assistance from banks and bankers,
      wished to get still more. The banks, they seem to have thought, could
      extend their credits to whatever sum might be wanted, without incurring
      any other expense besides that of a few reams of paper. They complained of
      the contracted views and dastardly spirit of the directors of those banks,
      which did not, they said, extend their credits in proportion to the
      extension of the trade of the country; meaning, no doubt, by the extension
      of that trade, the extension of their own projects beyond what they could
      carry on either with their own capital, or with what they had credit to
      borrow of private people in the usual way of bond or mortgage. The banks,
      they seem to have thought, were in honour bound to supply the deficiency,
      and to provide them with all the capital which they wanted to trade with.
      The banks, however, were of a different opinion; and upon their refusing
      to extend their credits, some of those traders had recourse to an
      expedient which, for a time, served their purpose, though at a much
      greater expense, yet as effectually as the utmost extension of bank
      credits could have done. This expedient was no other than the well known
      shift of drawing and redrawing; the shift to which unfortunate traders
      have sometimes recourse, when they are upon the brink of bankruptcy. The
      practice of raising money in this manner had been long known in England;
      and, during the course of the late war, when the high profits of trade
      afforded a great temptation to over-trading, is said to have been carried
      on to a very great extent. From England it was brought into Scotland,
      where, in proportion to the very limited commerce, and to the very
      moderate capital of the country, it was soon carried on to a much greater
      extent than it ever had been in England.
    
      The practice of drawing and redrawing is so well known to all men of
      business, that it may, perhaps, be thought unnecessary to give any account
      of it. But as this book may come into the hands of many people who are not
      men of business, and as the effects of this practice upon the banking
      trade are not, perhaps, generally understood, even by men of business
      themselves, I shall endeavour to explain it as distinctly as I can.
    
      The customs of merchants, which were established when the barbarous laws
      of Europe did not enforce the performance of their contracts, and which,
      during the course of the two last centuries, have been adopted into the
      laws of all European nations, have given such extraordinary privileges to
      bills of exchange, that money is more readily advanced upon them than upon
      any other species of obligation; especially when they are made payable
      within so short a period as two or three months after their date. If, when
      the bill becomes due, the acceptor does not pay it as soon as it is
      presented, he becomes from that moment a bankrupt. The bill is protested,
      and returns upon the drawer, who, if he does not immediately pay it,
      becomes likewise a bankrupt. If, before it came to the person who presents
      it to the acceptor for payment, it had passed through the hands of several
      other persons, who had successively advanced to one another the contents
      of it, either in money or goods, and who, to express that each of them had
      in his turn received those contents, had all of them in their order
      indorsed, that is, written their names upon the back of the bill; each
      indorser becomes in his turn liable to the owner of the bill for those
      contents, and, if he fails to pay, he becomes too, from that moment, a
      bankrupt. Though the drawer, acceptor, and indorsers of the bill, should
      all of them be persons of doubtful credit; yet, still the shortness of the
      date gives some security to the owner of the bill. Though all of them may
      be very likely to become bankrupts, it is a chance if they all become so
      in so short a time. The house is crazy, says a weary traveller to himself,
      and will not stand very long; but it is a chance if it falls to-night, and
      I will venture, therefore, to sleep in it to-night.
    
      The trader A in Edinburgh, we shall suppose, draws a bill upon B in
      London, payable two months after date. In reality B in London owes nothing
      to A in Edinburgh; but he agrees to accept of A’s bill, upon condition,
      that before the term of payment he shall redraw upon A in Edinburgh for
      the same sum, together with the interest and a commission, another bill,
      payable likewise two months after date. B accordingly, before the
      expiration of the first two months, redraws this bill upon A in Edinburgh;
      who, again before the expiration of the second two months, draws a second
      bill upon B in London, payable likewise two months after date; and before
      the expiration of the third two months, B in London redraws upon A in
      Edinburgh another bill payable also two months after date. This practice
      has sometimes gone on, not only for several months, but for several years
      together, the bill always returning upon A in Edinburgh with the
      accumulated interest and commission of all the former bills. The interest
      was five per cent. in the year, and the commission was never less than one
      half per cent. on each draught. This commission being repeated more than
      six times in the year, whatever money A might raise by this expedient
      might necessarily have cost him something more than eight per cent. in the
      year and sometimes a great deal more, when either the price of the
      commission happened to rise, or when he was obliged to pay compound
      interest upon the interest and commission of former bills. This practice
      was called raising money by circulation.
    
      In a country where the ordinary profits of stock, in the greater part of
      mercantile projects, are supposed to run between six and ten per cent. it
      must have been a very fortunate speculation, of which the returns could
      not only repay the enormous expense at which the money was thus borrowed
      for carrying it on, but afford, besides, a good surplus profit to the
      projector. Many vast and extensive projects, however, were undertaken, and
      for several years carried on, without any other fund to support them
      besides what was raised at this enormous expense. The projectors, no
      doubt, had in their golden dreams the most distinct vision of this great
      profit. Upon their awakening, however, either at the end of their
      projects, or when they were no longer able to carry them on, they very
      seldom, I believe, had the good fortune to find it.
    
      {The method described in the text was by no means either the most common
      or the most expensive one in which those adventurers sometimes raised
      money by circulation. It frequently happened, that A in Edinburgh would
      enable B in London to pay the first bill of exchange, by drawing, a few
      days before it became due, a second bill at three months date upon the
      same B in London. This bill, being payable to his own order, A sold in
      Edinburgh at par; and with its contents purchased bills upon London,
      payable at sight to the order of B, to whom he sent them by the post.
      Towards the end of the late war, the exchange between Edinburgh and London
      was frequently three per cent. against Edinburgh, and those bills at sight
      must frequently have cost A that premium. This transaction, therefore,
      being repeated at least four times in the year, and being loaded with a
      commission of at least one half per cent. upon each repetition, must at
      that period have cost A, at least, fourteen per cent. in the year. At
      other times A would enable to discharge the first bill of exchange, by
      drawing, a few days before it became due, a second bill at two months
      date, not upon B, but upon some third person, C, for example, in London.
      This other bill was made payable to the order of B, who, upon its being
      accepted by C, discounted it with some banker in London; and A enabled C
      to discharge it, by drawing, a few day’s before it became due, a third
      bill likewise at two months date, sometimes upon his first correspondent
      B, and sometimes upon some fourth or fifth person, D or E, for example.
      This third bill was made payable to the order of C, who, as soon as it was
      accepted, discounted it in the same manner with some banker in London.
      Such operations being repeated at least six times in the year, and being
      loaded with a commission of at least one half per cent. upon each
      repetition, together with the legal interest of five per cent. this method
      of raising money, in the same manner as that described in the text, must
      have cost A something more than eight per cent. By saving, however, the
      exchange between Edinburgh and London, it was less expensive than that
      mentioned in the foregoing part of this note; but then it required an
      established credit with more houses than one in London, an advantage which
      many of these adventurers could not always find it easy to procure.}
    
      The bills which A in Edinburgh drew upon B in London, he regularly
      discounted two months before they were due, with some bank or banker in
      Edinburgh; and the bills which B in London redrew upon A in Edinburgh, he
      as regularly discounted, either with the Bank of England, or with some
      other banker in London. Whatever was advanced upon such circulating bills
      was in Edinburgh advanced in the paper of the Scotch banks; and in London,
      when they were discounted at the Bank of England in the paper of that
      bank. Though the bills upon which this paper had been advanced were all of
      them repaid in their turn as soon as they became due, yet the value which
      had been really advanced upon the first bill was never really returned to
      the banks which advanced it; because, before each bill became due, another
      bill was always drawn to somewhat a greater amount than the bill which was
      soon to be paid: and the discounting of this other bill was essentially
      necessary towards the payment of that which was soon to be due. This
      payment, therefore, was altogether fictitious. The stream which, by means
      of those circulating bills of exchange, had once been made to run out from
      the coffers of the banks, was never replaced by any stream which really
      ran into them.
    
      The paper which was issued upon those circulating bills of exchange
      amounted, upon many occasions, to the whole fund destined for carrying on
      some vast and extensive project of agriculture, commerce, or manufactures;
      and not merely to that part of it which, had there been no paper money,
      the projector would have been obliged to keep by him unemployed, and in
      ready money, for answering occasional demands. The greater part of this
      paper was, consequently, over and above the value of the gold and silver
      which would have circulated in the country, had there been no paper money.
      It was over and above, therefore, what the circulation of the country
      could easily absorb and employ, and upon that account, immediately
      returned upon the banks, in order to be exchanged for gold and silver,
      which they were to find as they could. It was a capital which those
      projectors had very artfully contrived to draw from those banks, not only
      without their knowledge or deliberate consent, but for some time, perhaps,
      without their having the most distant suspicion that they had really
      advanced it.
    
      When two people, who are continually drawing and redrawing upon one
      another, discount their bills always with the same banker, he must
      immediately discover what they are about, and see clearly that they are
      trading, not with any capital of their own, but with the capital which he
      advances to them. But this discovery is not altogether so easy when they
      discount their bills sometimes with one banker, and sometimes with
      another, and when the two same persons do not constantly draw and redraw
      upon one another, but occasionally run the round of a great circle of
      projectors, who find it for their interest to assist one another in this
      method of raising money and to render it, upon that account, as difficult
      as possible to distinguish between a real and a fictitious bill of
      exchange, between a bill drawn by a real creditor upon a real debtor, and
      a bill for which there was properly no real creditor but the bank which
      discounted it, nor any real debtor but the projector who made use of the
      money. When a banker had even made this discovery, he might sometimes make
      it too late, and might find that he had already discounted the bills of
      those projectors to so great an extent, that, by refusing to discount any
      more, he would necessarily make them all bankrupts; and thus by ruining
      them, might perhaps ruin himself. For his own interest and safety,
      therefore, he might find it necessary, in this very perilous situation, to
      go on for some time, endeavouring, however, to withdraw gradually, and,
      upon that account, making every day greater and greater difficulties about
      discounting, in order to force these projectors by degrees to have
      recourse, either to other bankers, or to other methods of raising money:
      so as that he himself might, as soon as possible, get out of the circle.
      The difficulties, accordingly, which the Bank of England, which the
      principal bankers in London, and which even the more prudent Scotch banks
      began, after a certain time, and when all of them had already gone too
      far, to make about discounting, not only alarmed, but enraged, in the
      highest degree, those projectors. Their own distress, of which this
      prudent and necessary reserve of the banks was, no doubt, the immediate
      occasion, they called the distress of the country; and this distress of
      the country, they said, was altogether owing to the ignorance,
      pusillanimity, and bad conduct of the banks, which did not give a
      sufficiently liberal aid to the spirited undertakings of those who exerted
      themselves in order to beautify, improve, and enrich the country. It was
      the duty of the banks, they seemed to think, to lend for as long a time,
      and to as great an extent, as they might wish to borrow. The banks,
      however, by refusing in this manner to give more credit to those to whom
      they had already given a great deal too much, took the only method by
      which it was now possible to save either their own credit, or the public
      credit of the country.
    
      In the midst of this clamour and distress, a new bank was established in
      Scotland, for the express purpose of relieving the distress of the
      country. The design was generous; but the execution was imprudent, and the
      nature and causes of the distress which it meant to relieve, were not,
      perhaps, well understood. This bank was more liberal than any other had
      ever been, both in granting cash-accounts, and in discounting bills of
      exchange. With regard to the latter, it seems to have made scarce any
      distinction between real and circulating bills, but to have discounted all
      equally. It was the avowed principle of this bank to advance upon any
      reasonable security, the whole capital which was to be employed in those
      improvements of which the returns are the most slow and distant, such as
      the improvements of land. To promote such improvements was even said to be
      the chief of the public-spirited purposes for which it was instituted. By
      its liberality in granting cash-accounts, and in discounting bills of
      exchange, it, no doubt, issued great quantities of its bank notes. But
      those bank notes being, the greater part of them, over and above what the
      circulation of the country could easily absorb and employ, returned upon
      it, in order to be exchanged for gold and silver, as fast as they were
      issued. Its coffers were never well filled. The capital which had been
      subscribed to this bank, at two different subscriptions, amounted to one
      hundred and sixty thousand pounds, of which eighty per cent. only was paid
      up. This sum ought to have been paid in at several different instalments.
      A great part of the proprietors, when they paid in their first instalment,
      opened a cash-account with the bank; and the directors, thinking
      themselves obliged to treat their own proprietors with the same liberality
      with which they treated all other men, allowed many of them to borrow upon
      this cash-account what they paid in upon all their subsequent instalments.
      Such payments, therefore, only put into one coffer what had the moment
      before been taken out of another. But had the coffers of this bank been
      filled ever so well, its excessive circulation must have emptied them
      faster than they could have been replenished by any other expedient but
      the ruinous one of drawing upon London; and when the bill became due,
      paying it, together with interest and commission, by another draught upon
      the same place. Its coffers having been filled so very ill, it is said to
      have been driven to this resource within a very few months after it began
      to do business. The estates of the proprietors of this bank were worth
      several millions, and, by their subscription to the original bond or
      contract of the bank, were really pledged for answering all its
      engagements. By means of the great credit which so great a pledge
      necessarily gave it, it was, notwithstanding its too liberal conduct,
      enabled to carry on business for more than two years. When it was obliged
      to stop, it had in the circulation about two hundred thousand pounds in
      bank notes. In order to support the circulation of those notes, which were
      continually returning upon it as fast as they were issued, it had been
      constantly in the practice of drawing bills of exchange upon London, of
      which the number and value were continually increasing, and, when it
      stopt, amounted to upwards of six hundred thousand pounds. This bank,
      therefore, had, in little more than the course of two years, advanced to
      different people upwards of eight hundred thousand pounds at five per
      cent. Upon the two hundred thousand pounds which it circulated in bank
      notes, this five per cent. might perhaps be considered as a clear gain,
      without any other deduction besides the expense of management. But upon
      upwards of six hundred thousand pounds, for which it was continually
      drawing bills of exchange upon London, it was paying, in the way of
      interest and commission, upwards of eight per cent. and was consequently
      losing more than three per cent. upon more than three fourths of all its
      dealings.
    
      The operations of this bank seem to have produced effects quite opposite
      to those which were intended by the particular persons who planned and
      directed it. They seem to have intended to support the spirited
      undertakings, for as such they considered them, which were at that time
      carrying on in different parts of the country; and, at the same time, by
      drawing the whole banking business to themselves, to supplant all the
      other Scotch banks, particularly those established at Edinburgh, whose
      backwardness in discounting bills of exchange had given some offence. This
      bank, no doubt, gave some temporary relief to those projectors, and
      enabled them to carry on their projects for about two years longer than
      they could otherwise have done. But it thereby only enabled them to get so
      much deeper into debt; so that, when ruin came, it fell so much the
      heavier both upon them and upon their creditors. The operations of this
      bank, therefore, instead of relieving, in reality aggravated in the
      long-run the distress which those projectors had brought both upon
      themselves and upon their country. It would have been much better for
      themselves, their creditors, and their country, had the greater part of
      them been obliged to stop two years sooner than they actually did. The
      temporary relief, however, which this bank afforded to those projectors,
      proved a real and permanent relief to the other Scotch banks. All the
      dealers in circulating bills of exchange, which those other banks had
      become so backward in discounting, had recourse to this new bank, where
      they were received with open arms. Those other banks, therefore, were
      enabled to get very easily out of that fatal circle, from which they could
      not otherwise have disengaged themselves without incurring a considerable
      loss, and perhaps, too, even some degree of discredit.
    
      In the long-run, therefore, the operations of this bank increased the real
      distress of the country, which it meant to relieve; and effectually
      relieved, from a very great distress, those rivals whom it meant to
      supplant.
    
      At the first setting out of this bank, it was the opinion of some people,
      that how fast soever its coffers might be emptied, it might easily
      replenish them, by raising money upon the securities of those to whom it
      had advanced its paper. Experience, I believe, soon convinced them that
      this method of raising money was by much too slow to answer their purpose;
      and that coffers which originally were so ill filled, and which emptied
      themselves so very fast, could be replenished by no other expedient but
      the ruinous one of drawing bills upon London, and when they became due,
      paying them by other draughts on the same place, with accumulated interest
      and commission. But though they had been able by this method to raise
      money as fast as they wanted it, yet, instead of making a profit, they
      must have suffered a loss of every such operation; so that in the long-run
      they must have ruined themselves as a mercantile company, though perhaps
      not so soon as by the more expensive practice of drawing and redrawing.
      They could still have made nothing by the interest of the paper, which,
      being over and above what the circulation of the country could absorb and
      employ, returned upon them in order to be exchanged for gold and silver,
      as fast as they issued it; and for the payment of which they were
      themselves continually obliged to borrow money. On the contrary, the whole
      expense of this borrowing, of employing agents to look out for people who
      had money to lend, of negotiating with those people, and of drawing the
      proper bond or assignment, must have fallen upon them, and have been so
      much clear loss upon the balance of their accounts. The project of
      replenishing their coffers in this manner may be compared to that of a man
      who had a water-pond from which a stream was continually running out, and
      into which no stream was continually running, but who proposed to keep it
      always equally full, by employing a number of people to go continually
      with buckets to a well at some miles distance, in order to bring water to
      replenish it.
    
      But though this operation had proved not only practicable, but profitable
      to the bank, as a mercantile company; yet the country could have derived
      no benefit front it, but, on the contrary, must have suffered a very
      considerable loss by it. This operation could not augment, in the smallest
      degree, the quantity of money to be lent. It could only have erected this
      bank into a sort of general loan office for the whole country. Those who
      wanted to borrow must have applied to this bank, instead of applying to
      the private persons who had lent it their money. But a bank which lends
      money, perhaps to five hundred different people, the greater part of whom
      its directors can know very little about, is not likely to be more
      judicious in the choice of its debtors than a private person who lends out
      his money among a few people whom he knows, and in whose sober and frugal
      conduct he thinks he has good reason to confide. The debtors of such a
      bank as that whose conduct I have been giving some account of were likely,
      the greater part of them, to be chimerical projectors, the drawers and
      redrawers of circulating bills of exchange, who would employ the money in
      extravagant undertakings, which, with all the assistance that could be
      given them, they would probably never be able to complete, and which, if
      they should be completed, would never repay the expense which they had
      really cost, would never afford a fund capable of maintaining a quantity
      of labour equal to that which had been employed about them. The sober and
      frugal debtors of private persons, on the contrary, would be more likely
      to employ the money borrowed in sober undertakings which were proportioned
      to their capitals, and which, though they might have less of the grand and
      the marvellous, would have more of the solid and the profitable; which
      would repay with a large profit whatever had been laid out upon them, and
      which would thus afford a fund capable of maintaining a much greater
      quantity of labour than that which had been employed about them. The
      success of this operation, therefore, without increasing in the smallest
      degree the capital of the country, would only have transferred a great
      part of it from prudent and profitable to imprudent and unprofitable
      undertakings.
    
      That the industry of Scotland languished for want of money to employ it,
      was the opinion of the famous Mr Law. By establishing a bank of a
      particular kind, which he seems to have imagined might issue paper to the
      amount of the whole value of all the lands in the country, he proposed to
      remedy this want of money. The parliament of Scotland, when he first
      proposed his project, did not think proper to adopt it. It was afterwards
      adopted, with some variations, by the Duke of Orleans, at that time regent
      of France. The idea of the possibility of multiplying paper money to
      almost any extent was the real foundation of what is called the
      Mississippi scheme, the most extravagant project, both of banking and
      stock-jobbing, that perhaps the world ever saw. The different operations
      of this scheme are explained so fully, so clearly, and with so much order
      and distinctness, by Mr Du Verney, in his Examination of the Political
      Reflections upon commerce and finances of Mr Du Tot, that I shall not give
      any account of them. The principles upon which it was founded are
      explained by Mr Law himself, in a discourse concerning money and trade,
      which he published in Scotland when he first proposed his project. The
      splendid but visionary ideas which are set forth in that and some other
      works upon the same principles, still continue to make an impression upon
      many people, and have, perhaps, in part, contributed to that excess of
      banking, which has of late been complained of, both in Scotland and in
      other places.
    
      The Bank of England is the greatest bank of circulation in Europe. It was
      incorporated, in pursuance of an act of parliament, by a charter under the
      great seal, dated the 27th of July 1694. It at that time advanced to
      government the sum of £1,200,000 for an annuity of £100,000, or for £
      96,000 a-year, interest at the rate of eight per cent. and £4,000 year for
      the expense of management. The credit of the new government, established
      by the Revolution, we may believe, must have been very low, when it was
      obliged to borrow at so high an interest.
    
      In 1697, the bank was allowed to enlarge its capital stock, by an
      ingraftment of £1,001,171:10s. Its whole capital stock, therefore,
      amounted at this time to £2,201,171: 10s. This ingraftment is said to have
      been for the support of public credit. In 1696, tallies had been at forty,
      and fifty, and sixty, per cent. discount, and bank notes at twenty per
      cent. {James Postlethwaite’s History of the Public Revenue, p.301.} During
      the great re-coinage of the silver, which was going on at this time, the
      bank had thought proper to discontinue the payment of its notes, which
      necessarily occasioned their discredit.
    
      In pursuance of the 7th Anne, c. 7, the bank advanced and paid into the
      exchequer the sum of £400,000; making in all the sum of £1,600,000, which
      it had advanced upon its original annuity of £96,000 interest, and £4,000
      for expense of management. In 1708, therefore, the credit of government
      was as good as that of private persons, since it could borrow at six per
      cent. interest, the common legal and market rate of those times. In
      pursuance of the same act, the bank cancelled exchequer bills to the
      amount of £ 1,775,027: 17s: 10½d. at six per cent. interest, and was at
      the same time allowed to take in subscriptions for doubling its capital.
      In 1703, therefore, the capital of the bank amounted to £4,402,343; and it
      had advanced to government the sum of £3,375,027:17:10½d.
    
      By a call of fifteen per cent. in 1709, there was paid in, and made stock,
      £ 656,204:1:9d.; and by another of ten per cent. in 1710, £501,448:12:11d.
      In consequence of those two calls, therefore, the bank capital amounted to
      £ 5,559,995:14:8d.
    
      In pursuance of the 3rd George I. c.8, the bank delivered up two millions
      of exchequer Bills to be cancelled. It had at this time, therefore,
      advanced to government £5,375,027:17 10d. In pursuance of the 8th George
      I. c.21, the bank purchased of the South-sea company, stock to the amount
      of £4,000,000: and in 1722, in consequence of the subscriptions which it
      had taken in for enabling it to make this purchase, its capital stock was
      increased by £ 3,400,000. At this time, therefore, the bank had advanced
      to the public £ 9,375,027 17s. 10½d.; and its capital stock amounted only
      to £ 8,959,995:14:8d. It was upon this occasion that the sum which the
      bank had advanced to the public, and for which it received interest, began
      first to exceed its capital stock, or the sum for which it paid a dividend
      to the proprietors of bank stock; or, in other words, that the bank began
      to have an undivided capital, over and above its divided one. It has
      continued to have an undivided capital of the same kind ever since. In
      1746, the bank had, upon different occasions, advanced to the public
      £11,686,800, and its divided capital had been raised by different calls
      and subscriptions to £ 10,780,000. The state of those two sums has
      continued to be the same ever since. In pursuance of the 4th of George
      III. c.25, the bank agreed to pay to government for the renewal of its
      charter £110,000, without interest or re-payment. This sum, therefore did
      not increase either of those two other sums.
    
      The dividend of the bank has varied according to the variations in the
      rate of the interest which it has, at different times, received for the
      money it had advanced to the public, as well as according to other
      circumstances. This rate of interest has gradually been reduced from eight
      to three per cent. For some years past, the bank dividend has been at five
      and a half per cent.
    
      The stability of the bank of England is equal to that of the British
      government. All that it has advanced to the public must be lost before its
      creditors can sustain any loss. No other banking company in England can be
      established by act of parliament, or can consist of more than six members.
      It acts, not only as an ordinary bank, but as a great engine of state. It
      receives and pays the greater part of the annuities which are due to the
      creditors of the public; it circulates exchequer bills; and it advances to
      government the annual amount of the land and malt taxes, which are
      frequently not paid up till some years thereafter. In these different
      operations, its duty to the public may sometimes have obliged it, without
      any fault of its directors, to overstock the circulation with paper money.
      It likewise discounts merchants’ bills, and has, upon several different
      occasions, supported the credit of the principal houses, not only of
      England, but of Hamburgh and Holland. Upon one occasion, in 1763, it is
      said to have advanced for this purpose, in one week, about £1,600,000, a
      great part of it in bullion. I do not, however, pretend to warrant either
      the greatness of the sum, or the shortness of the time. Upon other
      occasions, this great company has been reduced to the necessity of paying
      in sixpences.
    
      It is not by augmenting the capital of the country, but by rendering a
      greater part of that capital active and productive than would otherwise be
      so, that the most judicious operations of banking can increase the
      industry of the country. That part of his capital which a dealer is
      obliged to keep by him unemployed and in ready money, for answering
      occasional demands, is so much dead stock, which, so long as it remains in
      this situation, produces nothing, either to him or to his country. The
      judicious operations of banking enable him to convert this dead stock into
      active and productive stock; into materials to work upon; into tools to
      work with; and into provisions and subsistence to work for; into stock
      which produces something both to himself and to his country. The gold and
      silver money which circulates in any country, and by means of which, the
      produce of its land and labour is annually circulated and distributed to
      the proper consumers, is, in the same manner as the ready money of the
      dealer, all dead stock. It is a very valuable part of the capital of the
      country, which produces nothing to the country. The judicious operations
      of banking, by substituting paper in the room of a great part of this gold
      and silver, enable the country to convert a great part of this dead stock
      into active and productive stock; into stock which produces something to
      the country. The gold and silver money which circulates in any country may
      very properly be compared to a highway, which, while it circulates and
      carries to market all the grass and corn of the country, produces itself
      not a single pile of either. The judicious operations of banking, by
      providing, if I may be allowed so violent a metaphor, a sort of waggon-way
      through the air, enable the country to convert, as it were, a great part
      of its highways into good pastures, and corn fields, and thereby to
      increase, very considerably, the annual produce of its land and labour.
      The commerce and industry of the country, however, it must be
      acknowledged, though they may be somewhat augmented, cannot be altogether
      so secure, when they are thus, as it were, suspended upon the Daedalian
      wings of paper money, as when they travel about upon the solid ground of
      gold and silver. Over and above the accidents to which they are exposed
      from the unskilfulness of the conductors of this paper money, they are
      liable to several others, from which no prudence or skill of those
      conductors can guard them.
    
      An unsuccessful war, for example, in which the enemy got possession of the
      capital, and consequently of that treasure which supported the credit of
      the paper money, would occasion a much greater confusion in a country
      where the whole circulation was carried on by paper, than in one where the
      greater part of it was carried on by gold and silver. The usual instrument
      of commerce having lost its value, no exchanges could be made but either
      by barter or upon credit. All taxes having been usually paid in paper
      money, the prince would not have wherewithal either to pay his troops, or
      to furnish his magazines; and the state of the country would be much more
      irretrievable than if the greater part of its circulation had consisted in
      gold and silver. A prince, anxious to maintain his dominions at all times
      in the state in which he can most easily defend them, ought upon this
      account to guard not only against that excessive multiplication of paper
      money which ruins the very banks which issue it, but even against that
      multiplication of it which enables them to fill the greater part of the
      circulation of the country with it.
    
      The circulation of every country may be considered as divided into two
      different branches; the circulation of the dealers with one another, and
      the circulation between the dealers and the consumers. Though the same
      pieces of money, whether paper or metal, may be employed sometimes in the
      one circulation and sometimes in the other; yet as both are constantly
      going on at the same time, each requires a certain stock of money, of one
      kind or another, to carry it on. The value of the goods circulated between
      the different dealers never can exceed the value of those circulated
      between the dealers and the consumers; whatever is bought by the dealers
      being ultimately destined to be sold to the consumers. The circulation
      between the dealers, as it is carried on by wholesale, requires generally
      a pretty large sum for every particular transaction. That between the
      dealers and the consumers, on the contrary, as it is generally carried on
      by retail, frequently requires but very small ones, a shilling, or even a
      halfpenny, being often sufficient. But small sums circulate much faster
      than large ones. A shilling changes masters more frequently than a guinea,
      and a halfpenny more frequently than a shilling. Though the annual
      purchases of all the consumers, therefore, are at least equal in value to
      those of all the dealers, they can generally be transacted with a much
      smaller quantity of money; the same pieces, by a more rapid circulation,
      serving as the instrument of many more purchases of the one kind than of
      the other.
    
      Paper money may be so regulated as either to confine itself very much to
      the circulation between the different dealers, or to extend itself
      likewise to a great part of that between the dealers and the consumers.
      Where no bank notes are circulated under £10 value, as in London, paper
      money confines itself very much to the circulation between the dealers.
      When a ten pound bank note comes into the hands of a consumer, he is
      generally obliged to change it at the first shop where he has occasion to
      purchase five shillings worth of goods; so that it often returns into the
      hands of a dealer before the consumer has spent the fortieth part of the
      money. Where bank notes are issued for so small sums as 20s. as in
      Scotland, paper money extends itself to a considerable part of the
      circulation between dealers and consumers. Before the Act of parliament
      which put a stop to the circulation of ten and five shilling notes, it
      filled a still greater part of that circulation. In the currencies of
      North America, paper was commonly issued for so small a sum as a shilling,
      and filled almost the whole of that circulation. In some paper currencies
      of Yorkshire, it was issued even for so small a sum as a sixpence.
    
      Where the issuing of bank notes for such very small sums is allowed, and
      commonly practised, many mean people are both enabled and encouraged to
      become bankers. A person whose promissory note for £5, or even for 20s.
      would be rejected by every body, will get it to be received without
      scruple when it is issued for so small a sum as a sixpence. But the
      frequent bankruptcies to which such beggarly bankers must be liable, may
      occasion a very considerable inconveniency, and sometimes even a very
      great calamity, to many poor people who had received their notes in
      payment.
    
      It were better, perhaps, that no bank notes were issued in any part of the
      kingdom for a smaller sum than £5. Paper money would then, probably,
      confine itself, in every part of the kingdom, to the circulation between
      the different dealers, as much as it does at present in London, where no
      bank notes are issued under £10 value; £5 being, in most part of the
      kingdom, a sum which, though it will purchase, perhaps, little more than
      half the quantity of goods, is as much considered, and is as seldom spent
      all at once, as £10 are amidst the profuse expense of London.
    
      Where paper money, it is to be observed, is pretty much confined to the
      circulation between dealers and dealers, as at London, there is always
      plenty of gold and silver. Where it extends itself to a considerable part
      of the circulation between dealers and consumers, as in Scotland, and
      still more in North America, it banishes gold and silver almost entirely
      from the country; almost all the ordinary transactions of its interior
      commerce being thus carried on by paper. The suppression of ten and five
      shilling bank notes, somewhat relieved the scarcity of gold and silver in
      Scotland; and the suppression of twenty shilling notes will probably
      relieve it still more. Those metals are said to have become more abundant
      in America, since the suppression of some of their paper currencies. They
      are said, likewise, to have been more abundant before the institution of
      those currencies.
    
      Though paper money should be pretty much confined to the circulation
      between dealers and dealers, yet banks and bankers might still be able to
      give nearly the same assistance to the industry and commerce of the
      country, as they had done when paper money filled almost the whole
      circulation. The ready money which a dealer is obliged to keep by him, for
      answering occasional demands, is destined altogether for the circulation
      between himself and other dealers of whom he buys goods. He has no
      occasion to keep any by him for the circulation between himself and the
      consumers, who are his customers, and who bring ready money to him,
      instead of taking any from him. Though no paper money, therefore, was
      allowed to be issued, but for such sums as would confine it pretty much to
      the circulation between dealers and dealers; yet partly by discounting
      real bills of exchange, and partly by lending upon cash-accounts, banks
      and bankers might still be able to relieve the greater part of those
      dealers from the necessity of keeping any considerable part of their stock
      by them unemployed, and in ready money, for answering occasional demands.
      They might still be able to give the utmost assistance which banks and
      bankers can with propriety give to traders of every kind.
    
      To restrain private people, it may be said, from receiving in payment the
      promissory notes of a banker for any sum, whether great or small, when
      they themselves are willing to receive them; or, to restrain a banker from
      issuing such notes, when all his neighbours are willing to accept of them,
      is a manifest violation of that natural liberty, which it is the proper
      business of law not to infringe, but to support. Such regulations may, no
      doubt, be considered as in some respect a violation of natural liberty.
      But those exertions of the natural liberty of a few individuals, which
      might endanger the security of the whole society, are, and ought to be,
      restrained by the laws of all governments; of the most free, as well as or
      the most despotical. The obligation of building party walls, in order to
      prevent the communication of fire, is a violation of natural liberty,
      exactly of the same kind with the regulations of the banking trade which
      are here proposed.
    
      A paper money, consisting in bank notes, issued by people of undoubted
      credit, payable upon demand, without any condition, and, in fact, always
      readily paid as soon as presented, is, in every respect, equal in value to
      gold and silver money, since gold and silver money can at anytime be had
      for it. Whatever is either bought or sold for such paper, must necessarily
      be bought or sold as cheap as it could have been for gold and silver.
    
      The increase of paper money, it has been said, by augmenting the quantity,
      and consequently diminishing the value, of the whole currency, necessarily
      augments the money price of commodities. But as the quantity of gold and
      silver, which is taken from the currency, is always equal to the quantity
      of paper which is added to it, paper money does not necessarily increase
      the quantity of the whole currency. From the beginning of the last century
      to the present time, provisions never were cheaper in Scotland than in
      1759, though, from the circulation of ten and five shilling bank notes,
      there was then more paper money in the country than at present. The
      proportion between the price of provisions in Scotland and that in England
      is the same now as before the great multiplication of banking companies in
      Scotland. Corn is, upon most occasions, fully as cheap in England as in
      France, though there is a great deal of paper money in England, and scarce
      any in France. In 1751 and 1752, when Mr Hume published his Political
      Discourses, and soon after the great multiplication of paper money in
      Scotland, there was a very sensible rise in the price of provisions,
      owing, probably, to the badness of the seasons, and not to the
      multiplication of paper money.
    
      It would be otherwise, indeed, with a paper money, consisting in
      promissory notes, of which the immediate payment depended, in any respect,
      either upon the good will of those who issued them, or upon a condition
      which the holder of the notes might not always have it in his power to
      fulfil, or of which the payment was not exigible till after a certain
      number of years, and which, in the mean time, bore no interest. Such a
      paper money would, no doubt, fall more or less below the value of gold and
      silver, according as the difficulty or uncertainty of obtaining immediate
      payment was supposed to be greater or less, or according to the greater or
      less distance of time at which payment was exigible.
    
      Some years ago the different banking companies of Scotland were in the
      practice of inserting into their bank notes, what they called an optional
      clause; by which they promised payment to the bearer, either as soon as
      the note should be presented, or, in the option of the directors, six
      months after such presentment, together with the legal interest for the
      said six months. The directors of some of those banks sometimes took
      advantage of this optional clause, and sometimes threatened those who
      demanded gold and silver in exchange for a considerable number of their
      notes, that they would take advantage of it, unless such demanders would
      content themselves with a part of what they demanded. The promissory notes
      of those banking companies constituted, at that time, the far greater part
      of the currency of Scotland, which this uncertainty of payment necessarily
      degraded below value of gold and silver money. During the continuance of
      this abuse (which prevailed chiefly in 1762, 1763, and 1764), while the
      exchange between London and Carlisle was at par, that between London and
      Dumfries would sometimes be four per cent. against Dumfries, though this
      town is not thirty miles distant from Carlisle. But at Carlisle, bills
      were paid in gold and silver; whereas at Dumfries they were paid in Scotch
      bank notes; and the uncertainty of getting these bank notes exchanged for
      gold and silver coin, had thus degraded them four per cent. below the
      value of that coin. The same act of parliament which suppressed ten and
      five shilling bank notes, suppressed likewise this optional clause, and
      thereby restored the exchange between England and Scotland to its natural
      rate, or to what the course of trade and remittances might happen to make
      it.
    
      In the paper currencies of Yorkshire, the payment of so small a sum as 6d.
      sometimes depended upon the condition, that the holder of the note should
      bring the change of a guinea to the person who issued it; a condition
      which the holders of such notes might frequently find it very difficult to
      fulfil, and which must have degraded this currency below the value of gold
      and silver money. An act of parliament, accordingly, declared all such
      clauses unlawful, and suppressed, in the same manner as in Scotland, all
      promissory notes, payable to the bearer, under 20s. value.
    
      The paper currencies of North America consisted, not in bank notes payable
      to the bearer on demand, but in a government paper, of which the payment
      was not exigible till several years after it was issued; and though the
      colony governments paid no interest to the holders of this paper, they
      declared it to be, and in fact rendered it, a legal tender of payment for
      the full value for which it was issued. But allowing the colony security
      to be perfectly good, £100, payable fifteen years hence, for example, in a
      country where interest is at six per cent., is worth little more than £40
      ready money. To oblige a creditor, therefore, to accept of this as full
      payment for a debt of £100, actually paid down in ready money, was an act
      of such violent injustice, as has scarce, perhaps, been attempted by the
      government of any other country which pretended to be free. It bears the
      evident marks of having originally been, what the honest and downright
      Doctor Douglas assures us it was, a scheme of fraudulent debtors to cheat
      their creditors. The government of Pennsylvania, indeed, pretended, upon
      their first emission of paper money, in 1722, to render their paper of
      equal value with gold and silver, by enacting penalties against all those
      who made any difference in the price of their goods when they sold them
      for a colony paper, and when they sold them for gold and silver, a
      regulation equally tyrannical, but much less, effectual, than that which
      it was meant to support. A positive law may render a shilling a legal
      tender for a guinea, because it may direct the courts of justice to
      discharge the debtor who has made that tender; but no positive law can
      oblige a person who sells goods, and who is at liberty to sell or not to
      sell as he pleases, to accept of a shilling as equivalent to a guinea in
      the price of them. Notwithstanding any regulation of this kind, it
      appeared, by the course of exchange with Great Britain, that £100 sterling
      was occasionally considered as equivalent, in some of the colonies, to
      £130, and in others to so great a sum as £1100 currency; this difference
      in the value arising from the difference in the quantity of paper emitted
      in the different colonies, and in the distance and probability of the term
      of its final discharge and redemption.
    
      No law, therefore, could be more equitable than the act of parliament, so
      unjustly complained of in the colonies, which declared, that no paper
      currency to be emitted there in time coming, should be a legal tender of
      payment.
    
      Pennsylvania was always more moderate in its emissions of paper money than
      any other of our colonies. Its paper currency, accordingly, is said never
      to have sunk below the value of the gold and silver which was current in
      the colony before the first emission of its paper money. Before that
      emission, the colony had raised the denomination of its coin, and had, by
      act of assembly, ordered 5s. sterling to pass in the colonies for 6s:3d.,
      and afterwards for 6s:8d. A pound, colony currency, therefore, even when
      that currency was gold and silver, was more than thirty per cent. below
      the value of £1 sterling; and when that currency was turned into paper, it
      was seldom much more than thirty per cent. below that value. The pretence
      for raising the denomination of the coin was to prevent the exportation of
      gold and silver, by making equal quantities of those metals pass for
      greater sums in the colony than they did in the mother country. It was
      found, however, that the price of all goods from the mother country rose
      exactly in proportion as they raised the denomination of their coin, so
      that their gold and silver were exported as fast as ever.
    
      The paper of each colony being received in the payment of the provincial
      taxes, for the full value for which it had been issued, it necessarily
      derived from this use some additional value, over and above what it would
      have had, from the real or supposed distance of the term of its final
      discharge and redemption. This additional value was greater or less,
      according as the quantity of paper issued was more or less above what
      could be employed in the payment of the taxes of the particular colony
      which issued it. It was in all the colonies very much above what could be
      employed in this manner.
    
      A prince, who should enact that a certain proportion of his taxes should
      be paid in a paper money of a certain kind, might thereby give a certain
      value to this paper money, even though the term of its final discharge and
      redemption should depend altogether upon the will of the prince. If the
      bank which issued this paper was careful to keep the quantity of it always
      somewhat below what could easily be employed in this manner, the demand
      for it might be such as to make it even bear a premium, or sell for
      somewhat more in the market than the quantity of gold or silver currency
      for which it was issued. Some people account in this manner for what is
      called the agio of the bank of Amsterdam, or for the superiority of bank
      money over current money, though this bank money, as they pretend, cannot
      be taken out of the bank at the will of the owner. The greater part of
      foreign bills of exchange must be paid in bank money, that is, by a
      transfer in the books of the bank; and the directors of the bank, they
      allege, are careful to keep the whole quantity of bank money always below
      what this use occasions a demand for. It is upon this account, they say,
      the bank money sells for a premium, or bears an agio of four or five per
      cent. above the same nominal sum of the gold and silver currency of the
      country. This account of the bank of Amsterdam, however, it will appear
      hereafter, is in a great measure chimerical.
    
      A paper currency which falls below the value of gold and silver coin, does
      not thereby sink the value of those metals, or occasion equal quantities
      of them to exchange for a smaller quantity of goods of any other kind. The
      proportion between the value of gold and silver and that of goods of any
      other kind, depends in all cases, not upon the nature and quantity of any
      particular paper money, which may be current in any particular country,
      but upon the richness or poverty of the mines, which happen at any
      particular time to supply the great market of the commercial world with
      those metals. It depends upon the proportion between the quantity of
      labour which is necessary in order to bring a certain quantity of gold and
      silver to market, and that which is necessary in order to bring thither a
      certain quantity of any other sort of goods.
    
      If bankers are restrained from issuing any circulating bank notes, or
      notes payable to the bearer, for less than a certain sum; and if they are
      subjected to the obligation of an immediate and unconditional payment of
      such bank notes as soon as presented, their trade may, with safety to the
      public, be rendered in all other respects perfectly free. The late
      multiplication of banking companies in both parts of the united kingdom,
      an event by which many people have been much alarmed, instead of
      diminishing, increases the security of the public. It obliges all of them
      to be more circumspect in their conduct, and, by not extending their
      currency beyond its due proportion to their cash, to guard themselves
      against those malicious runs, which the rivalship of so many competitors
      is always ready to bring upon them. It restrains the circulation of each
      particular company within a narrower circle, and reduces their circulating
      notes to a smaller number. By dividing the whole circulation into a
      greater number of parts, the failure of any one company, an accident
      which, in the course of things, must sometimes happen, becomes of less
      consequence to the public. This free competition, too, obliges all bankers
      to be more liberal in their dealings with their customers, lest their
      rivals should carry them away. In general, if any branch of trade, or any
      division of labour, be advantageous to the public, the freer and more
      general the competition, it will always be the more so.
    


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


    
      There is one sort of labour which adds to the value of the subject upon
      which it is bestowed; there is another which has no such effect. The
      former as it produces a value, may be called productive, the latter,
      unproductive labour. {Some French authors of great learning and ingenuity
      have used those words in a different sense. In the last chapter of the
      fourth book, I shall endeavour to shew that their sense is an improper
      one.} Thus the labour of a manufacturer adds generally to the value of the
      materials which he works upon, that of his own maintenance, and of his
      master’s profit. The labour of a menial servant, on the contrary, adds to
      the value of nothing. Though the manufacturer has his wages advanced to
      him by his master, he in reality costs him no expense, the value of those
      wages being generally restored, together with a profit, in the improved
      value of the subject upon which his labour is bestowed. But the
      maintenance of a menial servant never is restored. A man grows rich by
      employing a multitude of manufacturers; he grows poor by maintaining a
      multitude or menial servants. The labour of the latter, however, has its
      value, and deserves its reward as well as that of the former. But the
      labour of the manufacturer fixes and realizes itself in some particular
      subject or vendible commodity, which lasts for some time at least after
      that labour is past. It is, as it were, a certain quantity of labour
      stocked and stored up, to be employed, if necessary, upon some other
      occasion. That subject, or, what is the same thing, the price of that
      subject, can afterwards, if necessary, put into motion a quantity of
      labour equal to that which had originally produced it. The labour of the
      menial servant, on the contrary, does not fix or realize itself in any
      particular subject or vendible commodity. His services generally perish in
      the very instant of their performance, and seldom leave any trace of value
      behind them, for which an equal quantity of service could afterwards be
      procured.
    
      The labour of some of the most respectable orders in the society is, like
      that of menial servants, unproductive of any value, and does not fix or
      realize itself in any permanent subject, or vendible commodity, which
      endures after that labour is past, and for which an equal quantity of
      labour could afterwards be procured. The sovereign, for example, with all
      the officers both of justice and war who serve under him, the whole army
      and navy, are unproductive labourers. They are the servants of the public,
      and are maintained by a part of the annual produce of the industry of
      other people. Their service, how honourable, how useful, or how necessary
      soever, produces nothing for which an equal quantity of service can
      afterwards be procured. The protection, security, and defence, of the
      commonwealth, the effect of their labour this year, will not purchase its
      protection, security, and defence, for the year to come. In the same class
      must be ranked, some both of the gravest and most important, and some of
      the most frivolous professions; churchmen, lawyers, physicians, men of
      letters of all kinds; players, buffoons, musicians, opera-singers,
      opera-dancers, etc. The labour of the meanest of these has a certain
      value, regulated by the very same principles which regulate that of every
      other sort of labour; and that of the noblest and most useful, produces
      nothing which could afterwards purchase or procure an equal quantity of
      labour. Like the declamation of the actor, the harangue of the orator, or
      the tune of the musician, the work of all of them perishes in the very
      instant of its production.
    
      Both productive and unproductive labourers, and those who do not labour at
      all, are all equally maintained by the annual produce of the land and
      labour of the country. This produce, how great soever, can never be
      infinite, but must have certain limits. According, therefore, as a smaller
      or greater proportion of it is in any one year employed in maintaining
      unproductive hands, the more in the one case, and the less in the other,
      will remain for the productive, and the next year’s produce will be
      greater or smaller accordingly; the whole annual produce, if we except the
      spontaneous productions of the earth, being the effect of productive
      labour.
    
      Though the whole annual produce of the land and labour of every country is
      no doubt ultimately destined for supplying the consumption of its
      inhabitants, and for procuring a revenue to them; yet when it first comes
      either from the ground, or from the hands of the productive labourers, it
      naturally divides itself into two parts. One of them, and frequently the
      largest, is, in the first place, destined for replacing a capital, or for
      renewing the provisions, materials, and finished work, which had been
      withdrawn from a capital; the other for constituting a revenue either to
      the owner of this capital, as the profit of his stock, or to some other
      person, as the rent of his land. Thus, of the produce of land, one part
      replaces the capital of the farmer; the other pays his profit and the rent
      of the landlord; and thus constitutes a revenue both to the owner of this
      capital, as the profits of his stock, and to some other person as the rent
      of his land. Of the produce of a great manufactory, in the same manner,
      one part, and that always the largest, replaces the capital of the
      undertaker of the work; the other pays his profit, and thus constitutes a
      revenue to the owner of this capital.
    
      That part of the annual produce of the land and labour of any country
      which replaces a capital, never is immediately employed to maintain any
      but productive hands. It pays the wages of productive labour only. That
      which is immediately destined for constituting a revenue, either as profit
      or as rent, may maintain indifferently either productive or unproductive
      hands.
    
      Whatever part of his stock a man employs as a capital, he always expects
      it to be replaced to him with a profit. He employs it, therefore, in
      maintaining productive hands only; and after having served in the function
      of a capital to him, it constitutes a revenue to them. Whenever he employs
      any part of it in maintaining unproductive hands of any kind, that part is
      from that moment withdrawn from his capital, and placed in his stock
      reserved for immediate consumption.
    
      Unproductive labourers, and those who do not labour at all, are all
      maintained by revenue; either, first, by that part of the annual produce
      which is originally destined for constituting a revenue to some particular
      persons, either as the rent of land, or as the profits of stock; or,
      secondly, by that part which, though originally destined for replacing a
      capital, and for maintaining productive labourers only, yet when it comes
      into their hands, whatever part of it is over and above their necessary
      subsistence, may be employed in maintaining indifferently either
      productive or unproductive hands. Thus, not only the great landlord or the
      rich merchant, but even the common workman, if his wages are considerable,
      may maintain a menial servant; or he may sometimes go to a play or a
      puppet-show, and so contribute his share towards maintaining one set of
      unproductive labourers; or he may pay some taxes, and thus help to
      maintain another set, more honourable and useful, indeed, but equally
      unproductive. No part of the annual produce, however, which had been
      originally destined to replace a capital, is ever directed towards
      maintaining unproductive hands, till after it has put into motion its full
      complement of productive labour, or all that it could put into motion in
      the way in which it was employed. The workman must have earned his wages
      by work done, before he can employ any part of them in this manner. That
      part, too, is generally but a small one. It is his spare revenue only, of
      which productive labourers have seldom a great deal. They generally have
      some, however; and in the payment of taxes, the greatness of their number
      may compensate, in some measure, the smallness of their contribution. The
      rent of land and the profits of stock are everywhere, therefore, the
      principal sources from which unproductive hands derive their subsistence.
      These are the two sorts of revenue of which the owners have generally most
      to spare. They might both maintain indifferently, either productive or
      unproductive hands. They seem, however, to have some predilection for the
      latter. The expense of a great lord feeds generally more idle than
      industrious people. The rich merchant, though with his capital he
      maintains industrious people only, yet by his expense, that is, by the
      employment of his revenue, he feeds commonly the very same sort as the
      great lord.
    
      The proportion, therefore, between the productive and unproductive hands,
      depends very much in every country upon the proportion between that part
      of the annual produce, which, as soon as it comes either from the ground,
      or from the hands of the productive labourers, is destined for replacing a
      capital, and that which is destined for constituting a revenue, either as
      rent or as profit. This proportion is very different in rich from what it
      is in poor countries.
    
      Thus, at present, in the opulent countries of Europe, a very large,
      frequently the largest, portion of the produce of the land, is destined
      for replacing the capital of the rich and independent farmer; the other
      for paying his profits, and the rent of the landlord. But anciently,
      during the prevalency of the feudal government, a very small portion of
      the produce was sufficient to replace the capital employed in cultivation.
      It consisted commonly in a few wretched cattle, maintained altogether by
      the spontaneous produce of uncultivated land, and which might, therefore,
      be considered as a part of that spontaneous produce. It generally, too,
      belonged to the landlord, and was by him advanced to the occupiers of the
      land. All the rest of the produce properly belonged to him too, either as
      rent for his land, or as profit upon this paltry capital. The occupiers of
      land were generally bond-men, whose persons and effects were equally his
      property. Those who were not bond-men were tenants at will; and though the
      rent which they paid was often nominally little more than a quit-rent, it
      really amounted to the whole produce of the land. Their lord could at all
      times command their labour in peace and their service in war. Though they
      lived at a distance from his house, they were equally dependent upon him
      as his retainers who lived in it. But the whole produce of the land
      undoubtedly belongs to him, who can dispose of the labour and service of
      all those whom it maintains. In the present state of Europe, the share of
      the landlord seldom exceeds a third, sometimes not a fourth part of the
      whole produce of the land. The rent of land, however, in all the improved
      parts of the country, has been tripled and quadrupled since those ancient
      times; and this third or fourth part of the annual produce is, it seems,
      three or four times greater than the whole had been before. In the
      progress of improvement, rent, though it increases in proportion to the
      extent, diminishes in proportion to the produce of the land.
    
      In the opulent countries of Europe, great capitals are at present employed
      in trade and manufactures. In the ancient state, the little trade that was
      stirring, and the few homely and coarse manufactures that were carried on,
      required but very small capitals. These, however, must have yielded very
      large profits. The rate of interest was nowhere less than ten per cent.
      and their profits must have been sufficient to afford this great interest.
      At present, the rate of interest, in the improved parts of Europe, is
      nowhere higher than six per cent.; and in some of the most improved, it is
      so low as four, three, and two per cent. Though that part of the revenue
      of the inhabitants which is derived from the profits of stock, is always
      much greater in rich than in poor countries, it is because the stock is
      much greater; in proportion to the stock, the profits are generally much
      less.
    
      That part of the annual produce, therefore, which, as soon as it comes
      either from the ground, or from the hands of the productive labourers, is
      destined for replacing a capital, is not only much greater in rich than in
      poor countries, but bears a much greater proportion to that which is
      immediately destined for constituting a revenue either as rent or as
      profit. The funds destined for the maintenance of productive labour are
      not only much greater in the former than in the latter, but bear a much
      greater proportion to those which, though they may be employed to maintain
      either productive or unproductive hands, have generally a predilection for
      the latter.
    
      The proportion between those different funds necessarily determines in
      every country the general character of the inhabitants as to industry or
      idleness. We are more industrious than our forefathers, because, in the
      present times, the funds destined for the maintenance of industry are much
      greater in proportion to those which are likely to be employed in the
      maintenance of idleness, than they were two or three centuries ago. Our
      ancestors were idle for want of a sufficient encouragement to industry. It
      is better, says the proverb, to play for nothing, than to work for
      nothing. In mercantile and manufacturing towns, where the inferior ranks
      of people are chiefly maintained by the employment of capital, they are in
      general industrious, sober, and thriving; as in many English, and in most
      Dutch towns. In those towns which are principally supported by the
      constant or occasional residence of a court, and in which the inferior
      ranks of people are chiefly maintained by the spending of revenue, they
      are in general idle, dissolute, and poor; as at Rome, Versailles,
      Compeigne, and Fontainbleau. If you except Rouen and Bourdeaux, there is
      little trade or industry in any of the parliament towns of France; and the
      inferior ranks of people, being chiefly maintained by the expense of the
      members of the courts of justice, and of those who come to plead before
      them, are in general idle and poor. The great trade of Rouen and Bourdeaux
      seems to be altogether the effect of their situation. Rouen is necessarily
      the entrepot of almost all the goods which are brought either from foreign
      countries, or from the maritime provinces of France, for the consumption
      of the great city of Paris. Bourdeaux is, in the same manner, the entrepot
      of the wines which grow upon the banks of the Garronne, and of the rivers
      which run into it, one of the richest wine countries in the world, and
      which seems to produce the wine fittest for exportation, or best suited to
      the taste of foreign nations. Such advantageous situations necessarily
      attract a great capital by the great employment which they afford it; and
      the employment of this capital is the cause of the industry of those two
      cities. In the other parliament towns of France, very little more capital
      seems to be employed than what is necessary for supplying their own
      consumption; that is, little more than the smallest capital which can be
      employed in them. The same thing may be said of Paris, Madrid, and Vienna.
      Of those three cities, Paris is by far the most industrious, but Paris
      itself is the principal market of all the manufactures established at
      Paris, and its own consumption is the principal object of all the trade
      which it carries on. London, Lisbon, and Copenhagen, are, perhaps, the
      only three cities in Europe, which are both the constant residence of a
      court, and can at the same time be considered as trading cities, or as
      cities which trade not only for their own consumption, but for that of
      other cities and countries. The situation of all the three is extremely
      advantageous, and naturally fits them to be the entrepots of a great part
      of the goods destined for the consumption of distant places. In a city
      where a great revenue is spent, to employ with advantage a capital for any
      other purpose than for supplying the consumption of that city, is probably
      more difficult than in one in which the inferior ranks of people have no
      other maintenance but what they derive from the employment of such a
      capital. The idleness of the greater part of the people who are maintained
      by the expense of revenue, corrupts, it is probable, the industry of those
      who ought to be maintained by the employment of capital, and renders it
      less advantageous to employ a capital there than in other places. There
      was little trade or industry in Edinburgh before the Union. When the
      Scotch parliament was no longer to be assembled in it, when it ceased to
      be the necessary residence of the principal nobility and gentry of
      Scotland, it became a city of some trade and industry. It still continues,
      however, to be the residence of the principal courts of justice in
      Scotland, of the boards of customs and excise, etc. A considerable
      revenue, therefore, still continues to be spent in it. In trade and
      industry, it is much inferior to Glasgow, of which the inhabitants are
      chiefly maintained by the employment of capital. The inhabitants of a
      large village, it has sometimes been observed, after having made
      considerable progress in manufactures, have become idle and poor, in
      consequence of a great lord’s having taken up his residence in their
      neighbourhood.
    
      The proportion between capital and revenue, therefore, seems everywhere to
      regulate the proportion between industry and idleness Wherever capital
      predominates, industry prevails; wherever revenue, idleness. Every
      increase or diminution of capital, therefore, naturally tends to increase
      or diminish the real quantity of industry, the number of productive hands,
      and consequently the exchangeable value of the annual produce of the land
      and labour of the country, the real wealth and revenue of all its
      inhabitants.
    
      Capitals are increased by parsimony, and diminished by prodigality and
      misconduct.
    
      Whatever a person saves from his revenue he adds to his capital, and
      either employs it himself in maintaining an additional number of
      productive hands, or enables some other person to do so, by lending it to
      him for an interest, that is, for a share of the profits. As the capital
      of an individual can be increased only by what he saves from his annual
      revenue or his annual gains, so the capital of a society, which is the
      same with that of all the individuals who compose it, can be increased
      only in the same manner.
    
      Parsimony, and not industry, is the immediate cause of the increase of
      capital. Industry, indeed, provides the subject which parsimony
      accumulates; but whatever industry might acquire, if parsimony did not
      save and store up, the capital would never be the greater.
    
      Parsimony, by increasing the fund which is destined for the maintenance of
      productive hands, tends to increase the number of those hands whose labour
      adds to the value of the subject upon which it is bestowed. It tends,
      therefore, to increase the exchangeable value of the annual produce of the
      land and labour of the country. It puts into motion an additional quantity
      of industry, which gives an additional value to the annual produce.
    
      What is annually saved, is as regularly consumed as what is annually
      spent, and nearly in the same time too: but it is consumed by a different
      set of people. That portion of his revenue which a rich man annually
      spends, is, in most cases, consumed by idle guests and menial servants,
      who leave nothing behind them in return for their consumption. That
      portion which he annually saves, as, for the sake of the profit, it is
      immediately employed as a capital, is consumed in the same manner, and
      nearly in the same time too, but by a different set of people: by
      labourers, manufacturers, and artificers, who reproduce, with a profit,
      the value of their annual consumption. His revenue, we shall suppose, is
      paid him in money. Had he spent the whole, the food, clothing, and
      lodging, which the whole could have purchased, would have been distributed
      among the former set of people. By saving a part of it, as that part is,
      for the sake of the profit, immediately employed as a capital, either by
      himself or by some other person, the food, clothing, and lodging, which
      may be purchased with it, are necessarily reserved for the latter. The
      consumption is the same, but the consumers are different.
    
      By what a frugal man annually saves, he not only affords maintenance to an
      additional number of productive hands, for that of the ensuing year, but
      like the founder of a public work-house he establishes, as it were, a
      perpetual fund for the maintenance of an equal number in all times to
      come. The perpetual allotment and destination of this fund, indeed, is not
      always guarded by any positive law, by any trust-right or deed of
      mortmain. It is always guarded, however, by a very powerful principle, the
      plain and evident interest of every individual to whom any share of it
      shall ever belong. No part of it can ever afterwards be employed to
      maintain any but productive hands, without an evident loss to the person
      who thus perverts it from its proper destination.
    
      The prodigal perverts it in this manner: By not confining his expense
      within his income, he encroaches upon his capital. Like him who perverts
      the revenues of some pious foundation to profane purposes, he pays the
      wages of idleness with those funds which the frugality of his forefathers
      had, as it were, consecrated to the maintenance of industry. By
      diminishing the funds destined for the employment of productive labour, he
      necessarily diminishes, so far as it depends upon him, the quantity of
      that labour which adds a value to the subject upon which it is bestowed,
      and, consequently, the value of the annual produce of the land and labour
      of the whole country, the real wealth and revenue of its inhabitants. If
      the prodigality of some were not compensated by the frugality of others,
      the conduct of every prodigal, by feeding the idle with the bread of the
      industrious, would tend not only to beggar himself, but to impoverish his
      country.
    
      Though the expense of the prodigal should be altogether in home made, and
      no part of it in foreign commodities, its effect upon the productive funds
      of the society would still be the same. Every year there would still be a
      certain quantity of food and clothing, which ought to have maintained
      productive, employed in maintaining unproductive hands. Every year,
      therefore, there would still be some diminution in what would otherwise
      have been the value of the annual produce of the land and labour of the
      country.
    
      This expense, it may be said, indeed, not being in foreign goods, and not
      occasioning any exportation of gold and silver, the same quantity of money
      would remain in the country as before. But if the quantity of food and
      clothing which were thus consumed by unproductive, had been distributed
      among productive hands, they would have reproduced, together with a
      profit, the full value of their consumption. The same quantity of money
      would, in this case, equally have remained in the country, and there
      would, besides, have been a reproduction of an equal value of consumable
      goods. There would have been two values instead of one.
    
      The same quantity of money, besides, can not long remain in any country in
      which the value of the annual produce diminishes. The sole use of money is
      to circulate consumable goods. By means of it, provisions, materials, and
      finished work, are bought and sold, and distributed to their proper
      consumers. The quantity of money, therefore, which can be annually
      employed in any country, must be determined by the value of the consumable
      goods annually circulated within it. These must consist, either in the
      immediate produce of the land and labour of the country itself, or in
      something which had been purchased with some part of that produce. Their
      value, therefore, must diminish as the value of that produce diminishes,
      and along with it the quantity of money which can be employed in
      circulating them. But the money which, by this annual diminution of
      produce, is annually thrown out of domestic circulation, will not be
      allowed to lie idle. The interest of whoever possesses it requires that it
      should be employed; but having no employment at home, it will, in spite of
      all laws and prohibitions, be sent abroad, and employed in purchasing
      consumable goods, which may be of some use at home. Its annual exportation
      will, in this manner, continue for some time to add something to the
      annual consumption of the country beyond the value of its own annual
      produce. What in the days of its prosperity had been saved from that
      annual produce, and employed in purchasing gold and silver, will
      contribute, for some little time, to support its consumption in adversity.
      The exportation of gold and silver is, in this case, not the cause, but
      the effect of its declension, and may even, for some little time,
      alleviate the misery of that declension.
    
      The quantity of money, on the contrary, must in every country naturally
      increase as the value of the annual produce increases. The value of the
      consumable goods annually circulated within the society being greater,
      will require a greater quantity of money to circulate them. A part of the
      increased produce, therefore, will naturally be employed in purchasing,
      wherever it is to be had, the additional quantity of gold and silver
      necessary for circulating the rest. The increase of those metals will, in
      this case, be the effect, not the cause, of the public prosperity. Gold
      and silver are purchased everywhere in the same manner. The food,
      clothing, and lodging, the revenue and maintenance, of all those whose
      labour or stock is employed in bringing them from the mine to the market,
      is the price paid for them in Peru as well as in England. The country
      which has this price to pay, will never belong without the quantity of
      those metals which it has occasion for; and no country will ever long
      retain a quantity which it has no occasion for.
    
      Whatever, therefore, we may imagine the real wealth and revenue of a
      country to consist in, whether in the value of the annual produce of its
      land and labour, as plain reason seems to dictate, or in the quantity of
      the precious metals which circulate within it, as vulgar prejudices
      suppose; in either view of the matter, every prodigal appears to be a
      public enemy, and every frugal man a public benefactor.
    
      The effects of misconduct are often the same as those of prodigality.
      Every injudicious and unsuccessful project in agriculture, mines,
      fisheries, trade, or manufactures, tends in the same manner to diminish
      the funds destined for the maintenance of productive labour. In every such
      project, though the capital is consumed by productive hands only, yet as,
      by the injudicious manner in which they are employed, they do not
      reproduce the full value of their consumption, there must always be some
      diminution in what would otherwise have been the productive funds of the
      society.
    
      It can seldom happen, indeed, that the circumstances of a great nation can
      be much affected either by the prodigality or misconduct of individuals;
      the profusion or imprudence of some being always more than compensated by
      the frugality and good conduct of others.
    
      With regard to profusion, the principle which prompts to expense is the
      passion for present enjoyment; which, though sometimes violent and very
      difficult to be restrained, is in general only momentary and occasional.
      But the principle which prompts to save, is the desire of bettering our
      condition; a desire which, though generally calm and dispassionate, comes
      with us from the womb, and never leaves us till we go into the grave. In
      the whole interval which separates those two moments, there is scarce,
      perhaps, a single instance, in which any man is so perfectly and
      completely satisfied with his situation, as to be without any wish of
      alteration or improvement of any kind. An augmentation of fortune is the
      means by which the greater part of men propose and wish to better their
      condition. It is the means the most vulgar and the most obvious; and the
      most likely way of augmenting their fortune, is to save and accumulate
      some part of what they acquire, either regularly and annually, or upon
      some extraordinary occasion. Though the principle of expense, therefore,
      prevails in almost all men upon some occasions, and in some men upon
      almost all occasions; yet in the greater part of men, taking the whole
      course of their life at an average, the principle of frugality seems not
      only to predominate, but to predominate very greatly.
    
      With regard to misconduct, the number of prudent and successful
      undertakings is everywhere much greater than that of injudicious and
      unsuccessful ones. After all our complaints of the frequency of
      bankruptcies, the unhappy men who fall into this misfortune, make but a
      very small part of the whole number engaged in trade, and all other sorts
      of business; not much more, perhaps, than one in a thousand. Bankruptcy
      is, perhaps, the greatest and most humiliating calamity which can befal an
      innocent man. The greater part of men, therefore, are sufficiently careful
      to avoid it. Some, indeed, do not avoid it; as some do not avoid the
      gallows.
    
      Great nations are never impoverished by private, though they sometimes are
      by public prodigality and misconduct. The whole, or almost the whole
      public revenue is, in most countries, employed in maintaining unproductive
      hands. Such are the people who compose a numerous and splendid court, a
      great ecclesiastical establishment, great fleets and armies, who in time
      of peace produce nothing, and in time of war acquire nothing which can
      compensate the expense of maintaining them, even while the war lasts. Such
      people, as they themselves produce nothing, are all maintained by the
      produce of other men’s labour. When multiplied, therefore, to an
      unnecessary number, they may in a particular year consume so great a share
      of this produce, as not to leave a sufficiency for maintaining the
      productive labourers, who should reproduce it next year. The next year’s
      produce, therefore, will be less than that of the foregoing; and if the
      same disorder should continue, that of the third year will be still less
      than that of the second. Those unproductive hands who should be maintained
      by a part only of the spare revenue of the people, may consume so great a
      share of their whole revenue, and thereby oblige so great a number to
      encroach upon their capitals, upon the funds destined for the maintenance
      of productive labour, that all the frugality and good conduct of
      individuals may not be able to compensate the waste and degradation of
      produce occasioned by this violent and forced encroachment.
    
      This frugality and good conduct, however, is, upon most occasions, it
      appears from experience, sufficient to compensate, not only the private
      prodigality and misconduct of individuals, but the public extravagance of
      government. The uniform, constant, and uninterrupted effort of every man
      to better his condition, the principle from which public and national, as
      well as private opulence is originally derived, is frequently powerful
      enough to maintain the natural progress of things towards improvement, in
      spite both of the extravagance of government, and of the greatest errors
      of administration. Like the unknown principle of animal life, it
      frequently restores health and vigour to the constitution, in spite not
      only of the disease, but of the absurd prescriptions of the doctor.
    
      The annual produce of the land and labour of any nation can be increased
      in its value by no other means, but by increasing either the number of its
      productive labourers, or the productive powers of those labourers who had
      before been employed. The number of its productive labourers, it is
      evident, can never be much increased, but in consequence of an increase of
      capital, or of the funds destined for maintaining them. The productive
      powers of the same number of labourers cannot be increased, but in
      consequence either of some addition and improvement to those machines and
      instruments which facilitate and abridge labour, or of more proper
      division and distribution of employment. In either case, an additional
      capital is almost always required. It is by means of an additional capital
      only, that the undertaker of any work can either provide his workmen with
      better machinery, or make a more proper distribution of employment among
      them. When the work to be done consists of a number of parts, to keep
      every man constantly employed in one way, requires a much greater capital
      than where every man is occasionally employed in every different part of
      the work. When we compare, therefore, the state of a nation at two
      different periods, and find that the annual produce of its land and labour
      is evidently greater at the latter than at the former, that its lands are
      better cultivated, its manufactures more numerous and more flourishing,
      and its trade more extensive; we may be assured that its capital must have
      increased during the interval between those two periods, and that more
      must have been added to it by the good conduct of some, than had been
      taken from it either by the private misconduct of others, or by the public
      extravagance of government. But we shall find this to have been the case
      of almost all nations, in all tolerably quiet and peaceable times, even of
      those who have not enjoyed the most prudent and parsimonious governments.
      To form a right judgment of it, indeed, we must compare the state of the
      country at periods somewhat distant from one another. The progress is
      frequently so gradual, that, at near periods, the improvement is not only
      not sensible, but, from the declension either of certain branches of
      industry, or of certain districts of the country, things which sometimes
      happen, though the country in general is in great prosperity, there
      frequently arises a suspicion, that the riches and industry of the whole
      are decaying.
    
      The annual produce of the land and labour of England, for example, is
      certainly much greater than it was a little more than a century ago, at
      the restoration of Charles II. Though at present few people, I believe,
      doubt of this, yet during this period five years have seldom passed away,
      in which some book or pamphlet has not been published, written, too, with
      such abilities as to gain some authority with the public, and pretending
      to demonstrate that the wealth of the nation was fast declining; that the
      country was depopulated, agriculture neglected, manufactures decaying, and
      trade undone. Nor have these publications been all party pamphlets, the
      wretched offspring of falsehood and venality. Many of them have been
      written by very candid and very intelligent people, who wrote nothing but
      what they believed, and for no other reason but because they believed it.
    
      The annual produce of the land and labour of England, again, was certainly
      much greater at the Restoration than we can suppose it to have been about
      a hundred years before, at the accession of Elizabeth. At this period,
      too, we have all reason to believe, the country was much more advanced in
      improvement, than it had been about a century before, towards the close of
      the dissensions between the houses of York and Lancaster. Even then it
      was, probably, in a better condition than it had been at the Norman
      conquest: and at the Norman conquest, than during the confusion of the
      Saxon heptarchy. Even at this early period, it was certainly a more
      improved country than at the invasion of Julius Caesar, when its
      inhabitants were nearly in the same state with the savages in North
      America.
    
      In each of those periods, however, there was not only much private and
      public profusion, many expensive and unnecessary wars, great perversion of
      the annual produce from maintaining productive to maintain unproductive
      hands; but sometimes, in the confusion of civil discord, such absolute
      waste and destruction of stock, as might be supposed, not only to retard,
      as it certainly did, the natural accumulation of riches, but to have left
      the country, at the end of the period, poorer than at the beginning. Thus,
      in the happiest and most fortunate period of them all, that which has
      passed since the Restoration, how many disorders and misfortunes have
      occurred, which, could they have been foreseen, not only the
      impoverishment, but the total ruin of the country would have been expected
      from them? The fire and the plague of London, the two Dutch wars, the
      disorders of the revolution, the war in Ireland, the four expensive French
      wars of 1688, 1701, 1742, and 1756, together with the two rebellions of
      1715 and 1745. In the course of the four French wars, the nation has
      contracted more than £145,000,000 of debt, over and above all the other
      extraordinary annual expense which they occasioned; so that the whole
      cannot be computed at less than £200,000,000. So great a share of the
      annual produce of the land and labour of the country, has, since the
      Revolution, been employed upon different occasions, in maintaining an
      extraordinary number of unproductive hands. But had not those wars given
      this particular direction to so large a capital, the greater part of it
      would naturally have been employed in maintaining productive hands, whose
      labour would have replaced, with a profit, the whole value of their
      consumption. The value of the annual produce of the land and labour of the
      country would have been considerably increased by it every year, and every
      years increase would have augmented still more that of the following year.
      More houses would have been built, more lands would have been improved,
      and those which had been improved before would have been better
      cultivated; more manufactures would have been established, and those which
      had been established before would have been more extended; and to what
      height the real wealth and revenue of the country might by this time have
      been raised, it is not perhaps very easy even to imagine.
    
      But though the profusion of government must undoubtedly have retarded the
      natural progress of England towards wealth and improvement, it has not
      been able to stop it. The annual produce of its land and labour is
      undoubtedly much greater at present than it was either at the Restoration
      or at the Revolution. The capital, therefore, annually employed in
      cultivating this land, and in maintaining this labour, must likewise be
      much greater. In the midst of all the exactions of government, this
      capital has been silently and gradually accumulated by the private
      frugality and good conduct of individuals, by their universal, continual,
      and uninterrupted effort to better their own condition. It is this effort,
      protected by law, and allowed by liberty to exert itself in the manner
      that is most advantageous, which has maintained the progress of England
      towards opulence and improvement in almost all former times, and which, it
      is to be hoped, will do so in all future times. England, however, as it
      has never been blessed with a very parsimonious government, so parsimony
      has at no time been the characteristic virtue of its inhabitants. It is
      the highest impertinence and presumption, therefore, in kings and
      ministers to pretend to watch over the economy of private people, and to
      restrain their expense, either by sumptuary laws, or by prohibiting the
      importation of foreign luxuries. They are themselves always, and without
      any exception, the greatest spendthrifts in the society. Let them look
      well after their own expense, and they may safely trust private people
      with theirs. If their own extravagance does not ruin the state, that of
      the subject never will.
    
      As frugality increases, and prodigality diminishes, the public capital, so
      the conduct of those whose expense just equals their revenue, without
      either accumulating or encroaching, neither increases nor diminishes it.
      Some modes of expense, however, seem to contribute more to the growth of
      public opulence than others.
    
      The revenue of an individual may be spent, either in things which are
      consumed immediately, and in which one day’s expense can neither alleviate
      nor support that of another; or it may be spent in things mere durable,
      which can therefore be accumulated, and in which every day’s expense may,
      as he chooses, either alleviate, or support and heighten, the effect of
      that of the following day. A man of fortune, for example, may either spend
      his revenue in a profuse and sumptuous table, and in maintaining a great
      number of menial servants, and a multitude of dogs and horses; or,
      contenting himself with a frugal table, and few attendants, he may lay out
      the greater part of it in adorning his house or his country villa, in
      useful or ornamental buildings, in useful or ornamental furniture, in
      collecting books, statues, pictures; or in things more frivolous, jewels,
      baubles, ingenious trinkets of different kinds; or, what is most trifling
      of all, in amassing a great wardrobe of fine clothes, like the favourite
      and minister of a great prince who died a few years ago. Were two men of
      equal fortune to spend their revenue, the one chiefly in the one way, the
      other in the other, the magnificence of the person whose expense had been
      chiefly in durable commodities, would be continually increasing, every
      day’s expense contributing something to support and heighten the effect of
      that of the following day; that of the other, on the contrary, would be no
      greater at the end of the period than at the beginning. The former too
      would, at the end of the period, be the richer man of the two. He would
      have a stock of goods of some kind or other, which, though it might not be
      worth all that it cost, would always be worth something. No trace or
      vestige of the expense of the latter would remain, and the effects of ten
      or twenty years’ profusion would be as completely annihilated as if they
      had never existed.
    
      As the one mode of expense is more favourable than the other to the
      opulence of an individual, so is it likewise to that of a nation. The
      houses, the furniture, the clothing of the rich, in a little time, become
      useful to the inferior and middling ranks of people. They are able to
      purchase them when their superiors grow weary of them; and the general
      accommodation of the whole people is thus gradually improved, when this
      mode of expense becomes universal among men of fortune. In countries which
      have long been rich, you will frequently find the inferior ranks of people
      in possession both of houses and furniture perfectly good and entire, but
      of which neither the one could have been built, nor the other have been
      made for their use. What was formerly a seat of the family of Seymour, is
      now an inn upon the Bath road. The marriage-bed of James I. of Great
      Britain, which his queen brought with her from Denmark, as a present fit
      for a sovereign to make to a sovereign, was, a few years ago, the ornament
      of an alehouse at Dunfermline. In some ancient cities, which either have
      been long stationary, or have gone somewhat to decay, you will sometimes
      scarce find a single house which could have been built for its present
      inhabitants. If you go into those houses, too, you will frequently find
      many excellent, though antiquated pieces of furniture, which are still
      very fit for use, and which could as little have been made for them. Noble
      palaces, magnificent villas, great collections of books, statues,
      pictures, and other curiosities, are frequently both an ornament and an
      honour, not only to the neighbourhood, but to the whole country to which
      they belong. Versailles is an ornament and an honour to France, Stowe and
      Wilton to England. Italy still continues to command some sort of
      veneration, by the number of monuments of this kind which it possesses,
      though the wealth which produced them has decayed, and though the genius
      which planned them seems to be extinguished, perhaps from not having the
      same employment.
    
      The expense, too, which is laid out in durable commodities, is favourable
      not only to accumulation, but to frugality. If a person should at any time
      exceed in it, he can easily reform without exposing himself to the censure
      of the public. To reduce very much the number of his servants, to reform
      his table from great profusion to great frugality, to lay down his
      equipage after he has once set it up, are changes which cannot escape the
      observation of his neighbours, and which are supposed to imply some
      acknowledgment of preceding bad conduct. Few, therefore, of those who have
      once been so unfortunate as to launch out too far into this sort of
      expense, have afterwards the courage to reform, till ruin and bankruptcy
      oblige them. But if a person has, at any time, been at too great an
      expense in building, in furniture, in books, or pictures, no imprudence
      can be inferred from his changing his conduct. These are things in which
      further expense is frequently rendered unnecessary by former expense; and
      when a person stops short, he appears to do so, not because he has
      exceeded his fortune, but because he has satisfied his fancy.
    
      The expense, besides, that is laid out in durable commodities, gives
      maintenance, commonly, to a greater number of people than that which is
      employed in the most profuse hospitality. Of two or three hundred weight
      of provisions, which may sometimes be served up at a great festival, one
      half, perhaps, is thrown to the dunghill, and there is always a great deal
      wasted and abused. But if the expense of this entertainment had been
      employed in setting to work masons, carpenters, upholsterers, mechanics,
      etc. a quantity of provisions of equal value would have been distributed
      among a still greater number of people, who would have bought them in
      pennyworths and pound weights, and not have lost or thrown away a single
      ounce of them. In the one way, besides, this expense maintains productive,
      in the other unproductive hands. In the one way, therefore, it increases,
      in the other it does not increase the exchangeable value of the annual
      produce of the land and labour of the country.
    
      I would not, however, by all this, be understood to mean, that the one
      species of expense always betokens a more liberal or generous spirit than
      the other. When a man of fortune spends his revenue chiefly in
      hospitality, he shares the greater part of it with his friends and
      companions; but when he employs it in purchasing such durable commodities,
      he often spends the whole upon his own person, and gives nothing to any
      body without an equivalent. The latter species of expense, therefore,
      especially when directed towards frivolous objects, the little ornaments
      of dress and furniture, jewels, trinkets, gew-gaws, frequently indicates,
      not only a trifling, but a base and selfish disposition. All that I mean
      is, that the one sort of expense, as it always occasions some accumulation
      of valuable commodities, as it is more favourable to private frugality,
      and, consequently, to the increase of the public capital, and as it
      maintains productive rather than unproductive hands, conduces more than
      the other to the growth of public opulence.
    


CHAPTER IV.
OF STOCK LENT AT INTEREST.


    
      The stock which is lent at interest is always considered as a capital by
      the lender. He expects that in due time it is to be restored to him, and
      that, in the mean time, the borrower is to pay him a certain annual rent
      for the use of it. The borrower may use it either as a capital, or as a
      stock reserved for immediate consumption. If he uses it as a capital, he
      employs it in the maintenance of productive labourers, who reproduce the
      value, with a profit. He can, in this case, both restore the capital, and
      pay the interest, without alienating or encroaching upon any other source
      of revenue. If he uses it as a stock reserved for immediate consumption,
      he acts the part of a prodigal, and dissipates, in the maintenance of the
      idle, what was destined for the support of the industrious. He can, in
      this case, neither restore the capital nor pay the interest, without
      either alienating or encroaching upon some other source of revenue, such
      as the property or the rent of land.
    
      The stock which is lent at interest is, no doubt, occasionally employed in
      both these ways, but in the former much more frequently than in the
      latter. The man who borrows in order to spend will soon be ruined, and he
      who lends to him will generally have occasion to repent of his folly. To
      borrow or to lend for such a purpose, therefore, is, in all cases, where
      gross usury is out of the question, contrary to the interest of both
      parties; and though it no doubt happens sometimes, that people do both the
      one and the other, yet, from the regard that all men have for their own
      interest, we may be assured, that it cannot happen so very frequently as
      we are sometimes apt to imagine. Ask any rich man of common prudence, to
      which of the two sorts of people he has lent the greater part of his
      stock, to those who he thinks will employ it profitably, or to those who
      will spend it idly, and he will laugh at you for proposing the question.
      Even among borrowers, therefore, not the people in the world most famous
      for frugality, the number of the frugal and industrious surpasses
      considerably that of the prodigal and idle.
    
      The only people to whom stock is commonly lent, without their being
      expected to make any very profitable use of it, are country gentlemen, who
      borrow upon mortgage. Even they scarce ever borrow merely to spend. What
      they borrow, one may say, is commonly spent before they borrow it. They
      have generally consumed so great a quantity of goods, advanced to them
      upon credit by shop-keepers and tradesmen, that they find it necessary to
      borrow at interest, in order to pay the debt. The capital borrowed
      replaces the capitals of those shop-keepers and tradesmen which the
      country gentlemen could not have replaced from the rents of their estates.
      It is not properly borrowed in order to be spent, but in order to replace
      a capital which had been spent before.
    
      Almost all loans at interest are made in money, either of paper, or of
      gold and silver; but what the borrower really wants, and what the lender
      readily supplies him with, is not the money, but the money’s worth, or the
      goods which it can purchase. If he wants it as a stock for immediate
      consumption, it is those goods only which he can place in that stock. If
      he wants it as a capital for employing industry, it is from those goods
      only that the industrious can be furnished with the tools, materials, and
      maintenance necessary for carrying on their work. By means of the loan,
      the lender, as it were, assigns to the borrower his right to a certain
      portion of the annual produce of the land and labour of the country, to be
      employed as the borrower pleases.
    
      The quantity of stock, therefore, or, as it is commonly expressed, of
      money, which can be lent at interest in any country, is not regulated by
      the value of the money, whether paper or coin, which serves as the
      instrument of the different loans made in that country, but by the value
      of that part of the annual produce, which, as soon as it comes either from
      the ground, or from the hands of the productive labourers, is destined,
      not only for replacing a capital, but such a capital as the owner does not
      care to be at the trouble of employing himself. As such capitals are
      commonly lent out and paid back in money, they constitute what is called
      the monied interest. It is distinct, not only from the landed, but from
      the trading and manufacturing interests, as in these last the owners
      themselves employ their own capitals. Even in the monied interest,
      however, the money is, as it were, but the deed of assignment, which
      conveys from one hand to another those capitals which the owners do not
      care to employ themselves. Those capitals may be greater, in almost any
      proportion, than the amount of the money which serves as the instrument of
      their conveyance; the same pieces of money successively serving for many
      different loans, as well as for many different purchases. A, for example,
      lends to W £1000, with which W immediately purchases of B £1000 worth of
      goods. B having no occasion for the money himself, lends the identical
      pieces to X, with which X immediately purchases of C another £1000 worth
      of goods. C, in the same manner, and for the same reason, lends them to Y,
      who again purchases goods with them of D. In this manner, the same pieces,
      either of coin or of paper, may, in the course of a few days, serve as the
      Instrument of three different loans, and of three different purchases,
      each of which is, in value, equal to the whole amount of those pieces.
      What the three monied men, A, B, and C, assigned to the three borrowers,
      W, X, and Y, is the power of making those purchases. In this power consist
      both the value and the use of the loans. The stock lent by the three
      monied men is equal to the value of the goods which can be purchased with
      it, and is three times greater than that of the money with which the
      purchases are made. Those loans, however, may be all perfectly well
      secured, the goods purchased by the different debtors being so employed
      as, in due time, to bring back, with a profit, an equal value either of
      coin or of paper. And as the same pieces of money can thus serve as the
      instrument of different loans to three, or, for the same reason, to thirty
      times their value, so they may likewise successively serve as the
      instrument of repayment.
    
      A capital lent at interest may, in this manner, be considered as an
      assignment, from the lender to the borrower, of a certain considerable
      portion of the annual produce, upon condition that the burrower in return
      shall, during the continuance of the loan, annually assign to the lender a
      small portion, called the interest; and, at the end of it, a portion
      equally considerable with that which had originally been assigned to him,
      called the repayment. Though money, either coin or paper, serves generally
      as the deed of assignment, both to the smaller and to the more
      considerable portion, it is itself altogether different from what is
      assigned by it.
    
      In proportion as that share of the annual produce which, as soon as it
      comes either from the ground, or from the hands of the productive
      labourers, is destined for replacing a capital, increases in any country,
      what is called the monied interest naturally increases with it. The
      increase of those particular capitals from which the owners wish to derive
      a revenue, without being at the trouble of employing them themselves,
      naturally accompanies the general increase of capitals; or, in other
      words, as stock increases, the quantity of stock to be lent at interest
      grows gradually greater and greater.
    
      As the quantity of stock to be lent at interest increases, the interest,
      or the price which must be paid for the use of that stock, necessarily
      diminishes, not only from those general causes which make the market price
      of things commonly diminish as their quantity increases, but from other
      causes which are peculiar to this particular case. As capitals increase in
      any country, the profits which can be made by employing them necessarily
      diminish. It becomes gradually more and more difficult to find within the
      country a profitable method of employing any new capital. There arises, in
      consequence, a competition between different capitals, the owner of one
      endeavouring to get possession of that employment which is occupied by
      another; but, upon most occasions, he can hope to justle that other out of
      this employment by no other means but by dealing upon more reasonable
      terms. He must not only sell what he deals in somewhat cheaper, but, in
      order to get it to sell, he must sometimes, too, buy it dearer. The demand
      for productive labour, by the increase of the funds which are destined for
      maintaining it, grows every day greater and greater. Labourers easily find
      employment; but the owners of capitals find it difficult to get labourers
      to employ. Their competition raises the wages of labour, and sinks the
      profits of stock. But when the profits which can be made by the use of a
      capital are in this manner diminished, as it were, at both ends, the price
      which can be paid for the use of it, that is, the rate of interest, must
      necessarily be diminished with them.
    
      Mr Locke, Mr Lawe, and Mr Montesquieu, as well as many other writers, seem
      to have imagined that the increase of the quantity of gold and silver, in
      consequence of the discovery of the Spanish West Indies, was the real
      cause of the lowering of the rate of interest through the greater part of
      Europe. Those metals, they say, having become of less value themselves,
      the use of any particular portion of them necessarily became of less value
      too, and, consequently, the price which could be paid for it. This notion,
      which at first sight seems so plausible, has been so fully exposed by Mr
      Hume, that it is, perhaps, unnecessary to say any thing more about it. The
      following very short and plain argument, however, may serve to explain
      more distinctly the fallacy which seems to have misled those gentlemen.
    
      Before the discovery of the Spanish West Indies, ten per cent. seems to
      have been the common rate of interest through the greater part of Europe.
      It has since that time, in different countries, sunk to six, five, four,
      and three per cent. Let us suppose, that in every particular country the
      value of silver has sunk precisely in the same proportion as the rate of
      interest; and that in those countries, for example, where interest has
      been reduced from ten to five per cent. the same quantity of silver can
      now purchase just half the quantity of goods which it could have purchased
      before. This supposition will not, I believe, be found anywhere agreeable
      to the truth; but it is the most favourable to the opinion which we are
      going to examine; and, even upon this supposition, it is utterly
      impossible that the lowering of the value of silver could have the
      smallest tendency to lower the rate of interest. If £100 are in those
      countries now of no more value than £50 were then, £10 must now be of no
      more value than £5 were then. Whatever were the causes which lowered the
      value of the capital, the same must necessarily have lowered that of the
      interest, and exactly in the same proportion. The proportion between the
      value of the capital and that of the interest must have remained the same,
      though the rate had never been altered. By altering the rate, on the
      contrary, the proportion between those two values is necessarily altered.
      If £100 now are worth no more than £50 were then, £5 now can be worth no
      more than £2:10s. were then. By reducing the rate of interest, therefore,
      from ten to five per cent. we give for the use of a capital, which is
      supposed to be equal to one half of its former value, an interest which is
      equal to one fourth only of the value of the former interest.
    
      An increase in the quantity of silver, while that of the commodities
      circulated by means of it remained the same, could have no other effect
      than to diminish the value of that metal. The nominal value of all sorts
      of goods would be greater, but their real value would be precisely the
      same as before. They would be exchanged for a greater number of pieces of
      silver; but the quantity of labour which they could command, the number of
      people whom they could maintain and employ, would be precisely the same.
      The capital of the country would be the same, though a greater number of
      pieces might be requisite for conveying any equal portion of it from one
      hand to another. The deeds of assignment, like the conveyances of a
      verbose attorney, would be more cumbersome; but the thing assigned would
      be precisely the same as before, and could produce only the same effects.
      The funds for maintaining productive labour being the same, the demand for
      it would be the same. Its price or wages, therefore, though nominally
      greater, would really be the same. They would be paid in a greater number
      of pieces of silver, but they would purchase only the same quantity of
      goods. The profits of stock would be the same, both nominally and really.
      The wages of labour are commonly computed by the quantity of silver which
      is paid to the labourer. When that is increased, therefore, his wages
      appear to be increased, though they may sometimes be no greater than
      before. But the profits of stock are not computed by the number of pieces
      of silver with which they are paid, but by the proportion which those
      pieces bear to the whole capital employed. Thus, in a particular country,
      5s. a-week are said to be the common wages of labour, and ten per cent.
      the common profits of stock; but the whole capital of the country being
      the same as before, the competition between the different capitals of
      individuals into which it was divided would likewise be the same. They
      would all trade with the same advantages and disadvantages. The common
      proportion between capital and profit, therefore, would be the same, and
      consequently the common interest of money; what can commonly be given for
      the use of money being necessarily regulated by what can commonly be made
      by the use of it.
    
      Any increase in the quantity of commodities annually circulated within the
      country, while that of the money which circulated them remained the same,
      would, on the contrary, produce many other important effects, besides that
      of raising the value of the money. The capital of the country, though it
      might nominally be the same, would really be augmented. It might continue
      to be expressed by the same quantity of money, but it would command a
      greater quantity of labour. The quantity of productive labour which it
      could maintain and employ would be increased, and consequently the demand
      for that labour. Its wages would naturally rise with the demand, and yet
      might appear to sink. They might be paid with a smaller quantity of money,
      but that smaller quantity might purchase a greater quantity of goods than
      a greater had done before. The profits of stock would be diminished, both
      really and in appearance. The whole capital of the country being
      augmented, the competition between the different capitals of which it was
      composed would naturally be augmented along with it. The owners of those
      particular capitals would be obliged to content themselves with a smaller
      proportion of the produce of that labour which their respective capitals
      employed. The interest of money, keeping pace always with the profits of
      stock, might, in this manner, be greatly diminished, though the value of
      money, or the quantity of goods which any particular sum could purchase,
      was greatly augmented.
    
      In some countries the interest of money has been prohibited by law. But as
      something can everywhere be made by the use of money, something ought
      everywhere to be paid for the use of it. This regulation, instead of
      preventing, has been found from experience to increase the evil of usury.
      The debtor being obliged to pay, not only for the use of the money, but
      for the risk which his creditor runs by accepting a compensation for that
      use, he is obliged, if one may say so, to insure his creditor from the
      penalties of usury.
    
      In countries where interest is permitted, the law in order to prevent the
      extortion of usury, generally fixes the highest rate which can be taken
      without incurring a penalty. This rate ought always to be somewhat above
      the lowest market price, or the price which is commonly paid for the use
      of money by those who can give the most undoubted security. If this legal
      rate should be fixed below the lowest market rate, the effects of this
      fixation must be nearly the same as those of a total prohibition of
      interest. The creditor will not lend his money for less than the use of it
      is worth, and the debtor must pay him for the risk which he runs by
      accepting the full value of that use. If it is fixed precisely at the
      lowest market price, it ruins, with honest people who respect the laws of
      their country, the credit of all those who cannot give the very best
      security, and obliges them to have recourse to exorbitant usurers. In a
      country such as Great Britain, where money is lent to government at three
      per cent. and to private people, upon good security, at four and four and
      a-half, the present legal rate, five per cent. is perhaps as proper as
      any.
    
      The legal rate, it is to be observed, though it ought to be somewhat
      above, ought not to be much above the lowest market rate. If the legal
      rate of interest in Great Britain, for example, was fixed so high as eight
      or ten per cent. the greater part of the money which was to be lent, would
      be lent to prodigals and projectors, who alone would be willing to give
      this high interest. Sober people, who will give for the use of money no
      more than a part of what they are likely to make by the use of it, would
      not venture into the competition. A great part of the capital of the
      country would thus be kept out of the hands which were most likely to make
      a profitable and advantageous use of it, and thrown into those which were
      most likely to waste and destroy it. Where the legal rate of interest, on
      the contrary, is fixed but a very little above the lowest market rate,
      sober people are universally preferred, as borrowers, to prodigals and
      projectors. The person who lends money gets nearly as much interest from
      the former as he dares to take from the latter, and his money is much
      safer in the hands of the one set of people than in those of the other. A
      great part of the capital of the country is thus thrown into the hands in
      which it is most likely to be employed with advantage.
    
      No law can reduce the common rate of interest below the lowest ordinary
      market rate at the time when that law is made. Notwithstanding the edict
      of 1766, by which the French king attempted to reduce the rate of interest
      from five to four per cent. money continued to be lent in France at five
      per cent. the law being evaded in several different ways.
    
      The ordinary market price of land, it is to be observed, depends
      everywhere upon the ordinary market rate of interest. The person who has a
      capital from which he wishes to derive a revenue, without taking the
      trouble to employ it himself, deliberates whether he should buy land with
      it, or lend it out at interest. The superior security of land, together
      with some other advantages which almost everywhere attend upon this
      species of property, will generally dispose him to content himself with a
      smaller revenue from land, than what he might have by lending out his
      money at interest. These advantages are sufficient to compensate a certain
      difference of revenue; but they will compensate a certain difference only;
      and if the rent of land should fall short of the interest of money by a
      greater difference, nobody would buy land, which would soon reduce its
      ordinary price. On the contrary, if the advantages should much more than
      compensate the difference, everybody would buy land, which again would
      soon raise its ordinary price. When interest was at ten per cent. land was
      commonly sold for ten or twelve years purchase. As interest sunk to six,
      five, and four per cent. the price of land rose to twenty,
      five-and-twenty, and thirty years purchase. The market rate of interest is
      higher in France than in England, and the common price of land is lower.
      In England it commonly sells at thirty, in France at twenty years
      purchase.
    


CHAPTER V.
OF THE DIFFERENT EMPLOYMENTS OF CAPITALS.


    
      Though all capitals are destined for the maintenance of productive labour
      only, yet the quantity of that labour which equal capitals are capable of
      putting into motion, varies extremely according to the diversity of their
      employment; as does likewise the value which that employment adds to the
      annual produce of the land and labour of the country.
    
      A capital may be employed in four different ways; either, first, in
      procuring the rude produce annually required for the use and consumption
      of the society; or, secondly, in manufacturing and preparing that rude
      produce for immediate use and consumption; or, thirdly in transporting
      either the rude or manufactured produce from the places where they abound
      to those where they are wanted; or, lastly, in dividing particular
      portions of either into such small parcels as suit the occasional demands
      of those who want them. In the first way are employed the capitals of all
      those who undertake improvement or cultivation of lands, mines, or
      fisheries; in the second, those of all master manufacturers; in the third,
      those of all wholesale merchants; and in the fourth, those of all
      retailers. It is difficult to conceive that a capital should be employed
      in any way which may not be classed under some one or other of those four.
    
      Each of those four methods of employing a capital is essentially
      necessary, either to the existence or extension of the other three, or to
      the general conveniency of the society.
    
      Unless a capital was employed in furnishing rude produce to a certain
      degree of abundance, neither manufactures nor trade of any kind could
      exist.
    
      Unless a capital was employed in manufacturing that part of the rude
      produce which requires a good deal of preparation before it can be fit for
      use and consumption, it either would never be produced, because there
      could be no demand for it; or if it was produced spontaneously, it would
      be of no value in exchange, and could add nothing to the wealth of the
      society.
    
      Unless a capital was employed in transporting either the rude or
      manufactured produce from the places where it abounds to those where it is
      wanted, no more of either could be produced than was necessary for the
      consumption of the neighbourhood. The capital of the merchant exchanges
      the surplus produce of one place for that of another, and thus encourages
      the industry, and increases the enjoyments of both.
    
      Unless a capital was employed in breaking and dividing certain portions
      either of the rude or manufactured produce into such small parcels as suit
      the occasional demands of those who want them, every man would be obliged
      to purchase a greater quantity of the goods he wanted than his immediate
      occasions required. If there was no such trade as a butcher, for example,
      every man would be obliged to purchase a whole ox or a whole sheep at a
      time. This would generally be inconvenient to the rich, and much more so
      to the poor. If a poor workman was obliged to purchase a month’s or six
      months’ provisions at a time, a great part of the stock which he employs
      as a capital in the instruments of his trade, or in the furniture of his
      shop, and which yields him a revenue, he would be forced to place in that
      part of his stock which is reserved for immediate consumption, and which
      yields him no revenue. Nothing can be more convenient for such a person
      than to be able to purchase his subsistence from day to day, or even from
      hour to hour, as he wants it. He is thereby enabled to employ almost his
      whole stock as a capital. He is thus enabled to furnish work to a greater
      value; and the profit which he makes by it in this way much more than
      compensates the additional price which the profit of the retailer imposes
      upon the goods. The prejudices of some political writers against
      shopkeepers and tradesmen are altogether without foundation. So far is it
      from being necessary either to tax them, or to restrict their numbers,
      that they can never be multiplied so as to hurt the public, though they
      may so as to hurt one another. The quantity of grocery goods, for example,
      which can be sold in a particular town, is limited by the demand of that
      town and its neighbourhood. The capital, therefore, which can be employed
      in the grocery trade, cannot exceed what is sufficient to purchase that
      quantity. If this capital is divided between two different grocers, their
      competition will tend to make both of them sell cheaper than if it were in
      the hands of one only; and if it were divided among twenty, their
      competition would be just so much the greater, and the chance of their
      combining together, in order to raise the price, just so much the less.
      Their competition might, perhaps, ruin some of themselves; but to take
      care of this, is the business of the parties concerned, and it may safely
      be trusted to their discretion. It can never hurt either the consumer or
      the producer; on the contrary, it must tend to make the retailers both
      sell cheaper and buy dearer, than if the whole trade was monopolised by
      one or two persons. Some of them, perhaps, may sometimes decoy a weak
      customer to buy what he has no occasion for. This evil, however, is of too
      little importance to deserve the public attention, nor would it
      necessarily be prevented by restricting their numbers. It is not the
      multitude of alehouses, to give the must suspicious example, that
      occasions a general disposition to drunkenness among the common people;
      but that disposition, arising from other causes, necessarily gives
      employment to a multitude of alehouses.
    
      The persons whose capitals are employed in any of those four ways, are
      themselves productive labourers. Their labour, when properly directed,
      fixes and realizes itself in the subject or vendible commodity upon which
      it is bestowed, and generally adds to its price the value at least of
      their own maintenance and consumption. The profits of the farmer, of the
      manufacturer, of the merchant, and retailer, are all drawn from the price
      of the goods which the two first produce, and the two last buy and sell.
      Equal capitals, however, employed in each of those four different ways,
      will immediately put into motion very different quantities of productive
      labour; and augment, too, in very different proportions, the value of the
      annual produce of the land and labour of the society to which they belong.
    
      The capital of the retailer replaces, together with its profits, that of
      the merchant of whom he purchases goods, and thereby enables him to
      continue his business. The retailer himself is the only productive
      labourer whom it immediately employs. In his profit consists the whole
      value which its employment adds to the annual produce of the land and
      labour of the society.
    
      The capital of the wholesale merchant replaces, together with their
      profits, the capitals of the farmers and manufacturers of whom he
      purchases the rude and manufactured produce which he deals in, and thereby
      enables them to continue their respective trades. It is by this service
      chiefly that he contributes indirectly to support the productive labour of
      the society, and to increase the value of its annual produce. His capital
      employs, too, the sailors and carriers who transport his goods from one
      place to another; and it augments the price of those goods by the value,
      not only of his profits, but of their wages. This is all the productive
      labour which it immediately puts into motion, and all the value which it
      immediately adds to the annual produce. Its operation in both these
      respects is a good deal superior to that of the capital of the retailer.
    
      Part of the capital of the master manufacturer is employed as a fixed
      capital in the instruments of his trade, and replaces, together with its
      profits, that of some other artificer of whom he purchases them. Part of
      his circulating capital is employed in purchasing materials, and replaces,
      with their profits, the capitals of the farmers and miners of whom he
      purchases them. But a great part of it is always, either annually, or in a
      much shorter period, distributed among the different workmen whom he
      employs. It augments the value of those materials by their wages, and by
      their masters’ profits upon the whole stock of wages, materials, and
      instruments of trade employed in the business. It puts immediately into
      motion, therefore, a much greater quantity of productive labour, and adds
      a much greater value to the annual produce of the land and labour of the
      society, than an equal capital in the hands of any wholesale merchant.
    
      No equal capital puts into motion a greater quantity of productive labour
      than that of the farmer. Not only his labouring servants, but his
      labouring cattle, are productive labourers. In agriculture, too, Nature
      labours along with man; and though her labour costs no expense, its
      produce has its value, as well as that of the most expensive workmen. The
      most important operations of agriculture seem intended, not so much to
      increase, though they do that too, as to direct the fertility of Nature
      towards the production of the plants most profitable to man. A field
      overgrown with briars and brambles, may frequently produce as great a
      quantity of vegetables as the best cultivated vineyard or corn field.
      Planting and tillage frequently regulate more than they animate the active
      fertility of Nature; and after all their labour, a great part of the work
      always remains to be done by her. The labourers and labouring cattle,
      therefore, employed in agriculture, not only occasion, like the workmen in
      manufactures, the reproduction of a value equal to their own consumption,
      or to the capital which employs them, together with its owner’s profits,
      but of a much greater value. Over and above the capital of the farmer, and
      all its profits, they regularly occasion the reproduction of the rent of
      the landlord. This rent may be considered as the produce of those powers
      of Nature, the use of which the landlord lends to the farmer. It is
      greater or smaller, according to the supposed extent of those powers, or,
      in other words, according to the supposed natural or improved fertility of
      the land. It is the work of Nature which remains, after deducting or
      compensating every thing which can be regarded as the work of man. It is
      seldom less than a fourth, and frequently more than a third, of the whole
      produce. No equal quantity of productive labour employed in manufactures,
      can ever occasion so great reproduction. In them Nature does nothing; man
      does all; and the reproduction must always be in proportion to the
      strength of the agents that occasion it. The capital employed in
      agriculture, therefore, not only puts into motion a greater quantity of
      productive labour than any equal capital employed in manufactures; but in
      proportion, too, to the quantity of productive labour which it employs, it
      adds a much greater value to the annual produce of the land and labour of
      the country, to the real wealth and revenue of its inhabitants. Of all the
      ways in which a capital can be employed, it is by far the most
      advantageous to society.
    
      The capitals employed in the agriculture and in the retail trade of any
      society, must always reside within that society. Their employment is
      confined almost to a precise spot, to the farm, and to the shop of the
      retailer. They must generally, too, though there are some exceptions to
      this, belong to resident members of the society.
    
      The capital of a wholesale merchant, on the contrary, seems to have no
      fixed or necessary residence anywhere, but may wander about from place to
      place, according as it can either buy cheap or sell dear.
    
      The capital of the manufacturer must, no doubt, reside where the
      manufacture is carried on; but where this shall be, is not always
      necessarily determined. It may frequently be at a great distance, both
      from the place where the materials grow, and from that where the complete
      manufacture is consumed. Lyons is very distant, both from the places which
      afford the materials of its manufactures, and from those which consume
      them. The people of fashion in Sicily are clothed in silks made in other
      countries, from the materials which their own produces. Part of the wool
      of Spain is manufactured in Great Britain, and some part of that cloth is
      afterwards sent back to Spain.
    
      Whether the merchant whose capital exports the surplus produce of any
      society, be a native or a foreigner, is of very little importance. If he
      is a foreigner, the number of their productive labourers is necessarily
      less than if he had been a native, by one man only; and the value of their
      annual produce, by the profits of that one man. The sailors or carriers
      whom he employs, may still belong indifferently either to his country, or
      to their country, or to some third country, in the same manner as if he
      had been a native. The capital of a foreigner gives a value to their
      surplus produce equally with that of a native, by exchanging it for
      something for which there is a demand at home. It as effectually replaces
      the capital of the person who produces that surplus, and as effectually
      enables him to continue his business, the service by which the capital of
      a wholesale merchant chiefly contributes to support the productive labour,
      and to augment the value of the annual produce of the society to which he
      belongs.
    
      It is of more consequence that the capital of the manufacturer should
      reside within the country. It necessarily puts into motion a greater
      quantity of productive labour, and adds a greater value to the annual
      produce of the land and labour of the society. It may, however, be very
      useful to the country, though it should not reside within it. The capitals
      of the British manufacturers who work up the flax and hemp annually
      imported from the coasts of the Baltic, are surely very useful to the
      countries which produce them. Those materials are a part of the surplus
      produce of those countries, which, unless it was annually exchanged for
      something which is in demand here, would be of no value, and would soon
      cease to be produced. The merchants who export it, replace the capitals of
      the people who produce it, and thereby encourage them to continue the
      production; and the British manufacturers replace the capitals of those
      merchants.
    
      A particular country, in the same manner as a particular person, may
      frequently not have capital sufficient both to improve and cultivate all
      its lands, to manufacture and prepare their whole rude produce for
      immediate use and consumption, and to transport the surplus part either of
      the rude or manufactured produce to those distant markets, where it can be
      exchanged for something for which there is a demand at home. The
      inhabitants of many different parts of Great Britain have not capital
      sufficient to improve and cultivate all their lands. The wool of the
      southern counties of Scotland is, a great part of it, after a long land
      carriage through very bad roads, manufactured in Yorkshire, for want of a
      capital to manufacture it at home. There are many little manufacturing
      towns in Great Britain, of which the inhabitants have not capital
      sufficient to transport the produce of their own industry to those distant
      markets where there is demand and consumption for it. If there are any
      merchants among them, they are, properly, only the agents of wealthier
      merchants who reside in some of the great commercial cities.
    
      When the capital of any country is not sufficient for all those three
      purposes, in proportion as a greater share of it is employed in
      agriculture, the greater will be the quantity of productive labour which
      it puts into motion within the country; as will likewise be the value
      which its employment adds to the annual produce of the land and labour of
      the society. After agriculture, the capital employed in manufactures puts
      into motion the greatest quantity of productive labour, and adds the
      greatest value to the annual produce. That which is employed in the trade
      of exportation has the least effect of any of the three.
    
      The country, indeed, which has not capital sufficient for all those three
      purposes, has not arrived at that degree of opulence for which it seems
      naturally destined. To attempt, however, prematurely, and with an
      insufficient capital, to do all the three, is certainly not the shortest
      way for a society, no more than it would be for an individual, to acquire
      a sufficient one. The capital of all the individuals of a nation has its
      limits, in the same manner as that of a single individual, and is capable
      of executing only certain purposes. The capital of all the individuals of
      a nation is increased in the same manner as that of a single individual,
      by their continually accumulating and adding to it whatever they save out
      of their revenue. It is likely to increase the fastest, therefore, when it
      is employed in the way that affords the greatest revenue to all the
      inhabitants or the country, as they will thus be enabled to make the
      greatest savings. But the revenue of all the inhabitants of the country is
      necessarily in proportion to the value of the annual produce of their land
      and labour.
    
      It has been the principal cause of the rapid progress of our American
      colonies towards wealth and greatness, that almost their whole capitals
      have hitherto been employed in agriculture. They have no manufactures,
      those household and coarser manufactures excepted, which necessarily
      accompany the progress of agriculture, and which are the work of the women
      and children in every private family. The greater part, both of the
      exportation and coasting trade of America, is carried on by the capitals
      of merchants who reside in Great Britain. Even the stores and warehouses
      from which goods are retailed in some provinces, particularly in Virginia
      and Maryland, belong many of them to merchants who reside in the mother
      country, and afford one of the few instances of the retail trade of a
      society being carried on by the capitals of those who are not resident
      members of it. Were the Americans, either by combination, or by any other
      sort of violence, to stop the importation of European manufactures, and,
      by thus giving a monopoly to such of their own countrymen as could
      manufacture the like goods, divert any considerable part of their capital
      into this employment, they would retard, instead of accelerating, the
      further increase in the value of their annual produce, and would obstruct,
      instead of promoting, the progress of their country towards real wealth
      and greatness. This would be still more the case, were they to attempt, in
      the same manner, to monopolize to themselves their whole exportation
      trade.
    
      The course of human prosperity, indeed, seems scarce ever to have been of
      so long continuance as to unable any great country to acquire capital
      sufficient for all those three purposes; unless, perhaps, we give credit
      to the wonderful accounts of the wealth and cultivation of China, of those
      of ancient Egypt, and of the ancient state of Indostan. Even those three
      countries, the wealthiest, according to all accounts, that ever were in
      the world, are chiefly renowned for their superiority in agriculture and
      manufactures. They do not appear to have been eminent for foreign trade.
      The ancient Egyptians had a superstitious antipathy to the sea; a
      superstition nearly of the same kind prevails among the Indians; and the
      Chinese have never excelled in foreign commerce. The greater part of the
      surplus produce of all those three countries seems to have been always
      exported by foreigners, who gave in exchange for it something else, for
      which they found a demand there, frequently gold and silver.
    
      It is thus that the same capital will in any country put into motion a
      greater or smaller quantity of productive labour, and add a greater or
      smaller value to the annual produce of its land and labour, according to
      the different proportions in which it is employed in agriculture,
      manufactures, and wholesale trade. The difference, too, is very great,
      according to the different sorts of wholesale trade in which any part of
      it is employed.
    
      All wholesale trade, all buying in order to sell again by wholesale, maybe
      reduced to three different sorts: the home trade, the foreign trade of
      consumption, and the carrying trade. The home trade is employed in
      purchasing in one part of the same country, and selling in another, the
      produce of the industry of that country. It comprehends both the inland
      and the coasting trade. The foreign trade of consumption is employed in
      purchasing foreign goods for home consumption. The carrying trade is
      employed in transacting the commerce of foreign countries, or in carrying
      the surplus produce of one to another.
    
      The capital which is employed in purchasing in one part of the country, in
      order to sell in another, the produce of the industry of that country,
      generally replaces, by every such operation, two distinct capitals, that
      had both been employed in the agriculture or manufactures of that country,
      and thereby enables them to continue that employment. When it sends out
      from the residence of the merchant a certain value of commodities, it
      generally brings hack in return at least an equal value of other
      commodities. When both are the produce of domestic industry, it
      necessarily replaces, by every such operation, two distinct capitals,
      which had both been employed in supporting productive labour, and thereby
      enables them to continue that support. The capital which sends Scotch
      manufactures to London, and brings back English corn and manufactures to
      Edinburgh, necessarily replaces, by every such operation, two British
      capitals, which had both been employed in the agriculture or manufactures
      of Great Britain.
    
      The capital employed in purchasing foreign goods for home consumption,
      when this purchase is made with the produce of domestic industry,
      replaces, too, by every such operation, two distinct capitals; but one of
      them only is employed in supporting domestic industry. The capital which
      sends British goods to Portugal, and brings back Portuguese goods to Great
      Britain, replaces, by every such operation, only one British capital. The
      other is a Portuguese one. Though the returns, therefore, of the foreign
      trade of consumption, should be as quick as those of the home trade, the
      capital employed in it will give but one half of the encouragement to the
      industry or productive labour of the country.
    
      But the returns of the foreign trade of consumption are very seldom so
      quick as those of the home trade. The returns of the home trade generally
      come in before the end of the year, and sometimes three or four times in
      the year. The returns of the foreign trade of consumption seldom come in
      before the end of the year, and sometimes not till after two or three
      years. A capital, therefore, employed in the home trade, will sometimes
      make twelve operations, or be sent out and returned twelve times, before a
      capital employed in the foreign trade of consumption has made one. If the
      capitals are equal, therefore, the one will give four-and-twenty times
      more encouragement and support to the industry of the country than the
      other.
    
      The foreign goods for home consumption may sometimes be purchased, not
      with the produce of domestic industry but with some other foreign goods.
      These last, however, must have been purchased, either immediately with the
      produce of domestic industry, or with something else that had been
      purchased with it; for, the case of war and conquest excepted, foreign
      goods can never be acquired, but in exchange for something that had been
      produced at home, either immediately, or after two or more different
      exchanges. The effects, therefore, of a capital employed in such a
      round-about foreign trade of consumption, are, in every respect, the same
      as those of one employed in the most direct trade of the same kind, except
      that the final returns are likely to be still more distant, as they must
      depend upon the returns of two or three distinct foreign trades. If the
      hemp and flax of Riga are purchased with the tobacco of Virginia, which
      had been purchased with British manufactures, the merchant must wait for
      the returns of two distinct foreign trades, before he can employ the same
      capital in repurchasing a like quantity of British manufactures. If the
      tobacco of Virginia had been purchased, not with British manufactures, but
      with the sugar and rum of Jamaica, which had been purchased with those
      manufactures, he must wait for the returns of three. If those two or three
      distinct foreign trades should happen to be carried on by two or three
      distinct merchants, of whom the second buys the goods imported by the
      first, and the third buys those imported by the second, in order to export
      them again, each merchant, indeed, will, in this case, receive the returns
      of his own capital more quickly; but the final returns of the whole
      capital employed in the trade will be just as slow as ever. Whether the
      whole capital employed in such a round about trade belong to one merchant
      or to three, can make no difference with regard to the country, though it
      may with regard to the particular merchants. Three times a greater capital
      must in both cases be employed, in order to exchange a certain value of
      British manufactures for a certain quantity of flax and hemp, than would
      have been necessary, had the manufactures and the flax and hemp been
      directly exchanged for one another. The whole capital employed, therefore,
      in such a round-about foreign trade of consumption, will generally give
      less encouragement and support to the productive labour of the country,
      than an equal capital employed in a more direct trade of the same kind.
    
      Whatever be the foreign commodity with which the foreign goods for home
      consumption are purchased, it can occasion no essential difference, either
      in the nature of the trade, or in the encouragement and support which it
      can give to the productive labour of the country from which it is carried
      on. If they are purchased with the gold of Brazil, for example, or with
      the silver of Peru, this gold and silver, like the tobacco of Virginia,
      must have been purchased with something that either was the produce of the
      industry of the country, or that had been purchased with something else
      that was so. So far, therefore, as the productive labour of the country is
      concerned, the foreign trade of consumption, which is carried on by means
      of gold and silver, has all the advantages and all the inconveniencies of
      any other equally round-about foreign trade of consumption; and will
      replace, just as fast, or just as slow, the capital which is immediately
      employed in supporting that productive labour. It seems even to have one
      advantage over any other equally round-about foreign trade. The
      transportation of those metals from one place to another, on account of
      their small bulk and great value, is less expensive than that of almost
      any other foreign goods of equal value. Their freight is much less, and
      their insurance not greater; and no goods, besides, are less liable to
      suffer by the carriage. An equal quantity of foreign goods, therefore, may
      frequently be purchased with a smaller quantity of the produce of domestic
      industry, by the intervention of gold and silver, than by that of any
      other foreign goods. The demand of the country may frequently, in this
      manner, be supplied more completely, and at a smaller expense, than in any
      other. Whether, by the continual exportation of those metals, a trade of
      this kind is likely to impoverish the country from which it is carried on
      in any other way, I shall have occasion to examine at great length
      hereafter.
    
      That part of the capital of any country which is employed in the carrying
      trade, is altogether withdrawn from supporting the productive labour of
      that particular country, to support that of some foreign countries. Though
      it may replace, by every operation, two distinct capitals, yet neither of
      them belongs to that particular country. The capital of the Dutch
      merchant, which carries the corn of Poland to Portugal, and brings back
      the fruits and wines of Portugal to Poland, replaces by every such
      operation two capitals, neither of which had been employed in supporting
      the productive labour of Holland; but one of them in supporting that of
      Poland, and the other that of Portugal. The profits only return regularly
      to Holland, and constitute the whole addition which this trade necessarily
      makes to the annual produce of the land and labour of that country. When,
      indeed, the carrying trade of any particular country is carried on with
      the ships and sailors of that country, that part of the capital employed
      in it which pays the freight is distributed among, and puts into motion, a
      certain number of productive labourers of that country. Almost all nations
      that have had any considerable share of the carrying trade have, in fact,
      carried it on in this manner. The trade itself has probably derived its
      name from it, the people of such countries being the carriers to other
      countries. It does not, however, seem essential to the nature of the trade
      that it should be so. A Dutch merchant may, for example, employ his
      capital in transacting the commerce of Poland and Portugal, by carrying
      part of the surplus produce of the one to the other, not in Dutch, but in
      British bottoms. It maybe presumed, that he actually does so upon some
      particular occasions. It is upon this account, however, that the carrying
      trade has been supposed peculiarly advantageous to such a country as Great
      Britain, of which the defence and security depend upon the number of its
      sailors and shipping. But the same capital may employ as many sailors and
      shipping, either in the foreign trade of consumption, or even in the home
      trade, when carried on by coasting vessels, as it could in the carrying
      trade. The number of sailors and shipping which any particular capital can
      employ, does not depend upon the nature of the trade, but partly upon the
      bulk of the goods, in proportion to their value, and partly upon the
      distance of the ports between which they are to be carried; chiefly upon
      the former of those two circumstances. The coal trade from Newcastle to
      London, for example, employs more shipping than all the carrying trade of
      England, though the ports are at no great distance. To force, therefore,
      by extraordinary encouragements, a larger share of the capital of any
      country into the carrying trade, than what would naturally go to it, will
      not always necessarily increase the shipping of that country.
    
      The capital, therefore, employed in the home trade of any country, will
      generally give encouragement and support to a greater quantity of
      productive labour in that country, and increase the value of its annual
      produce, more than an equal capital employed in the foreign trade of
      consumption; and the capital employed in this latter trade has, in both
      these respects, a still greater advantage over an equal capital employed
      in the carrying trade. The riches, and so far as power depends upon
      riches, the power of every country must always be in proportion to the
      value of its annual produce, the fund from which all taxes must ultimately
      be paid. But the great object of the political economy of every country,
      is to increase the riches and power of that country. It ought, therefore,
      to give no preference nor superior encouragement to the foreign trade of
      consumption above the home trade, nor to the carrying trade above either
      of the other two. It ought neither to force nor to allure into either of
      those two channels a greater share of the capital of the country, than
      what would naturally flow into them of its own accord.
    
      Each of those different branches of trade, however, is not only
      advantageous, but necessary and unavoidable, when the course of things,
      without any constraint or violence, naturally introduces it.
    
      When the produce of any particular branch of industry exceeds what the
      demand of the country requires, the surplus must be sent abroad, and
      exchanged for something for which there is a demand at home. Without such
      exportation, a part of the productive labour of the country must cease,
      and the value of its annual produce diminish. The land and labour of Great
      Britain produce generally more corn, woollens, and hardware, than the
      demand of the home market requires. The surplus part of them, therefore,
      must be sent abroad, and exchanged for something for which there is a
      demand at home. It is only by means of such exportation, that this surplus
      can acquired value sufficient to compensate the labour and expense of
      producing it. The neighbourhood of the sea-coast, and the banks of all
      navigable rivers, are advantageous situations for industry, only because
      they facilitate the exportation and exchange of such surplus produce for
      something else which is more in demand there.
    
      When the foreign goods which are thus purchased with the surplus produce
      of domestic industry exceed the demand of the home market, the surplus
      part of them must be sent abroad again, and exchanged for something more
      in demand at home. About 96,000 hogsheads of tobacco are annually
      purchased in Virginia and Maryland with a part of the surplus produce of
      British industry. But the demand of Great Britain does not require,
      perhaps, more than 14,000. If the remaining 82,000, therefore, could not
      be sent abroad, and exchanged for something more in demand at home, the
      importation of them must cease immediately, and with it the productive
      labour of all those inhabitants of Great Britain who are at present
      employed in preparing the goods with which these 82,000 hogsheads are
      annually purchased. Those goods, which are part of the produce of the land
      and labour of Great Britain, having no market at home, and being deprived
      of that which they had abroad, must cease to be produced. The most
      round-about foreign trade of consumption, therefore, may, upon some
      occasions, be as necessary for supporting the productive labour of the
      country, and the value of its annual produce, as the most direct.
    
      When the capital stock of any country is increased to such a degree that
      it cannot be all employed in supplying the consumption, and supporting the
      productive labour of that particular country, the surplus part of it
      naturally disgorges itself into the carrying trade, and is employed in
      performing the same offices to other countries. The carrying trade is the
      natural effect and symptom of great national wealth; but it does not seem
      to be the natural cause of it. Those statesmen who have been disposed to
      favour it with particular encouragement, seem to have mistaken the effect
      and symptom for the cause. Holland, in proportion to the extent of the
      land and the number of its inhabitants, by far the richest country in
      Europe, has accordingly the greatest share of the carrying trade of
      Europe. England, perhaps the second richest country of Europe, is likewise
      supposed to have a considerable share in it; though what commonly passes
      for the carrying trade of England will frequently, perhaps, be found to be
      no more than a round-about foreign trade of consumption. Such are, in a
      great measure, the trades which carry the goods of the East and West
      Indies and of America to the different European markets. Those goods are
      generally purchased, either immediately with the produce of British
      industry, or with something else which had been purchased with that
      produce, and the final returns of those trades are generally used or
      consumed in Great Britain. The trade which is carried on in British
      bottoms between the different ports of the Mediterranean, and some trade
      of the same kind carried on by British merchants between the different
      ports of India, make, perhaps, the principal branches of what is properly
      the carrying trade of Great Britain.
    
      The extent of the home trade, and of the capital which can be employed in
      it, is necessarily limited by the value of the surplus produce of all
      those distant places within the country which have occasion to exchange
      their respective productions with one another; that of the foreign trade
      of consumption, by the value of the surplus produce of the whole country,
      and of what can be purchased with it; that of the carrying trade, by the
      value of the surplus produce of all the different countries in the world.
      Its possible extent, therefore, is in a manner infinite in comparison of
      that of the other two, and is capable of absorbing the greatest capitals.
    
      The consideration of his own private profit is the sole motive which
      determines the owner of any capital to employ it either in agriculture, in
      manufactures, or in some particular branch of the wholesale or retail
      trade. The different quantities of productive labour which it may put into
      motion, and the different values which it may add to the annual produce of
      the land and labour of the society, according as it is employed in one or
      other of those different ways, never enter into his thoughts. In
      countries, therefore, where agriculture is the most profitable of all
      employments, and farming and improving the most direct roads to a splendid
      fortune, the capitals of individuals will naturally be employed in the
      manner most advantageous to the whole society. The profits of agriculture,
      however, seem to have no superiority over those of other employments in
      any part of Europe. Projectors, indeed, in every corner of it, have,
      within these few years, amused the public with most magnificent accounts
      of the profits to be made by the cultivation and improvement of land.
      Without entering into any particular discussion of their calculations, a
      very simple observation may satisfy us that the result of them must be
      false. We see, every day, the most splendid fortunes, that have been
      acquired in the course of a single life, by trade and manufactures,
      frequently from a very small capital, sometimes from no capital. A single
      instance of such a fortune, acquired by agriculture in the same time, and
      from such a capital, has not, perhaps, occurred in Europe, during the
      course of the present century. In all the great countries of Europe,
      however, much good land still remains uncultivated; and the greater part
      of what is cultivated, is far from being improved to the degree of which
      it is capable. Agriculture, therefore, is almost everywhere capable of
      absorbing a much greater capital than has ever yet been employed in it.
      What circumstances in the policy of Europe have given the trades which are
      carried on in towns so great an advantage over that which is carried on in
      the country, that private persons frequently find it more for their
      advantage to employ their capitals in the most distant carrying trades of
      Asia and America than in the improvement and cultivation of the most
      fertile fields in their own neighbourhood, I shall endeavour to explain at
      full length in the two following books.
    


BOOK III.
OF THE DIFFERENT PROGRESS OF OPULENCE IN
DIFFERENT NATIONS
    


CHAPTER I.
OF THE NATURAL PROGRESS OF OPULENCE.


    
      The great commerce of every civilized society is that carried on between
      the inhabitants of the town and those of the country. It consists in the
      exchange of rude for manufactured produce, either immediately, or by the
      intervention of money, or of some sort of paper which represents money.
      The country supplies the town with the means of subsistence and the
      materials of manufacture. The town repays this supply, by sending back a
      part of the manufactured produce to the inhabitants of the country. The
      town, in which there neither is nor can be any reproduction of substances,
      may very properly be said to gain its whole wealth and subsistence from
      the country. We must not, however, upon this account, imagine that the
      gain of the town is the loss of the country. The gains of both are mutual
      and reciprocal, and the division of labour is in this, as in all other
      cases, advantageous to all the different persons employed in the various
      occupations into which it is subdivided. The inhabitants of the country
      purchase of the town a greater quantity of manufactured goods with the
      produce of a much smaller quantity of their own labour, than they must
      have employed had they attempted to prepare them themselves. The town
      affords a market for the surplus produce of the country, or what is over
      and above the maintenance of the cultivators; and it is there that the
      inhabitants of the country exchange it for something else which is in
      demand among them. The greater the number and revenue of the inhabitants
      of the town, the more extensive is the market which it affords to those of
      the country; and the more extensive that market, it is always the more
      advantageous to a great number. The corn which grows within a mile of the
      town, sells there for the same price with that which comes from twenty
      miles distance. But the price of the latter must, generally, not only pay
      the expense of raising it and bringing it to market, but afford, too, the
      ordinary profits of agriculture to the farmer. The proprietors and
      cultivators of the country, therefore, which lies in the neighbourhood of
      the town, over and above the ordinary profits of agriculture, gain, in the
      price of what they sell, the whole value of the carriage of the like
      produce that is brought from more distant parts; and they save, besides,
      the whole value of this carriage in the price of what they buy. Compare
      the cultivation of the lands in the neighbourhood of any considerable
      town, with that of those which lie at some distance from it, and you will
      easily satisfy yourself bow much the country is benefited by the commerce
      of the town. Among all the absurd speculations that have been propagated
      concerning the balance of trade, it has never been pretended that either
      the country loses by its commerce with the town, or the town by that with
      the country which maintains it.
    
      As subsistence is, in the nature of things, prior to conveniency and
      luxury, so the industry which procures the former, must necessarily be
      prior to that which ministers to the latter. The cultivation and
      improvement of the country, therefore, which affords subsistence, must,
      necessarily, be prior to the increase of the town, which furnishes only
      the means of conveniency and luxury. It is the surplus produce of the
      country only, or what is over and above the maintenance of the
      cultivators, that constitutes the subsistence of the town, which can
      therefore increase only with the increase of the surplus produce. The
      town, indeed, may not always derive its whole subsistence from the country
      in its neighbourhood, or even from the territory to which it belongs, but
      from very distant countries; and this, though it forms no exception from
      the general rule, has occasioned considerable variations in the progress
      of opulence in different ages and nations.
    
      That order of things which necessity imposes, in general, though not in
      every particular country, is in every particular country promoted by the
      natural inclinations of man. If human institutions had never thwarted
      those natural inclinations, the towns could nowhere have increased beyond
      what the improvement and cultivation of the territory in which they were
      situated could support; till such time, at least, as the whole of that
      territory was completely cultivated and improved. Upon equal, or nearly
      equal profits, most men will choose to employ their capitals, rather in
      the improvement and cultivation of land, than either in manufactures or in
      foreign trade. The man who employs his capital in land, has it more under
      his view and command; and his fortune is much less liable to accidents
      than that of the trader, who is obliged frequently to commit it, not only
      to the winds and the waves, but to the more uncertain elements of human
      folly and injustice, by giving great credits, in distant countries, to men
      with whose character and situation he can seldom be thoroughly acquainted.
      The capital of the landlord, on the contrary, which is fixed in the
      improvement of his land, seems to be as well secured as the nature of
      human affairs can admit of. The beauty of the country, besides, the
      pleasure of a country life, the tranquillity of mind which it promises,
      and, wherever the injustice of human laws does not disturb it, the
      independency which it really affords, have charms that, more or less,
      attract everybody; and as to cultivate the ground was the original
      destination of man, so, in every stage of his existence, he seems to
      retain a predilection for this primitive employment.
    
      Without the assistance of some artificers, indeed, the cultivation of land
      cannot be carried on, but with great inconveniency and continual
      interruption. Smiths, carpenters, wheelwrights and ploughwrights, masons
      and bricklayers, tanners, shoemakers, and tailors, are people whose
      service the farmer has frequent occasion for. Such artificers, too, stand
      occasionally in need of the assistance of one another; and as their
      residence is not, like that of the farmer, necessarily tied down to a
      precise spot, they naturally settle in the neighbourhood of one another,
      and thus form a small town or village. The butcher, the brewer, and the
      baker, soon join them, together with many other artificers and retailers,
      necessary or useful for supplying their occasional wants, and who
      contribute still further to augment the town. The inhabitants of the town,
      and those of the country, are mutually the servants of one another. The
      town is a continual fair or market, to which the inhabitants of the
      country resort, in order to exchange their rude for manufactured produce.
      It is this commerce which supplies the inhabitants of the town, both with
      the materials of their work, and the means of their subsistence. The
      quantity of the finished work which they sell to the inhabitants of the
      country, necessarily regulates the quantity of the materials and
      provisions which they buy. Neither their employment nor subsistence,
      therefore, can augment, but in proportion to the augmentation of the
      demand from the country for finished work; and this demand can augment
      only in proportion to the extension of improvement and cultivation. Had
      human institutions, therefore, never disturbed the natural course of
      things, the progressive wealth and increase of the towns would, in every
      political society, be consequential, and in proportion to the improvement
      and cultivation of the territory of country.
    
      In our North American colonies, where uncultivated land is still to be had
      upon easy terms, no manufactures for distant sale have ever yet been
      established in any of their towns. When an artificer has acquired a little
      more stock than is necessary for carrying on his own business in supplying
      the neighbouring country, he does not, in North America, attempt to
      establish with it a manufacture for more distant sale, but employs it in
      the purchase and improvement of uncultivated land. From artificer he
      becomes planter; and neither the large wages nor the easy subsistence
      which that country affords to artificers, can bribe him rather to work for
      other people than for himself. He feels that an artificer is the servant
      of his customers, from whom he derives his subsistence; but that a planter
      who cultivates his own land, and derives his necessary subsistence from
      the labour of his own family, is really a master, and independent of all
      the world.
    
      In countries, on the contrary, where there is either no uncultivated land,
      or none that can be had upon easy terms, every artificer who has acquired
      more stock than he can employ in the occasional jobs of the neighbourhood,
      endeavours to prepare work for more distant sale. The smith erects some
      sort of iron, the weaver some sort of linen or woollen manufactory. Those
      different manufactures come, in process of time, to be gradually
      subdivided, and thereby improved and refined in a great variety of ways,
      which may easily be conceived, and which it is therefore unnecessary to
      explain any farther.
    
      In seeking for employment to a capital, manufactures are, upon equal or
      nearly equal profits, naturally preferred to foreign commerce, for the
      same reason that agriculture is naturally preferred to manufactures. As
      the capital of the landlord or farmer is more secure than that of the
      manufacturer, so the capital of the manufacturer, being at all times more
      within his view and command, is more secure than that of the foreign
      merchant. In every period, indeed, of every society, the surplus part both
      of the rude and manufactured produce, or that for which there is no demand
      at home, must be sent abroad, in order to be exchanged for something for
      which there is some demand at home. But whether the capital which carries
      this surplus produce abroad be a foreign or a domestic one, is of very
      little importance. If the society has not acquired sufficient capital,
      both to cultivate all its lands, and to manufacture in the completest
      manner the whole of its rude produce, there is even a considerable
      advantage that the rude produce should be exported by a foreign capital,
      in order that the whole stock of the society may be employed in more
      useful purposes. The wealth of ancient Egypt, that of China and Indostan,
      sufficiently demonstrate that a nation may attain a very high degree of
      opulence, though the greater part of its exportation trade be carried on
      by foreigners. The progress of our North American and West Indian
      colonies, would have been much less rapid, had no capital but what
      belonged to themselves been employed in exporting their surplus produce.
    
      According to the natural course of things, therefore, the greater part of
      the capital of every growing society is, first, directed to agriculture,
      afterwards to manufactures, and, last of all, to foreign commerce. This
      order of things is so very natural, that in every society that had any
      territory, it has always, I believe, been in some degree observed. Some of
      their lands must have been cultivated before any considerable towns could
      be established, and some sort of coarse industry of the manufacturing kind
      must have been carried on in those towns, before they could well think of
      employing themselves in foreign commerce.
    
      But though this natural order of things must have taken place in some
      degree in every such society, it has, in all the modern states of Europe,
      been in many respects entirely inverted. The foreign commerce of some of
      their cities has introduced all their finer manufactures, or such as were
      fit for distant sale; and manufactures and foreign commerce together have
      given birth to the principal improvements of agriculture. The manners and
      customs which the nature of their original government introduced, and
      which remained after that government was greatly altered, necessarily
      forced them into this unnatural and retrograde order.
    


CHAPTER II.
OF THE DISCOURAGEMENT OF AGRICULTURE
IN THE ANCIENT STATE OF EUROPE, AFTER THE FALL OF THE ROMAN EMPIRE.


    
      When the German and Scythian nations overran the western provinces of the
      Roman empire, the confusions which followed so great a revolution lasted
      for several centuries. The rapine and violence which the barbarians
      exercised against the ancient inhabitants, interrupted the commerce
      between the towns and the country. The towns were deserted, and the
      country was left uncultivated; and the western provinces of Europe, which
      had enjoyed a considerable degree of opulence under the Roman empire, sunk
      into the lowest state of poverty and barbarism. During the continuance of
      those confusions, the chiefs and principal leaders of those nations
      acquired, or usurped to themselves, the greater part of the lands of those
      countries. A great part of them was uncultivated; but no part of them,
      whether cultivated or uncultivated, was left without a proprietor. All of
      them were engrossed, and the greater part by a few great proprietors.
    
      This original engrossing of uncultivated lands, though a great, might have
      been but a transitory evil. They might soon have been divided again, and
      broke into small parcels, either by succession or by alienation. The law
      of primogeniture hindered them from being divided by succession; the
      introduction of entails prevented their being broke into small parcels by
      alienation.
    
      When land, like moveables, is considered as the means only of subsistence
      and enjoyment, the natural law of succession divides it, like them, among
      all the children of the family; of all of whom the subsistence and
      enjoyment may be supposed equally dear to the father. This natural law of
      succession, accordingly, took place among the Romans who made no more
      distinction between elder and younger, between male and female, in the
      inheritance of lands, than we do in the distribution of moveables. But
      when land was considered as the means, not of subsistence merely, but of
      power and protection, it was thought better that it should descend
      undivided to one. In those disorderly times, every great landlord was a
      sort of petty prince. His tenants were his subjects. He was their judge,
      and in some respects their legislator in peace and their leader in war. He
      made war according to his own discretion, frequently against his
      neighbours, and sometimes against his sovereign. The security of a landed
      estate, therefore, the protection which its owner could afford to those
      who dwelt on it, depended upon its greatness. To divide it was to ruin it,
      and to expose every part of it to be oppressed and swallowed up by the
      incursions of its neighbours. The law of primogeniture, therefore, came to
      take place, not immediately indeed, but in process of time, in the
      succession of landed estates, for the same reason that it has generally
      taken place in that of monarchies, though not always at their first
      institution. That the power, and consequently the security of the
      monarchy, may not be weakened by division, it must descend entire to one
      of the children. To which of them so important a preference shall be
      given, must be determined by some general rule, founded not upon the
      doubtful distinctions of personal merit, but upon some plain and evident
      difference which can admit of no dispute. Among the children of the same
      family there can be no indisputable difference but that of sex, and that
      of age. The male sex is universally preferred to the female; and when all
      other things are equal, the elder everywhere takes place of the younger.
      Hence the origin of the right of primogeniture, and of what is called
      lineal succession.
    
      Laws frequently continue in force long after the circumstances which first
      gave occasion to them, and which could alone render them reasonable, are
      no more. In the present state of Europe, the proprietor of a single acre
      of land is as perfectly secure in his possession as the proprietor of
      100,000. The right of primogeniture, however, still continues to be
      respected; and as of all institutions it is the fittest to support the
      pride of family distinctions, it is still likely to endure for many
      centuries. In every other respect, nothing can be more contrary to the
      real interest of a numerous family, than a right which, in order to enrich
      one, beggars all the rest of the children.
    
      Entails are the natural consequences of the law of primogeniture. They
      were introduced to preserve a certain lineal succession, of which the law
      of primogeniture first gave the idea, and to hinder any part of the
      original estate from being carried out of the proposed line, either by
      gift, or device, or alienation; either by the folly, or by the misfortune
      of any of its successive owners. They were altogether unknown to the
      Romans. Neither their substitutions, nor fidei commisses, bear any
      resemblance to entails, though some French lawyers have thought proper to
      dress the modern institution in the language and garb of those ancient
      ones.
    
      When great landed estates were a sort of principalities, entails might not
      be unreasonable. Like what are called the fundamental laws of some
      monarchies, they might frequently hinder the security of thousands from
      being endangered by the caprice or extravagance of one man. But in the
      present state of Europe, when small as well as great estates derive their
      security from the laws of their country, nothing can be more completely
      absurd. They are founded upon the most absurd of all suppositions, the
      supposition that every successive generation of men have not an equal
      right to the earth, and to all that it possesses; but that the property of
      the present generation should be restrained and regulated according to the
      fancy of those who died, perhaps five hundred years ago. Entails, however,
      are still respected, through the greater part of Europe; In those
      countries, particularly, in which noble birth is a necessary qualification
      for the enjoyment either of civil or military honours. Entails are thought
      necessary for maintaining this exclusive privilege of the nobility to the
      great offices and honours of their country; and that order having usurped
      one unjust advantage over the rest of their fellow-citizens, lest their
      poverty should render it ridiculous, it is thought reasonable that they
      should have another. The common law of England, indeed, is said to abhor
      perpetuities, and they are accordingly more restricted there than in any
      other European monarchy; though even England is not altogether without
      them. In Scotland, more than one fifth, perhaps more than one third part
      of the whole lands in the country, are at present supposed to be under
      strict entail.
    
      Great tracts of uncultivated land were in this manner not only engrossed
      by particular families, but the possibility of their being divided again
      was as much as possible precluded for ever. It seldom happens, however,
      that a great proprietor is a great improver. In the disorderly times which
      gave birth to those barbarous institutions, the great proprietor was
      sufficiently employed in defending his own territories, or in extending
      his jurisdiction and authority over those of his neighbours. He had no
      leisure to attend to the cultivation and improvement of land. When the
      establishment of law and order afforded him this leisure, he often wanted
      the inclination, and almost always the requisite abilities. If the expense
      of his house and person either equalled or exceeded his revenue, as it did
      very frequently, he had no stock to employ in this manner. If he was an
      economist, he generally found it more profitable to employ his annual
      savings in new purchases than in the improvement of his old estate. To
      improve land with profit, like all other commercial projects, requires an
      exact attention to small savings and small gains, of which a man born to a
      great fortune, even though naturally frugal, is very seldom capable. The
      situation of such a person naturally disposes him to attend rather to
      ornament, which pleases his fancy, than to profit, for which he has so
      little occasion. The elegance of his dress, of his equipage, of his house
      and household furniture, are objects which, from his infancy, he has been
      accustomed to have some anxiety about. The turn of mind which this habit
      naturally forms, follows him when he comes to think of the improvement of
      land. He embellishes, perhaps, four or five hundred acres in the
      neighbourhood of his house, at ten times the expense which the land is
      worth after all his improvements; and finds, that if he was to improve his
      whole estate in the same manner, and he has little taste for any other, he
      would be a bankrupt before he had finished the tenth part of it. There
      still remain, in both parts of the united kingdom, some great estates
      which have continued, without interruption, in the hands of the same
      family since the times of feudal anarchy. Compare the present condition of
      those estates with the possessions of the small proprietors in their
      neighbourhood, and you will require no other argument to convince you how
      unfavourable such extensive property is to improvement.
    
      If little improvement was to be expected from such great proprietors,
      still less was to be hoped for from those who occupied the land under
      them. In the ancient state of Europe, the occupiers of land were all
      tenants at will. They were all, or almost all, slaves, but their slavery
      was of a milder kind than that known among the ancient Greeks and Romans,
      or even in our West Indian colonies. They were supposed to belong more
      directly to the land than to their master. They could, therefore, be sold
      with it, but not separately. They could marry, provided it was with the
      consent of their master; and he could not afterwards dissolve the marriage
      by selling the man and wife to different persons. If he maimed or murdered
      any of them, he was liable to some penalty, though generally but to a
      small one. They were not, however, capable of acquiring property. Whatever
      they acquired was acquired to their master, and he could take it from them
      at pleasure. Whatever cultivation and improvement could be carried on by
      means of such slaves, was properly carried on by their master. It was at
      his expense. The seed, the cattle, and the instruments of husbandry, were
      all his. It was for his benefit. Such slaves could acquire nothing but
      their daily maintenance. It was properly the proprietor himself,
      therefore, that in this case occupied his own lands, and cultivated them
      by his own bondmen. This species of slavery still subsists in Russia,
      Poland, Hungary, Bohemia, Moravia, and other parts of Germany. It is only
      in the western and south-western provinces of Europe that it has gradually
      been abolished altogether.
    
      But if great improvements are seldom to be expected from great
      proprietors, they are least of all to be expected when they employ slaves
      for their workmen. The experience of all ages and nations, I believe,
      demonstrates that the work done by slaves, though it appears to cost only
      their maintenance, is in the end the dearest of any. A person who can
      acquire no property can have no other interest but to eat as much and to
      labour as little as possible. Whatever work he does beyond what is
      sufficient to purchase his own maintenance, can be squeezed out of him by
      violence only, and not by any interest of his own. In ancient Italy, how
      much the cultivation of corn degenerated, how unprofitable it became to
      the master, when it fell under the management of slaves, is remarked both
      by Pliny and Columella. In the time of Aristotle, it had not been much
      better in ancient Greece. Speaking of the ideal republic described in the
      laws of Plato, to maintain 5000 idle men (the number of warriors supposed
      necessary for its defence), together with their women and servants, would
      require, he says, a territory of boundless extent and fertility, like the
      plains of Babylon.
    
      The pride of man makes him love to domineer, and nothing mortifies him so
      much as to be obliged to condescend to persuade his inferiors. Wherever
      the law allows it, and the nature of the work can afford it, therefore, he
      will generally prefer the service of slaves to that of freemen. The
      planting of sugar and tobacco can afford the expense of slave cultivation.
      The raising of corn, it seems, in the present times, cannot. In the
      English colonies, of which the principal produce is corn, the far greater
      part of the work is done by freemen. The late resolution of the Quakers in
      Pennsylvania, to set at liberty all their negro slaves, may satisfy us
      that their number cannot be very great. Had they made any considerable
      part of their property, such a resolution could never have been agreed to.
      In our sugar colonies., on the contrary, the whole work is done by slaves,
      and in our tobacco colonies a very great part of it. The profits of a
      sugar plantation in any of our West Indian colonies, are generally much
      greater than those of any other cultivation that is known either in Europe
      or America; and the profits of a tobacco plantation, though inferior to
      those of sugar, are superior to those of corn, as has already been
      observed. Both can afford the expense of slave cultivation but sugar can
      afford it still better than tobacco. The number of negroes, accordingly,
      is much greater, in proportion to that of whites, in our sugar than in our
      tobacco colonies.
    
      To the slave cultivators of ancient times gradually succeeded a species of
      farmers, known at present in France by the name of metayers. They are
      called in Latin Coloni Partiarii. They have been so long in disuse in
      England, that at present I know no English name for them. The proprietor
      furnished them with the seed, cattle, and instruments of husbandry, the
      whole stock, in short, necessary for cultivating the farm. The produce was
      divided equally between the proprietor and the farmer, after setting aside
      what was judged necessary for keeping up the stock, which was restored to
      the proprietor, when the farmer either quitted or was turned out of the
      farm.
    
      Land occupied by such tenants is properly cultivated at the expense of the
      proprietors, as much as that occupied by slaves. There is, however, one
      very essential difference between them. Such tenants, being freemen, are
      capable of acquiring property; and having a certain proportion of the
      produce of the land, they have a plain interest that the whole produce
      should be as great as possible, in order that their own proportion may be
      so. A slave, on the contrary, who can acquire nothing but his maintenance,
      consults his own ease, by making the land produce as little as possible
      over and above that maintenance. It is probable that it was partly upon
      account of this advantage, and partly upon account of the encroachments
      which the sovereigns, always jealous of the great lords, gradually
      encouraged their villains to make upon their authority, and which seem, at
      least, to have been such as rendered this species of servitude altogether
      inconvenient, that tenure in villanage gradually wore out through the
      greater part of Europe. The time and manner, however, in which so
      important a revolution was brought about, is one of the most obscure
      points in modern history. The church of Rome claims great merit in it; and
      it is certain, that so early as the twelfth century, Alexander III.
      published a bull for the general emancipation of slaves. It seems,
      however, to have been rather a pious exhortation, than a law to which
      exact obedience was required from the faithful. Slavery continued to take
      place almost universally for several centuries afterwards, till it was
      gradually abolished by the joint operation of the two interests above
      mentioned; that of the proprietor on the one hand, and that of the
      sovereign on the other. A villain, enfranchised, and at the same time
      allowed to continue in possession of the land, having no stock of his own,
      could cultivate it only by means of what the landlord advanced to him, and
      must therefore have been what the French call a metayer.
    
      It could never, however, be the interest even of this last species of
      cultivators, to lay out, in the further improvement of the land, any part
      of the little stock which they might save from their own share of the
      produce; because the landlord, who laid out nothing, was to get one half
      of whatever it produced. The tithe, which is but a tenth of the produce,
      is found to be a very great hindrance to improvement. A tax, therefore,
      which amounted to one half, must have been an effectual bar to it. It
      might be the interest of a metayer to make the land produce as much as
      could be brought out of it by means of the stock furnished by the
      proprietor; but it could never be his interest to mix any part of his own
      with it. In France, where five parts out of six of the whole kingdom are
      said to be still occupied by this species of cultivators, the proprietors
      complain, that their metayers take every opportunity of employing their
      master’s cattle rather in carriage than in cultivation; because, in the
      one case, they get the whole profits to themselves, in the other they
      share them with their landlord. This species of tenants still subsists in
      some parts of Scotland. They are called steel-bow tenants. Those ancient
      English tenants, who are said by Chief-Baron Gilbert and Dr Blackstone to
      have been rather bailiffs of the landlord than farmers, properly so
      called, were probably of the same kind.
    
      To this species of tenantry succeeded, though by very slow degrees,
      farmers, properly so called, who cultivated the land with their own stock,
      paying a rent certain to the landlord. When such farmers have a lease for
      a term of years, they may sometimes find it for their interest to lay out
      part of their capital in the further improvement of the farm; because they
      may sometimes expect to recover it, with a large profit, before the
      expiration of the lease. The possession, even of such farmers, however,
      was long extremely precarious, and still is so in many parts of Europe.
      They could, before the expiration of their term, be legally ousted of
      their leases by a new purchaser; in England, even, by the fictitious
      action of a common recovery. If they were turned out illegally by the
      violence of their master, the action by which they obtained redress was
      extremely imperfect. It did not always reinstate them in the possession of
      the land, but gave them damages, which never amounted to a real loss. Even
      in England, the country, perhaps of Europe, where the yeomanry has always
      been most respected, it was not till about the 14th of Henry VII. that the
      action of ejectment was invented, by which the tenant recovers, not
      damages only, but possession, and in which his claim is not necessarily
      concluded by the uncertain decision of a single assize. This action has
      been found so effectual a remedy, that, in the modern practice, when the
      landlord has occasion to sue for the possession of the land, he seldom
      makes use of the actions which properly belong to him as a landlord, the
      writ of right or the writ of entry, but sues in the name of his tenant, by
      the writ of ejectment. In England, therefore the security of the tenant is
      equal to that of the proprietor. In England, besides, a lease for life of
      forty shillings a-year value is a freehold, and entitles the lessee to a
      vote for a member of parliament; and as a great part of the yeomanry have
      freeholds of this kind, the whole order becomes respectable to their
      landlords, on account of the political consideration which this gives
      them. There is, I believe, nowhere in Europe, except in England, any
      instance of the tenant building upon the land of which he had no lease,
      and trusting that the honour of his landlord would take no advantage of so
      important an improvement. Those laws and customs, so favourable to the
      yeomanry, have perhaps contributed more to the present grandeur of
      England, than all their boasted regulations of commerce taken together.
    
      The law which secures the longest leases against successors of every kind,
      is, so far as I know, peculiar to Great Britain. It was introduced into
      Scotland so early as 1449, by a law of James II. Its beneficial influence,
      however, has been much obstructed by entails; the heirs of entail being
      generally restrained from letting leases for any long term of years,
      frequently for more than one year. A late act of parliament has, in this
      respect, somewhat slackened their fetters, though they are still by much
      too strait. In Scotland, besides, as no leasehold gives a vote for a
      member of parliament, the yeomanry are upon this account less respectable
      to their landlords than in England.
    
      In other parts of Europe, after it was found convenient to secure tenants
      both against heirs and purchasers, the term of their security was still
      limited to a very short period; in France, for example, to nine years from
      the commencement of the lease. It has in that country, indeed, been lately
      extended to twentyseven, a period still too short to encourage the tenant
      to make the most important improvements. The proprietors of land were
      anciently the legislators of every part of Europe. The laws relating to
      land, therefore, were all calculated for what they supposed the interest
      of the proprietor. It was for his interest, they had imagined, that no
      lease granted by any of his predecessors should hinder him from enjoying,
      during a long term of years, the full value of his land. Avarice and
      injustice are always short-sighted, and they did not foresee how much this
      regulation must obstruct improvement, and thereby hurt, in the long-run,
      the real interest of the landlord.
    
      The farmers, too, besides paying the rent, were anciently, it was
      supposed, bound to perform a great number of services to the landlord,
      which were seldom either specified in the lease, or regulated by any
      precise rule, but by the use and wont of the manor or barony. These
      services, therefore, being almost entirely arbitrary, subjected the tenant
      to many vexations. In Scotland the abolition of all services not precisely
      stipulated in the lease, has, in the course of a few years, very much
      altered for the better the condition of the yeomanry of that country.
    
      The public services to which the yeomanry were bound, were not less
      arbitrary than the private ones. To make and maintain the high roads, a
      servitude which still subsists, I believe, everywhere, though with
      different degrees of oppression in different countries, was not the only
      one. When the king’s troops, when his household, or his officers of any
      kind, passed through any part of the country, the yeomanry were bound to
      provide them with horses, carriages, and provisions, at a price regulated
      by the purveyor. Great Britain is, I believe, the only monarchy in Europe
      where the oppression of purveyance has been entirely abolished. It still
      subsists in France and Germany.
    
      The public taxes, to which they were subject, were as irregular and
      oppressive as the services. The ancient lords, though extremely unwilling
      to grant, themselves, any pecuniary aid to their sovereign, easily allowed
      him to tallage, as they called it, their tenants, and had not knowledge
      enough to foresee how much this must, in the end, affect their own
      revenue. The taille, as it still subsists in France may serve as an
      example of those ancient tallages. It is a tax upon the supposed profits
      of the farmer, which they estimate by the stock that he has upon the farm.
      It is his interest, therefore, to appear to have as little as possible,
      and consequently to employ as little as possible in its cultivation, and
      none in its improvement. Should any stock happen to accumulate in the
      hands of a French farmer, the taille is almost equal to a prohibition of
      its ever being employed upon the land. This tax, besides, is supposed to
      dishonour whoever is subject to it, and to degrade him below, not only the
      rank of a gentleman, but that of a burgher; and whoever rents the lands of
      another becomes subject to it. No gentleman, nor even any burgher, who has
      stock, will submit to this degradation. This tax, therefore, not only
      hinders the stock which accumulates upon the land from being employed in
      its improvement, but drives away all other stock from it. The ancient
      tenths and fifteenths, so usual in England in former times, seem, so far
      as they affected the land, to have been taxes of the same nature with the
      taille.
    
      Under all these discouragements, little improvement could be expected from
      the occupiers of land. That order of people, with all the liberty and
      security which law can give, must always improve under great disadvantage.
      The farmer, compared with the proprietor, is as a merchant who trades with
      burrowed money, compared with one who trades with his own. The stock of
      both may improve; but that of the one, with only equal good conduct, must
      always improve more slowly than that of the other, on account of the large
      share of the profits which is consumed by the interest of the loan. The
      lands cultivated by the farmer must, in the same manner, with only equal
      good conduct, be improved more slowly than those cultivated by the
      proprietor, on account of the large share of the produce which is consumed
      in the rent, and which, had the farmer been proprietor, he might have
      employed in the further improvement of the land. The station of a farmer,
      besides, is, from the nature of things, inferior to that of a proprietor.
      Through the greater part of Europe, the yeomanry are regarded as an
      inferior rank of people, even to the better sort of tradesmen and
      mechanics, and in all parts of Europe to the great merchants and master
      manufacturers. It can seldom happen, therefore, that a man of any
      considerable stock should quit the superior, in order to place himself in
      an inferior station. Even in the present state of Europe, therefore,
      little stock is likely to go from any other profession to the improvement
      of land in the way of farming. More does, perhaps, in Great Britain than
      in any other country, though even there the great stocks which are in some
      places employed in farming, have generally been acquired by fanning, the
      trade, perhaps, in which, of all others, stock is commonly acquired most
      slowly. After small proprietors, however, rich and great farmers are in
      every country the principal improvers. There are more such, perhaps, in
      England than in any other European monarchy. In the republican governments
      of Holland, and of Berne in Switzerland, the farmers are said to be not
      inferior to those of England.
    
      The ancient policy of Europe was, over and above all this, unfavourable to
      the improvement and cultivation of land, whether carried on by the
      proprietor or by the farmer; first, by the general prohibition of the
      exportation of corn, without a special licence, which seems to have been a
      very universal regulation; and, secondly, by the restraints which were
      laid upon the inland commerce, not only of corn, but of almost every other
      part of the produce of the farm, by the absurd laws against engrossers,
      regraters, and forestallers, and by the privileges of fairs and markets.
      It has already been observed in what manner the prohibition of the
      exportation of corn, together with some encouragement given to the
      importation of foreign corn, obstructed the cultivation of ancient Italy,
      naturally the most fertile country in Europe, and at that time the seat of
      the greatest empire in the world. To what degree such restraints upon the
      inland commerce of this commodity, joined to the general prohibition of
      exportation, must have discouraged the cultivation of countries less
      fertile, and less favourably circumstanced, it is not, perhaps, very easy
      to imagine.
    


CHAPTER III.
OF THE RISE AND PROGRESS OF CITIES
AND TOWNS, AFTER THE FALL OF THE ROMAN EMPIRE.


    
      The inhabitants of cities and towns were, after the fall of the Roman
      empire, not more favoured than those of the country. They consisted,
      indeed, of a very different order of people from the first inhabitants of
      the ancient republics of Greece and Italy. These last were composed
      chiefly of the proprietors of lands, among whom the public territory was
      originally divided, and who found it convenient to build their houses in
      the neighbourhood of one another, and to surround them with a wall, for
      the sake of common defence. After the fall of the Roman empire, on the
      contrary, the proprietors of land seem generally to have lived in
      fortified castles on their own estates, and in the midst of their own
      tenants and dependants. The towns were chiefly inhabited by tradesmen and
      mechanics, who seem, in those days, to have been of servile, or very
      nearly of servile condition. The privileges which we find granted by
      ancient charters to the inhabitants of some of the principal towns in
      Europe, sufficiently show what they were before those grants. The people
      to whom it is granted as a privilege, that they might give away their own
      daughters in marriage without the consent of their lord, that upon their
      death their own children, and not their lord, should succeed to their
      goods, and that they might dispose of their own effects by will, must,
      before those grants, have been either altogether, or very nearly, in the
      same state of villanage with the occupiers of land in the country.
    
      They seem, indeed, to have been a very poor, mean set of people, who
      seemed to travel about with their goods from place to place, and from fair
      to fair, like the hawkers and pedlars of the present times. In all the
      different countries of Europe then, in the same manner as in several of
      the Tartar governments of Asia at present, taxes used to be levied upon
      the persons and goods of travellers, when they passed through certain
      manors, when they went over certain bridges, when they carried about their
      goods from place to place in a fair, when they erected in it a booth or
      stall to sell them in. These different taxes were known in England by the
      names of passage, pontage, lastage, and stallage. Sometimes the king,
      sometimes a great lord, who had, it seems, upon some occasions, authority
      to do this, would grant to particular traders, to such particularly as
      lived in their own demesnes, a general exemption from such taxes. Such
      traders, though in other respects of servile, or very nearly of servile
      condition, were upon this account called free traders. They, in return,
      usually paid to their protector a sort of annual poll-tax. In those days
      protection was seldom granted without a valuable consideration, and this
      tax might perhaps be considered as compensation for what their patrons
      might lose by their exemption from other taxes. At first, both those
      poll-taxes and those exemptions seem to have been altogether personal, and
      to have affected only particular individuals, during either their lives,
      or the pleasure of their protectors. In the very imperfect accounts which
      have been published from Doomsday-book, of several of the towns of
      England, mention is frequently made, sometimes of the tax which particular
      burghers paid, each of them, either to the king, or to some other great
      lord, for this sort of protection, and sometimes of the general amount
      only of all those taxes. {see Brady’s Historical Treatise of Cities and
      Boroughs, p. 3. etc.}
    
      But how servile soever may have been originally the condition of the
      inhabitants of the towns, it appears evidently, that they arrived at
      liberty and independency much earlier than the occupiers of land in the
      country. That part of the king’s revenue which arose from such poll-taxes
      in any particular town, used commonly to be let in farm, during a term of
      years, for a rent certain, sometimes to the sheriff of the county, and
      sometimes to other persons. The burghers themselves frequently got credit
      enough to be admitted to farm the revenues of this sort which arose out of
      their own town, they becoming jointly and severally answerable for the
      whole rent. {See Madox, Firma Burgi, p. 18; also History of the Exchequer,
      chap. 10, sect. v, p. 223, first edition.} To let a farm in this manner,
      was quite agreeable to the usual economy of, I believe, the sovereigns of
      all the different countries of Europe, who used frequently to let whole
      manors to all the tenants of those manors, they becoming jointly and
      severally answerable for the whole rent; but in return being allowed to
      collect it in their own way, and to pay it into the king’s exchequer by
      the hands of their own bailiff, and being thus altogether freed from the
      insolence of the king’s officers; a circumstance in those days regarded as
      of the greatest importance.
    
      At first, the farm of the town was probably let to the burghers, in the
      same manner as it had been to other farmers, for a term of years only. In
      process of time, however, it seems to have become the general practice to
      grant it to them in fee, that is for ever, reserving a rent certain, never
      afterwards to be augmented. The payment having thus become perpetual, the
      exemptions, in return, for which it was made, naturally became perpetual
      too. Those exemptions, therefore, ceased to be personal, and could not
      afterwards be considered as belonging to individuals, as individuals, but
      as burghers of a particular burgh, which, upon this account, was called a
      free burgh, for the same reason that they had been called free burghers or
      free traders.
    
      Along with this grant, the important privileges, above mentioned, that
      they might give away their own daughters in marriage, that their children
      should succeed to them, and that they might dispose of their own effects
      by will, were generally bestowed upon the burghers of the town to whom it
      was given. Whether such privileges had before been usually granted, along
      with the freedom of trade, to particular burghers, as individuals, I know
      not. I reckon it not improbable that they were, though I cannot produce
      any direct evidence of it. But however this may have been, the principal
      attributes of villanage and slavery being thus taken away from them, they
      now at least became really free, in our present sense of the word freedom.
    
      Nor was this all. They were generally at the same time erected into a
      commonalty or corporation, with the privilege of having magistrates and a
      town-council of their own, of making bye-laws for their own government, of
      building walls for their own defence, and of reducing all their
      inhabitants under a sort of military discipline, by obliging them to watch
      and ward; that is, as anciently understood, to guard and defend those
      walls against all attacks and surprises, by night as well as by day. In
      England they were generally exempted from suit to the hundred and county
      courts: and all such pleas as should arise among them, the pleas of the
      crown excepted, were left to the decision of their own magistrates. In
      other countries, much greater and more extensive jurisdictions were
      frequently granted to them. {See Madox, Firma Burgi. See also Pfeffel in
      the Remarkable events under Frederick II. and his Successors of the House
      of Suabia.}
    
      It might, probably, be necessary to grant to such towns as were admitted
      to farm their own revenues, some sort of compulsive jurisdiction to oblige
      their own citizens to make payment. In those disorderly times, it might
      have been extremely inconvenient to have left them to seek this sort of
      justice from any other tribunal. But it must seem extraordinary, that the
      sovereigns of all the different countries of Europe should have exchanged
      in this manner for a rent certain, never more to be augmented, that branch
      of their revenue, which was, perhaps, of all others, the most likely to be
      improved by the natural course of things, without either expense or
      attention of their own; and that they should, besides, have in this manner
      voluntarily erected a sort of independent republics in the heart of their
      own dominions.
    
      In order to understand this, it must be remembered, that, in those days,
      the sovereign of perhaps no country in Europe was able to protect, through
      the whole extent of his dominions, the weaker part of his subjects from
      the oppression of the great lords. Those whom the law could not protect,
      and who were not strong enough to defend themselves, were obliged either
      to have recourse to the protection of some great lord, and in order to
      obtain it, to become either his slaves or vassals; or to enter into a
      league of mutual defence for the common protection of one another. The
      inhabitants of cities and burghs, considered as single individuals, had no
      power to defend themselves; but by entering into a league of mutual
      defence with their neighbours, they were capable of making no contemptible
      resistance. The lords despised the burghers, whom they considered not only
      as a different order, but as a parcel of emancipated slaves, almost of a
      different species from themselves. The wealth of the burghers never failed
      to provoke their envy and indignation, and they plundered them upon every
      occasion without mercy or remorse. The burghers naturally hated and feared
      the lords. The king hated and feared them too; but though, perhaps, he
      might despise, he had no reason either to hate or fear the burghers.
      Mutual interest, therefore, disposed them to support the king, and the
      king to support them against the lords. They were the enemies of his
      enemies, and it was his interest to render them as secure and independent
      of those enemies as he could. By granting them magistrates of their own,
      the privilege of making bye-laws for their own government, that of
      building walls for their own defence, and that of reducing all their
      inhabitants under a sort of military discipline, he gave them all the
      means of security and independency of the barons which it was in his power
      to bestow. Without the establishment of some regular government of this
      kind, without some authority to compel their inhabitants to act according
      to some certain plan or system, no voluntary league of mutual defence
      could either have afforded them any permanent security, or have enabled
      them to give the king any considerable support. By granting them the farm
      of their own town in fee, he took away from those whom he wished to have
      for his friends, and, if one may say so, for his allies, all ground of
      jealousy and suspicion, that he was ever afterwards to oppress them,
      either by raising the farm-rent of their town, or by granting it to some
      other farmer.
    
      The princes who lived upon the worst terms with their barons, seem
      accordingly to have been the most liberal in grants of this kind to their
      burghs. King John of England, for example, appears to have been a most
      munificent benefactor to his towns. {See Madox.} Philip I. of France lost
      all authority over his barons. Towards the end of his reign, his son
      Lewis, known afterwards by the name of Lewis the Fat, consulted, according
      to Father Daniel, with the bishops of the royal demesnes, concerning the
      most proper means of restraining the violence of the great lords. Their
      advice consisted of two different proposals. One was to erect a new order
      of jurisdiction, by establishing magistrates and a town-council in every
      considerable town of his demesnes. The other was to form a new militia, by
      making the inhabitants of those towns, under the command of their own
      magistrates, march out upon proper occasions to the assistance of the
      king. It is from this period, according to the French antiquarians, that
      we are to date the institution of the magistrates and councils of cities
      in France. It was during the unprosperous reigns of the princes of the
      house of Suabia, that the greater part of the free towns of Germany
      received the first grants of their privileges, and that the famous
      Hanseatic league first became formidable. {See Pfeffel.}
    
      The militia of the cities seems, in those times, not to have been inferior
      to that of the country; and as they could be more readily assembled upon
      any sudden occasion, they frequently had the advantage in their disputes
      with the neighbouring lords. In countries such as Italy or Switzerland, in
      which, on account either of their distance from the principal seat of
      government, of the natural strength of the country itself, or of some
      other reason, the sovereign came to lose the whole of his authority; the
      cities generally became independent republics, and conquered all the
      nobility in their neighbourhood; obliging them to pull down their castles
      in the country, and to live, like other peaceable inhabitants, in the
      city. This is the short history of the republic of Berne, as well as of
      several other cities in Switzerland. If you except Venice, for of that
      city the history is somewhat different, it is the history of all the
      considerable Italian republics, of which so great a number arose and
      perished between the end of the twelfth and the beginning of the sixteenth
      century.
    
      In countries such as France and England, where the authority of the
      sovereign, though frequently very low, never was destroyed altogether, the
      cities had no opportunity of becoming entirely independent. They became,
      however, so considerable, that the sovereign could impose no tax upon
      them, besides the stated farm-rent of the town, without their own consent.
      They were, therefore, called upon to send deputies to the general assembly
      of the states of the kingdom, where they might join with the clergy and
      the barons in granting, upon urgent occasions, some extraordinary aid to
      the king. Being generally, too, more favourable to his power, their
      deputies seem sometimes to have been employed by him as a counterbalance
      in those assemblies to the authority of the great lords. Hence the origin
      of the representation of burghs in the states-general of all great
      monarchies in Europe.
    
      Order and good government, and along with them the liberty and security of
      individuals, were in this manner established in cities, at a time when the
      occupiers of land in the country, were exposed to every sort of violence.
      But men in this defenceless state naturally content themselves with their
      necessary subsistence; because, to acquire more, might only tempt the
      injustice of their oppressors. On the contrary, when they are secure of
      enjoying the fruits of their industry, they naturally exert it to better
      their condition, and to acquire not only the necessaries, but the
      conveniencies and elegancies of life. That industry, therefore, which aims
      at something more than necessary subsistence, was established in cities
      long before it was commonly practised by the occupiers of land in the
      country. If, in the hands of a poor cultivator, oppressed with the
      servitude of villanage, some little stock should accumulate, he would
      naturally conceal it with great care from his master, to whom it would
      otherwise have belonged, and take the first opportunity of running away to
      a town. The law was at that time so indulgent to the inhabitants of towns,
      and so desirous of diminishing the authority of the lords over those of
      the country, that if he could conceal himself there from the pursuit of
      his lord for a year, he was free for ever. Whatever stock, therefore,
      accumulated in the hands of the industrious part of the inhabitants of the
      country, naturally took refuge in cities, as the only sanctuaries in which
      it could be secure to the person that acquired it.
    
      The inhabitants of a city, it is true, must always ultimately derive their
      subsistence, and the whole materials and means of their industry, from the
      country. But those of a city, situated near either the sea-coast or the
      banks of a navigable river, are not necessarily confined to derive them
      from the country in their neighbourhood. They have a much wider range, and
      may draw them from the most remote corners of the world, either in
      exchange for the manufactured produce of their own industry, or by
      performing the office of carriers between distant countries, and
      exchanging the produce of one for that of another. A city might, in this
      manner, grow up to great wealth and splendour, while not only the country
      in its neighbourhood, but all those to which it traded, were in poverty
      and wretchedness. Each of those countries, perhaps, taken singly, could
      afford it but a small part, either of its subsistence or of its
      employment; but all of them taken together, could afford it both a great
      subsistence and a great employment. There were, however, within the narrow
      circle of the commerce of those times, some countries that were opulent
      and industrious. Such was the Greek empire as long as it subsisted, and
      that of the Saracens during the reigns of the Abassides. Such, too, was
      Egypt till it was conquered by the Turks, some part of the coast of
      Barbary, and all those provinces of Spain which were under the government
      of the Moors.
    
      The cities of Italy seem to have been the first in Europe which were
      raised by commerce to any considerable degree of opulence. Italy lay in
      the centre of what was at that time the improved and civilized part of the
      world. The crusades, too, though, by the great waste of stock and
      destruction of inhabitants which they occasioned, they must necessarily
      have retarded the progress of the greater part of Europe, were extremely
      favourable to that of some Italian cities. The great armies which marched
      from all parts to the conquest of the Holy Land, gave extraordinary
      encouragement to the shipping of Venice, Genoa, and Pisa, sometimes in
      transporting them thither, and always in supplying them with provisions.
      They were the commissaries, if one may say so, of those armies; and the
      most destructive frenzy that ever befel the European nations, was a source
      of opulence to those republics.
    
      The inhabitants of trading cities, by importing the improved manufactures
      and expensive luxuries of richer countries, afforded some food to the
      vanity of the great proprietors, who eagerly purchased them with great
      quantities of the rude produce of their own lands. The commerce of a great
      part of Europe in those times, accordingly, consisted chiefly in the
      exchange of their own rude, for the manufactured produce of more civilized
      nations. Thus the wool of England used to be exchanged for the wines of
      France, and the fine cloths of Flanders, in the same manner as the corn in
      Poland is at this day, exchanged for the wines and brandies of France, and
      for the silks and velvets of France and Italy.
    
      A taste for the finer and more improved manufactures was, in this manner,
      introduced by foreign commerce into countries where no such works were
      carried on. But when this taste became so general as to occasion a
      considerable demand, the merchants, in order to save the expense of
      carriage, naturally endeavoured to establish some manufactures of the same
      kind in their own country. Hence the origin of the first manufactures for
      distant sale, that seem to have been established in the western provinces
      of Europe, after the fall of the Roman empire.
    
      No large country, it must be observed, ever did or could subsist without
      some sort of manufactures being carried on in it; and when it is said of
      any such country that it has no manufactures, it must always be understood
      of the finer and more improved, or of such as are fit for distant sale. In
      every large country both the clothing and household furniture or the far
      greater part of the people, are the produce of their own industry. This is
      even more universally the case in those poor countries which are commonly
      said to have no manufactures, than in those rich ones that are said to
      abound in them. In the latter you will generally find, both in the clothes
      and household furniture of the lowest rank of people, a much greater
      proportion of foreign productions than in the former.
    
      Those manufactures which are fit for distant sale, seem to have been
      introduced into different countries in two different ways.
    
      Sometimes they have been introduced in the manner above mentioned, by the
      violent operation, if one may say so, of the stocks of particular
      merchants and undertakers, who established them in imitation of some
      foreign manufactures of the same kind. Such manufactures, therefore, are
      the offspring of foreign commerce; and such seem to have been the ancient
      manufactures of silks, velvets, and brocades, which flourished in Lucca
      during the thirteenth century. They were banished from thence by the
      tyranny of one of Machiavel’s heroes, Castruccio Castracani. In 1310, nine
      hundred families were driven out of Lucca, of whom thirty-one retired to
      Venice, and offered to introduce there the silk manufacture. {See Sandi
      Istoria civile de Vinezia, part 2 vol. i, page 247 and 256.} Their offer
      was accepted, many privileges were conferred upon them, and they began the
      manufacture with three hundred workmen. Such, too, seem to have been the
      manufactures of fine cloths that anciently flourished in Flanders, and
      which were introduced into England in the beginning of the reign of
      Elizabeth, and such are the present silk manufactures of Lyons and
      Spitalfields. Manufactures introduced in this manner are generally
      employed upon foreign materials, being imitations of foreign manufactures.
      When the Venetian manufacture was first established, the materials were
      all brought from Sicily and the Levant. The more ancient manufacture of
      Lucca was likewise carried on with foreign materials. The cultivation of
      mulberry trees, and the breeding of silk-worms, seem not to have been
      common in the northern parts of Italy before the sixteenth century. Those
      arts were not introduced into France till the reign of Charles IX. The
      manufactures of Flanders were carried on chiefly with Spanish and English
      wool. Spanish wool was the material, not of the first woollen manufacture
      of England, but of the first that was fit for distant sale. More than one
      half the materials of the Lyons manufacture is at this day foreign silk;
      when it was first established, the whole, or very nearly the whole, was
      so. No part of the materials of the Spitalfields manufacture is ever
      likely to be the produce of England. The seat of such manufactures, as
      they are generally introduced by the scheme and project of a few
      individuals, is sometimes established in a maritime city, and sometimes in
      an inland town, according as their interest, judgment, or caprice, happen
      to determine.
    
      At other times, manufactures for distant sale grow up naturally, and as it
      were of their own accord, by the gradual refinement of those household and
      coarser manufactures which must at all times be carried on even in the
      poorest and rudest countries. Such manufactures are generally employed
      upon the materials which the country produces, and they seem frequently to
      have been first refined and improved in such inland countries as were not,
      indeed, at a very great, but at a considerable distance from the
      sea-coast, and sometimes even from all water carriage. An inland country,
      naturally fertile and easily cultivated, produces a great surplus of
      provisions beyond what is necessary for maintaining the cultivators; and
      on account of the expense of land carriage, and inconveniency of river
      navigation, it may frequently be difficult to send this surplus abroad.
      Abundance, therefore, renders provisions cheap, and encourages a great
      number of workmen to settle in the neighbourhood, who find that their
      industry can there procure them more of the necessaries and conveniencies
      of life than in other places. They work up the materials of manufacture
      which the land produces, and exchange their finished work, or, what is the
      same thing, the price of it, for more materials and provisions. They give
      a new value to the surplus part of the rude produce, by saving the expense
      of carrying it to the water-side, or to some distant market; and they
      furnish the cultivators with something in exchange for it that is either
      useful or agreeable to them, upon easier terms than they could have
      obtained it before. The cultivators get a better price for their surplus
      produce, and can purchase cheaper other conveniencies which they have
      occasion for. They are thus both encouraged and enabled to increase this
      surplus produce by a further improvement and better cultivation of the
      land; and as the fertility of she land had given birth to the manufacture,
      so the progress of the manufacture reacts upon the land, and increases
      still further its fertility. The manufacturers first supply the
      neighbourhood, and afterwards, as their work improves and refines, more
      distant markets. For though neither the rude produce, nor even the coarse
      manufacture, could, without the greatest difficulty, support the expense
      of a considerable land-carriage, the refined and improved manufacture
      easily may. In a small bulk it frequently contains the price of a great
      quantity of rude produce. A piece of fine cloth, for example which weighs
      only eighty pounds, contains in it the price, not only of eighty pounds
      weight of wool, but sometimes of several thousand weight of corn, the
      maintenance of the different working people, and of their immediate
      employers. The corn which could with difficulty have been carried abroad
      in its own shape, is in this manner virtually exported in that of the
      complete manufacture, and may easily be sent to the remotest corners of
      the world. In this manner have grown up naturally, and, as it were, of
      their own accord, the manufactures of Leeds, Halifax, Sheffield,
      Birmingham, and Wolverhampton. Such manufactures are the offspring of
      agriculture. In the modern history of Europe, their extension and
      improvement have generally been posterior to those which were the
      offspring of foreign commerce. England was noted for the manufacture of
      fine cloths made of Spanish wool, more than a century before any of those
      which now flourish in the places above mentioned were fit for foreign
      sale. The extension and improvement of these last could not take place but
      in consequence of the extension and improvement of agriculture, the last
      and greatest effect of foreign commerce, and of the manufactures
      immediately introduced by it, and which I shall now proceed to explain.
    


CHAPTER IV.
HOW THE COMMERCE OF TOWNS CONTRIBUTED
TO THE IMPROVEMENT OF THE COUNTRY.


    
      The increase and riches of commercial and manufacturing towns contributed
      to the improvement and cultivation of the countries to which they
      belonged, in three different ways.
    
      First, by affording a great and ready market for the rude produce of the
      country, they gave encouragement to its cultivation and further
      improvement. This benefit was not even confined to the countries in which
      they were situated, but extended more or less to all those with which they
      had any dealings. To all of them they afforded a market for some part
      either of their rude or manufactured produce, and, consequently, gave some
      encouragement to the industry and improvement of all. Their own country,
      however, on account of its neighbourhood, necessarily derived the greatest
      benefit from this market. Its rude produce being charged with less
      carriage, the traders could pay the growers a better price for it, and yet
      afford it as cheap to the consumers as that of more distant countries.
    
      Secondly, the wealth acquired by the inhabitants of cities was frequently
      employed in purchasing such lands as were to be sold, of which a great
      part would frequently be uncultivated. Merchants are commonly ambitious of
      becoming country gentlemen, and, when they do, they are generally the best
      of all improvers. A merchant is accustomed to employ his money chiefly in
      profitable projects; whereas a mere country gentleman is accustomed to
      employ it chiefly in expense. The one often sees his money go from him,
      and return to him again with a profit; the other, when once he parts with
      it, very seldom expects to see any more of it. Those different habits
      naturally affect their temper and disposition in every sort of business.
      The merchant is commonly a bold, a country gentleman a timid undertaker.
      The one is not afraid to lay out at once a large capital upon the
      improvement of his land, when he has a probable prospect of raising the
      value of it in proportion to the expense; the other, if he has any
      capital, which is not always the case, seldom ventures to employ it in
      this manner. If he improves at all, it is commonly not with a capital, but
      with what he can save out or his annual revenue. Whoever has had the
      fortune to live in a mercantile town, situated in an unimproved country,
      must have frequently observed how much more spirited the operations of
      merchants were in this way, than those of mere country gentlemen. The
      habits, besides, of order, economy, and attention, to which mercantile
      business naturally forms a merchant, render him much fitter to execute,
      with profit and success, any project of improvement.
    
      Thirdly, and lastly, commerce and manufactures gradually introduced order
      and good government, and with them the liberty and security of
      individuals, among the inhabitants of the country, who had before lived
      almost in a continual state of war with their neighbours, and of servile
      dependency upon their superiors. This, though it has been the least
      observed, is by far the most important of all their effects. Mr Hume is
      the only writer who, so far as I know, has hitherto taken notice of it.
    
      In a country which has neither foreign commerce nor any of the finer
      manufactures, a great proprietor, having nothing for which he can exchange
      the greater part of the produce of his lands which is over and above the
      maintenance of the cultivators, consumes the whole in rustic hospitality
      at home. If this surplus produce is sufficient to maintain a hundred or a
      thousand men, he can make use of it in no other way than by maintaining a
      hundred or a thousand men. He is at all times, therefore, surrounded with
      a multitude of retainers and dependants, who, having no equivalent to give
      in return for their maintenance, but being fed entirely by his bounty,
      must obey him, for the same reason that soldiers must obey the prince who
      pays them. Before the extension of commerce and manufactures in Europe,
      the hospitality of the rich and the great, from the sovereign down to the
      smallest baron, exceeded every thing which, in the present times, we can
      easily form a notion of Westminster-hall was the dining-room of William
      Rufus, and might frequently, perhaps, not be too large for his company. It
      was reckoned a piece of magnificence in Thomas Becket, that he strewed the
      floor of his hall with clean hay or rushes in the season, in order that
      the knights and squires, who could not get seats, might not spoil their
      fine clothes when they sat down on the floor to eat their dinner. The
      great Earl of Warwick is said to have entertained every day, at his
      different manors, 30,000 people; and though the number here may have been
      exaggerated, it must, however, have been very great to admit of such
      exaggeration. A hospitality nearly of the same kind was exercised not many
      years ago in many different parts of the Highlands of Scotland. It seems
      to be common in all nations to whom commerce and manufactures are little
      known. I have seen, says Doctor Pocock, an Arabian chief dine in the
      streets of a town where he had come to sell his cattle, and invite all
      passengers, even common beggars, to sit down with him and partake of his
      banquet.
    
      The occupiers of land were in every respect as dependent upon the great
      proprietor as his retainers. Even such of them as were not in a state of
      villanage, were tenants at will, who paid a rent in no respect equivalent
      to the subsistence which the land afforded them. A crown, half a crown, a
      sheep, a lamb, was some years ago, in the Highlands of Scotland, a common
      rent for lands which maintained a family. In some places it is so at this
      day; nor will money at present purchase a greater quantity of commodities
      there than in other places. In a country where the surplus produce of a
      large estate must be consumed upon the estate itself, it will frequently
      be more convenient for the proprietor, that part of it be consumed at a
      distance from his own house, provided they who consume it are as dependent
      upon him as either his retainers or his menial servants. He is thereby
      saved from the embarrassment of either too large a company, or too large a
      family. A tenant at will, who possesses land sufficient to maintain his
      family for little more than a quit-rent, is as dependent upon the
      proprietor as any servant or retainer whatever, and must obey him with as
      little reserve. Such a proprietor, as he feeds his servants and retainers
      at his own house, so he feeds his tenants at their houses. The subsistence
      of both is derived from his bounty, and its continuance depends upon his
      good pleasure.
    
      Upon the authority which the great proprietors necessarily had, in such a
      state of things, over their tenants and retainers, was founded the power
      of the ancient barons. They necessarily became the judges in peace, and
      the leaders in war, of all who dwelt upon their estates. They could
      maintain order, and execute the law, within their respective demesnes,
      because each of them could there turn the whole force of all the
      inhabitants against the injustice of anyone. No other person had
      sufficient authority to do this. The king, in particular, had not. In
      those ancient times, he was little more than the greatest proprietor in
      his dominions, to whom, for the sake of common defence against their
      common enemies, the other great proprietors paid certain respects. To have
      enforced payment of a small debt within the lands of a great proprietor,
      where all the inhabitants were armed, and accustomed to stand by one
      another, would have cost the king, had he attempted it by his own
      authority, almost the same effort as to extinguish a civil war. He was,
      therefore, obliged to abandon the administration of justice, through the
      greater part of the country, to those who were capable of administering
      it; and, for the same reason, to leave the command of the country militia
      to those whom that militia would obey.
    
      It is a mistake to imagine that those territorial jurisdictions took their
      origin from the feudal law. Not only the highest jurisdictions, both civil
      and criminal, but the power of levying troops, of coining money, and even
      that of making bye-laws for the government of their own people, were all
      rights possessed allodially by the great proprietors of land, several
      centuries before even the name of the feudal law was known in Europe. The
      authority and jurisdiction of the Saxon lords in England appear to have
      been as great before the Conquest as that of any of the Norman lords after
      it. But the feudal law is not supposed to have become the common law of
      England till after the Conquest. That the most extensive authority and
      jurisdictions were possessed by the great lords in France allodially, long
      before the feudal law was introduced into that country, is a matter of
      fact that admits of no doubt. That authority, and those jurisdictions, all
      necessarily flowed from the state of property and manners just now
      described. Without remounting to the remote antiquities of either the
      French or English monarchies, we may find, in much later times, many
      proofs that such effects must always flow from such causes. It is not
      thirty years ago since Mr Cameron of Lochiel, a gentleman of Lochaber in
      Scotland, without any legal warrant whatever, not being what was then
      called a lord of regality, nor even a tenant in chief, but a vassal of the
      Duke of Argyll, and with out being so much as a justice of peace, used,
      notwithstanding, to exercise the highest criminal jurisdictions over his
      own people. He is said to have done so with great equity, though without
      any of the formalities of justice; and it is not improbable that the state
      of that part of the country at that time made it necessary for him to
      assume this authority, in order to maintain the public peace. That
      gentleman, whose rent never exceeded £500 a-year, carried, in 1745, 800 of
      his own people into the rebellion with him.
    
      The introduction of the feudal law, so far from extending, may be regarded
      as an attempt to moderate, the authority of the great allodial lords. It
      established a regular subordination, accompanied with a long train of
      services and duties, from the king down to the smallest proprietor. During
      the minority of the proprietor, the rent, together with the management of
      his lands, fell into the hands of his immediate superior; and,
      consequently, those of all great proprietors into the hands of the king,
      who was charged with the maintenance and education of the pupil, and who,
      from his authority as guardian, was supposed to have a right of disposing
      of him in marriage, provided it was in a manner not unsuitable to his
      rank. But though this institution necessarily tended to strengthen the
      authority of the king, and to weaken that of the great proprietors, it
      could not do either sufficiently for establishing order and good
      government among the inhabitants of the country; because it could not
      alter sufficiently that state of property and manners from which the
      disorders arose. The authority of government still continued to be, as
      before, too weak in the head, and too strong in the inferior members; and
      the excessive strength of the inferior members was the cause of the
      weakness of the head. After the institution of feudal subordination, the
      king was as incapable of restraining the violence of the great lords as
      before. They still continued to make war according to their own
      discretion, almost continually upon one another, and very frequently upon
      the king; and the open country still continued to be a scene of violence,
      rapine, and disorder.
    
      But what all the violence of the feudal institutions could never have
      effected, the silent and insensible operation of foreign commerce and
      manufactures gradually brought about. These gradually furnished the great
      proprietors with something for which they could exchange the whole surplus
      produce of their lands, and which they could consume themselves, without
      sharing it either with tenants or retainers. All for ourselves, and
      nothing for other people, seems, in every age of the world, to have been
      the vile maxim of the masters of mankind. As soon, therefore, as they
      could find a method of consuming the whole value of their rents
      themselves, they had no disposition to share them with any other persons.
      For a pair of diamond buckles, perhaps, or for something as frivolous and
      useless, they exchanged the maintenance, or, what is the same thing, the
      price of the maintenance of 1000 men for a year, and with it the whole
      weight and authority which it could give them. The buckles, however, were
      to be all their own, and no other human creature was to have any share of
      them; whereas, in the more ancient method of expense, they must have
      shared with at least 1000 people. With the judges that were to determine
      the preference, this difference was perfectly decisive; and thus, for the
      gratification of the most childish, the meanest, and the most sordid of
      all vanities they gradually bartered their whole power and authority.
    
      In a country where there is no foreign commerce, nor any of the finer
      manufactures, a man of £10,000 a-year cannot well employ his revenue in
      any other way than in maintaining, perhaps, 1000 families, who are all of
      them necessarily at his command. In the present state of Europe, a man of
      £10,000 a-year can spend his whole revenue, and he generally does so,
      without directly maintaining twenty people, or being able to command more
      than ten footmen, not worth the commanding. Indirectly, perhaps, he
      maintains as great, or even a greater number of people, than he could have
      done by the ancient method of expense. For though the quantity of precious
      productions for which he exchanges his whole revenue be very small, the
      number of workmen employed in collecting and preparing it must necessarily
      have been very great. Its great price generally arises from the wages of
      their labour, and the profits of all their immediate employers. By paying
      that price, he indirectly pays all those wages and profits, and thus
      indirectly contributes to the maintenance of all the workmen and their
      employers. He generally contributes, however, but a very small proportion
      to that of each; to a very few, perhaps, not a tenth, to many not a
      hundredth, and to some not a thousandth, or even a ten thousandth part of
      their whole annual maintenance. Though he contributes, therefore, to the
      maintenance of them all, they are all more or less independent of him,
      because generally they can all be maintained without him.
    
      When the great proprietors of land spend their rents in maintaining their
      tenants and retainers, each of them maintains entirely all his own tenants
      and all his own retainers. But when they spend them in maintaining
      tradesmen and artificers, they may, all of them taken together, perhaps
      maintain as great, or, on account of the waste which attends rustic
      hospitality, a greater number of people than before. Each of them,
      however, taken singly, contributes often but a very small share to the
      maintenance of any individual of this greater number. Each tradesman or
      artificer derives his subsistence from the employment, not of one, but of
      a hundred or a thousand different customers. Though in some measure
      obliged to them all, therefore, he is not absolutely dependent upon any
      one of them.
    
      The personal expense of the great proprietors having in this manner
      gradually increased, it was impossible that the number of their retainers
      should not as gradually diminish, till they were at last dismissed
      altogether. The same cause gradually led them to dismiss the unnecessary
      part of their tenants. Farms were enlarged, and the occupiers of land,
      notwithstanding the complaints of depopulation, reduced to the number
      necessary for cultivating it, according to the imperfect state of
      cultivation and improvement in those times. By the removal of the
      unnecessary mouths, and by exacting from the farmer the full value of the
      farm, a greater surplus, or, what is the same thing, the price of a
      greater surplus, was obtained for the proprietor, which the merchants and
      manufacturers soon furnished him with a method of spending upon his own
      person, in the same manner as he had done the rest. The cause continuing
      to operate, he was desirous to raise his rents above what his lands, in
      the actual state of their improvement, could afford. His tenants could
      agree to this upon one condition only, that they should be secured in
      their possession for such a term of years as might give them time to
      recover, with profit, whatever they should lay not in the further
      improvement of the land. The expensive vanity of the landlord made him
      willing to accept of this condition; and hence the origin of long leases.
    
      Even a tenant at will, who pays the full value of the land, is not
      altogether dependent upon the landlord. The pecuniary advantages which
      they receive from one another are mutual and equal, and such a tenant will
      expose neither his life nor his fortune in the service of the proprietor.
      But if he has a lease for along term of years, he is altogether
      independent; and his landlord must not expect from him even the most
      trifling service, beyond what is either expressly stipulated in the lease,
      or imposed upon him by the common and known law of the country.
    
      The tenants having in this manner become independent, and the retainers
      being dismissed, the great proprietors were no longer capable of
      interrupting the regular execution of justice, or of disturbing the peace
      of the country. Having sold their birth-right, not like Esau, for a mess
      of pottage in time of hunger and necessity, but, in the wantonness of
      plenty, for trinkets and baubles, fitter to be the playthings of children
      than the serious pursuits of men, they became as insignificant as any
      substantial burgher or tradesmen in a city. A regular government was
      established in the country as well as in the city, nobody having
      sufficient power to disturb its operations in the one, any more than in
      the other.
    
      It does not, perhaps, relate to the present subject, but I cannot help
      remarking it, that very old families, such as have possessed some
      considerable estate from father to son for many successive generations,
      are very rare in commercial countries. In countries which have little
      commerce, on the contrary, such as Wales, or the Highlands of Scotland,
      they are very common. The Arabian histories seem to be all full of
      genealogies; and there is a history written by a Tartar Khan, which has
      been translated into several European languages, and which contains scarce
      any thing else; a proof that ancient families are very common among those
      nations. In countries where a rich man can spend his revenue in no other
      way than by maintaining as many people as it can maintain, he is apt to
      run out, and his benevolence, it seems, is seldom so violent as to attempt
      to maintain more than he can afford. But where he can spend the greatest
      revenue upon his own person, he frequently has no bounds to his expense,
      because he frequently has no bounds to his vanity, or to his affection for
      his own person. In commercial countries, therefore, riches, in spite of
      the most violent regulations of law to prevent their dissipation, very
      seldom remain long in the same family. Among simple nations, on the
      contrary, they frequently do, without any regulations of law; for among
      nations of shepherds, such as the Tartars and Arabs, the consumable nature
      of their property necessarily renders all such regulations impossible.
    
      A revolution of the greatest importance to the public happiness, was in
      this manner brought about by two different orders of people, who had not
      the least intention to serve the public. To gratify the most childish
      vanity was the sole motive of the great proprietors. The merchants and
      artificers, much less ridiculous, acted merely from a view to their own
      interest, and in pursuit of their own pedlar principle of turning a penny
      wherever a penny was to be got. Neither of them had either knowledge or
      foresight of that great revolution which the folly of the one, and the
      industry of the other, was gradually bringing about.
    
      It was thus, that, through the greater part of Europe, the commerce and
      manufactures of cities, instead of being the effect, have been the cause
      and occasion of the improvement and cultivation of the country.
    
      This order, however, being contrary to the natural course of things, is
      necessarily both slow and uncertain. Compare the slow progress of those
      European countries of which the wealth depends very much upon their
      commerce and manufactures, with the rapid advances of our North American
      colonies, of which the wealth is founded altogether in agriculture.
      Through the greater part of Europe, the number of inhabitants is not
      supposed to double in less than five hundred years. In several of our
      North American colonies, it is found to double in twenty or
      five-and-twenty years. In Europe, the law of primogeniture, and
      perpetuities of different kinds, prevent the division of great estates,
      and thereby hinder the multiplication of small proprietors. A small
      proprietor, however, who knows every part of his little territory, views
      it with all the affection which property, especially small property,
      naturally inspires, and who upon that account takes pleasure, not only in
      cultivating, but in adorning it, is generally of all improvers the most
      industrious, the most intelligent, and the most successful. The same
      regulations, besides, keep so much land out of the market, that there are
      always more capitals to buy than there is land to sell, so that what is
      sold always sells at a monopoly price. The rent never pays the interest of
      the purchase-money, and is, besides, burdened with repairs and other
      occasional charges, to which the interest of money is not liable. To
      purchase land, is, everywhere in Europe, a most unprofitable employment of
      a small capital. For the sake of the superior security, indeed, a man of
      moderate circumstances, when he retires from business, will sometimes
      choose to lay out his little capital in land. A man of profession, too
      whose revenue is derived from another source often loves to secure his
      savings in the same way. But a young man, who, instead of applying to
      trade or to some profession, should employ a capital of two or three
      thousand pounds in the purchase and cultivation of a small piece of land,
      might indeed expect to live very happily and very independently, but must
      bid adieu for ever to all hope of either great fortune or great
      illustration, which, by a different employment of his stock, he might have
      had the same chance of acquiring with other people. Such a person, too,
      though he cannot aspire at being a proprietor, will often disdain to be a
      farmer. The small quantity of land, therefore, which is brought to market,
      and the high price of what is brought thither, prevents a great number of
      capitals from being employed in its cultivation and improvement, which
      would otherwise have taken that direction. In North America, on the
      contrary, fifty or sixty pounds is often found a sufficient stock to begin
      a plantation with. The purchase and improvement of uncultivated land is
      there the most profitable employment of the smallest as well as of the
      greatest capitals, and the most direct road to all the fortune and
      illustration which can be required in that country. Such land, indeed, is
      in North America to be had almost for nothing, or at a price much below
      the value of the natural produce; a thing impossible in Europe, or indeed
      in any country where all lands have long been private property. If landed
      estates, however, were divided equally among all the children, upon the
      death of any proprietor who left a numerous family, the estate would
      generally be sold. So much land would come to market, that it could no
      longer sell at a monopoly price. The free rent of the land would go no
      nearer to pay the interest of the purchase-money, and a small capital
      might be employed in purchasing land as profitable as in any other way.
    
      England, on account of the natural fertility of the soil, of the great
      extent of the sea-coast in proportion to that of the whole country, and of
      the many navigable rivers which run through it, and afford the conveniency
      of water carriage to some of the most inland parts of it, is perhaps as
      well fitted by nature as any large country in Europe to be the seat of
      foreign commerce, of manufactures for distant sale, and of all the
      improvements which these can occasion. From the beginning of the reign of
      Elizabeth, too, the English legislature has been peculiarly attentive to
      the interest of commerce and manufactures, and in reality there is no
      country in Europe, Holland itself not excepted, of which the law is, upon
      the whole, more favourable to this sort of industry. Commerce and
      manufactures have accordingly been continually advancing during all this
      period. The cultivation and improvement of the country has, no doubt, been
      gradually advancing too; but it seems to have followed slowly, and at a
      distance, the more rapid progress of commerce and manufactures. The
      greater part of the country must probably have been cultivated before the
      reign of Elizabeth; and a very great part of it still remains
      uncultivated, and the cultivation of the far greater part much inferior to
      what it might be, The law of England, however, favours agriculture, not
      only indirectly, by the protection of commerce, but by several direct
      encouragements. Except in times of scarcity, the exportation of corn is
      not only free, but encouraged by a bounty. In times of moderate plenty,
      the importation of foreign corn is loaded with duties that amount to a
      prohibition. The importation of live cattle, except from Ireland, is
      prohibited at all times; and it is but of late that it was permitted from
      thence. Those who cultivate the land, therefore, have a monopoly against
      their countrymen for the two greatest and most important articles of land
      produce, bread and butcher’s meat. These encouragements, although at
      bottom, perhaps, as I shall endeavour to show hereafter, altogether
      illusory, sufficiently demonstrate at least the good intention of the
      legislature to favour agriculture. But what is of much more importance
      than all of them, the yeomanry of England are rendered as secure, as
      independent, and as respectable, as law can make them. No country,
      therefore, which the right of primogeniture takes place, which pays
      tithes, and where perpetuities, though contrary to the spirit of the law,
      are admitted in some cases, can give more encouragement to agriculture
      than England. Such, however, notwithstanding, is the state of its
      cultivation. What would it have been, had the law given no direct
      encouragement to agriculture besides what arises indirectly from the
      progress of commerce, and had left the yeomanry in the same condition as
      in most other countries of Europe? It is now more than two hundred years
      since the beginning of the reign of Elizabeth, a period as long as the
      course of human prosperity usually endures.
    
      France seems to have had a considerable share of foreign commerce, near a
      century before England was distinguished as a commercial country. The
      marine of France was considerable, according to the notions of the times,
      before the expedition of Charles VIII. to Naples. The cultivation and
      improvement of France, however, is, upon the whole, inferior to that of
      England. The law of the country has never given the same direct
      encouragement to agriculture.
    
      The foreign commerce of Spain and Portual to the other parts of Europe,
      though chiefly carried on in foreign ships, is very considerable. That to
      their colonies is carried on in their own, and is much greater, on account
      of the great riches and extent of those colonies. But it has never
      introduced any considerable manufactures for distant sale into either of
      those countries, and the greater part of both still remains uncultivated.
      The foreign commerce of Portugal is of older standing than that of any
      great country in Europe, except Italy.
    
      Italy is the only great country of Europe which seems to have been
      cultivated and improved in every part, by means of foreign commerce and
      manufactures for distant sale. Before the invasion of Charles VIII.,
      Italy, according to Guicciardini, was cultivated not less in the most
      mountainous and barren parts of the country, than in the plainest and most
      fertile. The advantageous situation of the country, and the great number
      of independent status which at that time subsisted in it, probably
      contributed not a little to this general cultivation. It is not
      impossible, too, notwithstanding this general expression of one of the
      most judicious and reserved of modern historians, that Italy was not at
      that time better cultivated than England is at present.
    
      The capital, however, that is acquired to any country by commerce and
      manufactures, is always a very precarious and uncertain possession, till
      some part of it has been secured and realized in the cultivation and
      improvement of its lands. A merchant, it has been said very properly, is
      not necessarily the citizen of any particular country. It is in a great
      measure indifferent to him from what place he carries on his trade; and a
      very trifling disgust will make him remove his capital, and, together with
      it, all the industry which it supports, from one country to another. No
      part of it can be said to belong to any particular country, till it has
      been spread, as it were, over the face of that country, either in
      buildings, or in the lasting improvement of lands. No vestige now remains
      of the great wealth said to have been possessed by the greater part of the
      Hanse Towns, except in the obscure histories of the thirteenth and
      fourteenth centuries. It is even uncertain where some of them were
      situated, or to what towns in Europe the Latin names given to some of them
      belong. But though the misfortunes of Italy, in the end of the fifteenth
      and beginning of the sixteenth centuries, greatly diminished the commerce
      and manufactures of the cities of Lombardy and Tuscany, those countries
      still continue to be among the most populous and best cultivated in
      Europe. The civil wars of Flanders, and the Spanish government which
      succeeded them, chased away the great commerce of Antwerp, Ghent, and
      Bruges. But Flanders still continues to be one of the richest, best
      cultivated, and most populous provinces of Europe. The ordinary
      revolutions of war and government easily dry up the sources of that wealth
      which arises from commerce only. That which arises from the more solid
      improvements of agriculture is much more durable, and cannot be destroyed
      but by those more violent convulsions occasioned by the depredations of
      hostile and barbarous nations continued for a century or two together;
      such as those that happened for some time before and after the fall of the
      Roman empire in the western provinces of Europe.
    


BOOK IV.
OF SYSTEMS OF POLITICAL ECONOMY.


    
      Political economy, considered as a branch of the science of a statesman or
      legislator, proposes two distinct objects; first, to provide a plentiful
      revenue or subsistence for the people, or, more properly, to enable them
      to provide such a revenue or subsistence for themselves; and, secondly, to
      supply the state or commonwealth with a revenue sufficient for the public
      services. It proposes to enrich both the people and the sovereign.
    
      The different progress of opulence in different ages and nations, has
      given occasion to two different systems of political economy, with regard
      to enriching the people. The one may be called the system of commerce, the
      other that of agriculture. I shall endeavour to explain both as fully and
      distinctly as I can, and shall begin with the system of commerce. It is
      the modern system, and is best understood in our own country and in our
      own times.
    


CHAPTER I.
OF THE PRINCIPLE OF THE COMMERCIAL OR
MERCANTILE SYSTEM.


    
      That wealth consists in money, or in gold and silver, is a popular notion
      which naturally arises from the double function of money, as the
      instrument of commerce, and as the measure of value. In consequence of its
      being the instrument of commerce, when we have money we can more readily
      obtain whatever else we have occasion for, than by means of any other
      commodity. The great affair, we always find, is to get money. When that is
      obtained, there is no difficulty in making any subsequent purchase. In
      consequence of its being the measure of value, we estimate that of all
      other commodities by the quantity of money which they will exchange for.
      We say of a rich man, that he is worth a great deal, and of a poor man,
      that he is worth very little money. A frugal man, or a man eager to be
      rich, is said to love money; and a careless, a generous, or a profuse man,
      is said to be indifferent about it. To grow rich is to get money; and
      wealth and money, in short, are, in common language, considered as in
      every respect synonymous.
    
      A rich country, in the same manner as a rich man, is supposed to be a
      country abounding in money; and to heap up gold and silver in any country
      is supposed to be the readiest way to enrich it. For some time after the
      discovery of America, the first inquiry of the Spaniards, when they
      arrived upon any unknown coast, used to be, if there was any gold or
      silver to be found in the neighbourhood? By the information which they
      received, they judged whether it was worth while to make a settlement
      there, or if the country was worth the conquering. Plano Carpino, a monk
      sent ambassador from the king of France to one of the sons of the famous
      Gengis Khan, says, that the Tartars used frequently to ask him, if there
      was plenty of sheep and oxen in the kingdom of France? Their inquiry had
      the same object with that of the Spaniards. They wanted to know if the
      country was rich enough to be worth the conquering. Among the Tartars, as
      among all other nations of shepherds, who are generally ignorant of the
      use of money, cattle are the instruments of commerce and the measures of
      value. Wealth, therefore, according to them, consisted in cattle, as,
      according to the Spaniards, it consisted in gold and silver. Of the two,
      the Tartar notion, perhaps, was the nearest to the truth.
    
      Mr Locke remarks a distinction between money and other moveable goods. All
      other moveable goods, he says, are of so consumable a nature, that the
      wealth which consists in them cannot be much depended on; and a nation
      which abounds in them one year may, without any exportation, but merely by
      their own waste and extravagance, be in great want of them the next.
      Money, on the contrary, is a steady friend, which, though it may travel
      about from hand to hand, yet if it can be kept from going out of the
      country, is not very liable to be wasted and consumed. Gold and silver,
      therefore, are, according to him, the must solid and substantial part of
      the moveable wealth of a nation; and to multiply those metals ought, he
      thinks, upon that account, to be the great object of its political
      economy.
    
      Others admit, that if a nation could be separated from all the world, it
      would be of no consequence how much or how little money circulated in it.
      The consumable goods, which were circulated by means of this money, would
      only be exchanged for a greater or a smaller number of pieces; but the
      real wealth or poverty of the country, they allow, would depend altogether
      upon the abundance or scarcity of those consumable goods. But it is
      otherwise, they think, with countries which have connections with foreign
      nations, and which are obliged to carry on foreign wars, and to maintain
      fleets and armies in distant countries. This, they say, cannot be done,
      but by sending abroad money to pay them with; and a nation cannot send
      much money abroad, unless it has a good deal at home. Every such nation,
      therefore, must endeavour, in time of peace, to accumulate gold and
      silver, that when occasion requires, it may have wherewithal to carry on
      foreign wars.
    
      In consequence of those popular notions, all the different nations of
      Europe have studied, though to little purpose, every possible means of
      accumulating gold and silver in their respective countries. Spain and
      Portugal, the proprietors of the principal mines which supply Europe with
      those metals, have either prohibited their exportation under the severest
      penalties, or subjected it to a considerable duty. The like prohibition
      seems anciently to have made a part of the policy of most other European
      nations. It is even to be found, where we should least of all expect to
      find it, in some old Scotch acts of Parliament, which forbid, under heavy
      penalties, the carrying gold or silver forth of the kingdom. The like
      policy anciently took place both in France and England.
    
      When those countries became commercial, the merchants found this
      prohibition, upon many occasions, extremely inconvenient. They could
      frequently buy more advantageously with gold and silver, than with any
      other commodity, the foreign goods which they wanted, either to import
      into their own, or to carry to some other foreign country. They
      remonstrated, therefore, against this prohibition as hurtful to trade.
    
      They represented, first, that the exportation of gold and silver, in order
      to purchase foreign goods, did not always diminish the quantity of those
      metals in the kingdom; that, on the contrary, it might frequently increase
      the quantity; because, if the consumption of foreign goods was not thereby
      increased in the country, those goods might be re-exported to foreign
      countries, and being there sold for a large profit, might bring back much
      more treasure than was originally sent out to purchase them. Mr Mun
      compares this operation of foreign trade to the seed-time and harvest of
      agriculture. “If we only behold,” says he, “the actions of the husbandman
      in the seed time, when he casteth away much good corn into the ground, we
      shall account him rather a madman than a husbandman. But when we consider
      his labours in the harvest, which is the end of his endeavours, we shall
      find the worth and plentiful increase of his actions.”
    
      They represented, secondly, that this prohibition could not hinder the
      exportation of gold and silver, which, on account of the smallness of
      their bulk in proportion to their value, could easily be smuggled abroad.
      That this exportation could only be prevented by a proper attention to
      what they called the balance of trade. That when the country exported to a
      greater value than it imported, a balance became due to it from foreign
      nations, which was necessarily paid to it in gold and silver, and thereby
      increased the quantity of those metals in the kingdom. But that when it
      imported to a greater value than it exported, a contrary balance became
      due to foreign nations, which was necessarily paid to them in the same
      manner, and thereby diminished that quantity: that in this case, to
      prohibit the exportation of those metals, could not prevent it, but only,
      by making it more dangerous, render it more expensive: that the exchange
      was thereby turned more against the country which owed the balance, than
      it otherwise might have been; the merchant who purchased a bill upon the
      foreign country being obliged to pay the banker who sold it, not only for
      the natural risk, trouble, and expense of sending the money thither, but
      for the extraordinary risk arising from the prohibition; but that the more
      the exchange was against any country, the more the balance of trade became
      necessarily against it; the money of that country becoming necessarily of
      so much less value, in comparison with that of the country to which the
      balance was due. That if the exchange between England and Holland, for
      example, was five per cent. against England, it would require 105 ounces
      of silver in England to purchase a bill for 100 ounces of silver in
      Holland: that 105 ounces of silver in England, therefore, would be worth
      only 100 ounces of silver in Holland, and would purchase only a
      proportionable quantity of Dutch goods; but that 100 ounces of silver in
      Holland, on the contrary, would be worth 105 ounces in England, and would
      purchase a proportionable quantity of English goods; that the English
      goods which were sold to Holland would be sold so much cheaper, and the
      Dutch goods which were sold to England so much dearer, by the difference
      of the exchange: that the one would draw so much less Dutch money to
      England, and the other so much more English money to Holland, as this
      difference amounted to: and that the balance of trade, therefore, would
      necessarily be so much more against England, and would require a greater
      balance of gold and silver to be exported to Holland.
    
      Those arguments were partly solid and partly sophistical. They were solid,
      so far as they asserted that the exportation of gold and silver in trade
      might frequently be advantageous to the country. They were solid, too, in
      asserting that no prohibition could prevent their exportation, when
      private people found any advantage in exporting them. But they were
      sophistical, in supposing, that either to preserve or to augment the
      quantity of those metals required more the attention of government, than
      to preserve or to augment the quantity of any other useful commodities,
      which the freedom of trade, without any such attention, never fails to
      supply in the proper quantity. They were sophistical, too, perhaps, in
      asserting that the high price of exchange necessarily increased what they
      called the unfavourable balance of trade, or occasioned the exportation of
      a greater quantity of gold and silver. That high price, indeed, was
      extremely disadvantageous to the merchants who had any money to pay in
      foreign countries. They paid so much dearer for the bills which their
      bankers granted them upon those countries. But though the risk arising
      from the prohibition might occasion some extraordinary expense to the
      bankers, it would not necessarily carry any more money out of the country.
      This expense would generally be all laid out in the country, in smuggling
      the money out of it, and could seldom occasion the exportation of a single
      sixpence beyond the precise sum drawn for. The high price of exchange,
      too, would naturally dispose the merchants to endeavour to make their
      exports nearly balance their imports, in order that they might have this
      high exchange to pay upon as small a sum as possible. The high price of
      exchange, besides, must necessarily have operated as a tax, in raising the
      price of foreign goods, and thereby diminishing their consumption. It
      would tend, therefore, not to increase, but to diminish, what they called
      the unfavourable balance of trade, and consequently the exportation of
      gold and silver.
    
      Such as they were, however, those arguments convinced the people to whom
      they were addressed. They were addressed by merchants to parliaments and
      to the councils of princes, to nobles, and to country gentlemen; by those
      who were supposed to understand trade, to those who were conscious to them
      selves that they knew nothing about the matter. That foreign trade
      enriched the country, experience demonstrated to the nobles and country
      gentlemen, as well as to the merchants; but how, or in what manner, none
      of them well knew. The merchants knew perfectly in what manner it enriched
      themselves, it was their business to know it. But to know in what manner
      it enriched the country, was no part of their business. The subject never
      came into their consideration, but when they had occasion to apply to
      their country for some change in the laws relating to foreign trade. It
      then became necessary to say something about the beneficial effects of
      foreign trade, and the manner in which those effects were obstructed by
      the laws as they then stood. To the judges who were to decide the
      business, it appeared a most satisfactory account of the matter, when they
      were told that foreign trade brought money into the country, but that the
      laws in question hindered it from bringing so much as it otherwise would
      do. Those arguments, therefore, produced the wished-for effect. The
      prohibition of exporting gold and silver was, in France and England,
      confined to the coin of those respective countries. The exportation of
      foreign coin and of bullion was made free. In Holland, and in some other
      places, this liberty was extended even to the coin of the country. The
      attention of government was turned away from guarding against the
      exportation of gold and silver, to watch over the balance of trade, as the
      only cause which could occasion any augmentation or diminution of those
      metals. From one fruitless care, it was turned away to another care much
      more intricate, much more embarrassing, and just equally fruitless. The
      title of Mun’s book, England’s Treasure in Foreign Trade, became a
      fundamental maxim in the political economy, not of England only, but of
      all other commercial countries. The inland or home trade, the most
      important of all, the trade in which an equal capital affords the greatest
      revenue, and creates the greatest employment to the people of the country,
      was considered as subsidiary only to foreign trade. It neither brought
      money into the country, it was said, nor carried any out of it. The
      country, therefore, could never become either richer or poorer by means of
      it, except so far as its prosperity or decay might indirectly influence
      the state of foreign trade.
    
      A country that has no mines of its own, must undoubtedly draw its gold and
      silver from foreign countries, in the same manner as one that has no
      vineyards of its own must draw its wines. It does not seem necessary,
      however, that the attention of government should be more turned towards
      the one than towards the other object. A country that has wherewithal to
      buy wine, will always get the wine which it has occasion for; and a
      country that has wherewithal to buy gold and silver, will never be in want
      of those metals. They are to be bought for a certain price, like all other
      commodities; and as they are the price of all other commodities, so all
      other commodities are the price of those metals. We trust, with perfect
      security, that the freedom of trade, without any attention of government,
      will always supply us with the wine which we have occasion for; and we may
      trust, with equal security, that it will always supply us with all the
      gold and silver which we can afford to purchase or to employ, either in
      circulating our commodities or in other uses.
    
      The quantity of every commodity which human industry can either purchase
      or produce, naturally regulates itself in every country according to the
      effectual demand, or according to the demand of those who are willing to
      pay the whole rent, labour, and profits, which must be paid in order to
      prepare and bring it to market. But no commodities regulate themselves
      more easily or more exactly, according to this effectual demand, than gold
      and silver; because, on account of the small bulk and great value of those
      metals, no commodities can be more easily transported from one place to
      another; from the places where they are cheap, to those where they are
      dear; from the places where they exceed, to those where they fall short of
      this effectual demand. If there were in England, for example, an effectual
      demand for an additional quantity of gold, a packet-boat could bring from
      Lisbon, or from wherever else it was to be had, fifty tons of gold, which
      could be coined into more than five millions of guineas. But if there were
      an effectual demand for grain to the same value, to import it would
      require, at five guineas a-ton, a million of tons of shipping, or a
      thousand ships of a thousand tons each. The navy of England would not be
      sufficient.
    
      When the quantity of gold and silver imported into any country exceeds the
      effectual demand, no vigilance of government can prevent their
      exportation. All the sanguinary laws of Spain and Portugal are not able to
      keep their gold and silver at home. The continual importations from Peru
      and Brazil exceed the effectual demand of those countries, and sink the
      price of those metals there below that in the neighbouring countries. If,
      on the contrary, in any particular country, their quantity fell short of
      the effectual demand, so as to raise their price above that of the
      neighbouring countries, the government would have no occasion to take any
      pains to import them. If it were even to take pains to prevent their
      importation, it would not be able to effectuate it. Those metals, when the
      Spartans had got wherewithal to purchase them, broke through all the
      barriers which the laws of Lycurgus opposed to their entrance into
      Lacedaemon. All the sanguinary laws of the customs are not able to prevent
      the importation of the teas of the Dutch and Gottenburg East India
      companies; because somewhat cheaper than those of the British company. A
      pound of tea, however, is about a hundred times the bulk of one of the
      highest prices, sixteen shillings, that is commonly paid for it in silver,
      and more than two thousand times the bulk of the same price in gold, and,
      consequently, just so many times more difficult to smuggle.
    
      It is partly owing to the easy transportation of gold and silver, from the
      places where they abound to those where they are wanted, that the price of
      those metals does not fluctuate continually, like that of the greater part
      of other commodities, which are hindered by their bulk from shifting their
      situation, when the market happens to be either over or under-stocked with
      them. The price of those metals, indeed, is not altogether exempted from
      variation; but the changes to which it is liable are generally slow,
      gradual, and uniform. In Europe, for example, it is supposed, without much
      foundation, perhaps, that during the course of the present and preceding
      century, they have been constantly, but gradually, sinking in their value,
      on account of the continual importations from the Spanish West Indies. But
      to make any sudden change in the price of gold and silver, so as to raise
      or lower at once, sensibly and remarkably, the money price of all other
      commodities, requires such a revolution in commerce as that occasioned by
      the discovery of America.
    
      If, not withstanding all this, gold and silver should at any time fall
      short in a country which has wherewithal to purchase them, there are more
      expedients for supplying their place, than that of almost any other
      commodity. If the materials of manufacture are wanted, industry must stop.
      If provisions are wanted, the people must starve. But if money is wanted,
      barter will supply its place, though with a good deal of inconveniency.
      Buying and selling upon credit, and the different dealers compensating
      their credits with one another, once a-month, or once a-year, will supply
      it with less inconveniency. A well-regulated paper-money will supply it
      not only without any inconveniency, but, in some cases, with some
      advantages. Upon every account, therefore, the attention of government
      never was so unnecessarily employed, as when directed to watch over the
      preservation or increase of the quantity of money in any country.
    
      No complaint, however, is more common than that of a scarcity of money.
      Money, like wine, must always be scarce with those who have neither
      wherewithal to buy it, nor credit to borrow it. Those who have either,
      will seldom be in want either of the money, or of the wine which they have
      occasion for. This complaint, however, of the scarcity of money, is not
      always confined to improvident spendthrifts. It is sometimes general
      through a whole mercantile town and the country in its neighbourhood.
      Over-trading is the common cause of it. Sober men, whose projects have
      been disproportioned to their capitals, are as likely to have neither
      wherewithal to buy money, nor credit to borrow it, as prodigals, whose
      expense has been disproportioned to their revenue. Before their projects
      can be brought to bear, their stock is gone, and their credit with it.
      They run about everywhere to borrow money, and everybody tells them that
      they have none to lend. Even such general complaints of the scarcity of
      money do not always prove that the usual number of gold and silver pieces
      are not circulating in the country, but that many people want those pieces
      who have nothing to give for them. When the profits of trade happen to be
      greater than ordinary over-trading becomes a general error, both among
      great and small dealers. They do not always send more money abroad than
      usual, but they buy upon credit, both at home and abroad, an unusual
      quantity of goods, which they send to some distant market, in hopes that
      the returns will come in before the demand for payment. The demand comes
      before the returns, and they have nothing at hand with which they can
      either purchase money or give solid security for borrowing. It is not any
      scarcity of gold and silver, but the difficulty which such people find in
      borrowing, and which their creditor find in getting payment, that
      occasions the general complaint of the scarcity of money.
    
      It would be too ridiculous to go about seriously to prove, that wealth
      does not consist in money, or in gold and silver; but in what money
      purchases, and is valuable only for purchasing. Money, no doubt, makes
      always a part of the national capital; but it has already been shown that
      it generally makes but a small part, and always the most unprofitable part
      of it.
    
      It is not because wealth consists more essentially in money than in goods,
      that the merchant finds it generally more easy to buy goods with money,
      than to buy money with goods; but because money is the known and
      established instrument of commerce, for which every thing is readily given
      in exchange, but which is not always with equal readiness to be got in
      exchange for every thing. The greater part of goods, besides, are more
      perishable than money, and he may frequently sustain a much greater loss
      by keeping them. When his goods are upon hand, too, he is more liable to
      such demands for money as he may not be able to answer, than when he has
      got their price in his coffers. Over and above all this, his profit arises
      more directly from selling than from buying; and he is, upon all these
      accounts, generally much more anxious to exchange his goods for money than
      his money for goods. But though a particular merchant, with abundance of
      goods in his warehouse, may sometimes be ruined by not being able to sell
      them in time, a nation or country is not liable to the same accident, The
      whole capital of a merchant frequently consists in perishable goods
      destined for purchasing money. But it is but a very small part of the
      annual produce of the land and labour of a country, which can ever be
      destined for purchasing gold and silver from their neighbours. The far
      greater part is circulated and consumed among themselves; and even of the
      surplus which is sent abroad, the greater part is generally destined for
      the purchase of other foreign goods. Though gold and silver, therefore,
      could not be had in exchange for the goods destined to purchase them, the
      nation would not be ruined. It might, indeed, suffer some loss and
      inconveniency, and be forced upon some of those expedients which are
      necessary for supplying the place of money. The annual produce of its land
      and labour, however, would be the same, or very nearly the same as usual;
      because the same, or very nearly the same consumable capital would be
      employed in maintaining it. And though goods do not always draw money so
      readily as money draws goods, in the long-run they draw it more
      necessarily than even it draws them. Goods can serve many other purposes
      besides purchasing money, but money can serve no other purpose besides
      purchasing goods. Money, therefore, necessarily runs after goods, but
      goods do not always or necessarily run after money. The man who buys, does
      not always mean to sell again, but frequently to use or to consume;
      whereas he who sells always means to buy again. The one may frequently
      have done the whole, but the other can never have done more than the one
      half of his business. It is not for its own sake that men desire money,
      but for the sake of what they can purchase with it.
    
      Consumable commodities, it is said, are soon destroyed; whereas gold and
      silver are of a more durable nature, and were it not for this continual
      exportation, might be accumulated for ages together, to the incredible
      augmentation of the real wealth of the country. Nothing, therefore, it is
      pretended, can be more disadvantageous to any country, than the trade
      which consists in the exchange of such lasting for such perishable
      commodities. We do not, however, reckon that trade disadvantageous, which
      consists in the exchange of the hardware of England for the wines of
      France, and yet hardware is a very durable commodity, and were it not for
      this continual exportation, might too be accumulated for ages together, to
      the incredible augmentation of the pots and pans of the country. But it
      readily occurs, that the number of such utensils is in every country
      necessarily limited by the use which there is for them; that it would be
      absurd to have more pots and pans than were necessary for cooking the
      victuals usually consumed there; and that, if the quantity of victuals
      were to increase, the number of pots and pans would readily increase along
      with it; a part of the increased quantity of victuals being employed in
      purchasing them, or in maintaining an additional number of workmen whose
      business it was to make them. It should as readily occur, that the
      quantity of gold and silver is, in every country, limited by the use which
      there is for those metals; that their use consists in circulating
      commodities, as coin, and in affording a species of household furniture,
      as plate; that the quantity of coin in every country is regulated by the
      value of the commodities which are to be circulated by it; increase that
      value, and immediately a part of it will be sent abroad to purchase,
      wherever it is to be had, the additional quantity of coin requisite for
      circulating them: that the quantity of plate is regulated by the number
      and wealth of those private families who choose to indulge themselves in
      that sort of magnificence; increase the number and wealth of such
      families, and a part of this increased wealth will most probably be
      employed in purchasing, wherever it is to be found, an additional quantity
      of plate; that to attempt to increase the wealth of any country, either by
      introducing or by detaining in it an unnecessary quantity of gold and
      silver, is as absurd as it would be to attempt to increase the good cheer
      of private families, by obliging them to keep an unnecessary number of
      kitchen utensils. As the expense of purchasing those unnecessary utensils
      would diminish, instead of increasing, either the quantity or goodness of
      the family provisions; so the expense of purchasing an unnecessary
      quantity of gold and silver must, in every country, as necessarily
      diminish the wealth which feeds, clothes, and lodges, which maintains and
      employs the people. Gold and silver, whether in the shape of coin or of
      plate, are utensils, it must be remembered, as much as the furniture of
      the kitchen. Increase the use of them, increase the consumable commodities
      which are to be circulated, managed, and prepared by means of them, and
      you will infallibly increase the quantity; but if you attempt by
      extraordinary means to increase the quantity, you will as infallibly
      diminish the use, and even the quantity too, which in those metals can
      never be greater than what the use requires. Were they ever to be
      accumulated beyond this quantity, their transportation is so easy, and the
      loss which attends their lying idle and unemployed so great, that no law
      could prevent their being immediately sent out of the country.
    
      It is not always necessary to accumulate gold and silver, in order to
      enable a country to carry on foreign wars, and to maintain fleets and
      armies in distant countries. Fleets and armies are maintained, not with
      gold and silver, but with consumable goods. The nation which, from the
      annual produce of its domestic industry, from the annual revenue arising
      out of its lands, and labour, and consumable stock, has wherewithal to
      purchase those consumable goods in distant countries, can maintain foreign
      wars there.
    
      A nation may purchase the pay and provisions of an army in a distant
      country three different ways; by sending abroad either, first, some part
      of its accumulated gold and silver; or, secondly, some part of the annual
      produce of its manufactures; or, last of all, some part of its annual rude
      produce.
    
      The gold and silver which can properly be considered as accumulated, or
      stored up in any country, may be distinguished into three parts; first,
      the circulating money; secondly, the plate of private families; and, last
      of all, the money which may have been collected by many years parsimony,
      and laid up in the treasury of the prince.
    
      It can seldom happen that much can be spared from the circulating money of
      the country; because in that there can seldom be much redundancy. The
      value of goods annually bought and sold in any country requires a certain
      quantity of money to circulate and distribute them to their proper
      consumers, and can give employment to no more. The channel of circulation
      necessarily draws to itself a sum sufficient to fill it, and never admits
      any more. Something, however, is generally withdrawn from this channel in
      the case of foreign war. By the great number of people who are maintained
      abroad, fewer are maintained at home. Fewer goods are circulated there,
      and less money becomes necessary to circulate them. An extraordinary
      quantity of paper money of some sort or other, too, such as exchequer
      notes, navy bills, and bank bills, in England, is generally issued upon
      such occasions, and, by supplying the place of circulating gold and
      silver, gives an opportunity of sending a greater quantity of it abroad.
      All this, however, could afford but a poor resource for maintaining a
      foreign war, of great expense, and several years duration.
    
      The melting down of the plate of private families has, upon every
      occasion, been found a still more insignificant one. The French, in the
      beginning of the last war, did not derive so much advantage from this
      expedient as to compensate the loss of the fashion.
    
      The accumulated treasures of the prince have in former times afforded a
      much greater and more lasting resource. In the present times, if you
      except the king of Prussia, to accumulate treasure seems to be no part of
      the policy of European princes.
    
      The funds which maintained the foreign wars of the present century, the
      most expensive perhaps which history records, seem to have had little
      dependency upon the exportation either of the circulating money, or of the
      plate of private families, or of the treasure of the prince. The last
      French war cost Great Britain upwards of £90,000,000, including not only
      the £75,000,000 of new debt that was contracted, but the additional 2s. in
      the pound land-tax, and what was annually borrowed of the sinking fund.
      More than two-thirds of this expense were laid out in distant countries;
      in Germany, Portugal, America, in the ports of the Mediterranean, in the
      East and West Indies. The kings of England had no accumulated treasure. We
      never heard of any extraordinary quantity of plate being melted down. The
      circulating gold and silver of the country had not been supposed to exceed
      £18,000,000. Since the late recoinage of the gold, however, it is believed
      to have been a good deal under-rated. Let us suppose, therefore, according
      to the most exaggerated computation which I remember to have either seen
      or heard of, that, gold and silver together, it amounted to £30,000,000.
      Had the war been carried on by means of our money, the whole of it must,
      even according to this computation, have been sent out and returned again,
      at least twice in a period of between six and seven years. Should this be
      supposed, it would afford the most decisive argument, to demonstrate how
      unnecessary it is for government to watch over the preservation of money,
      since, upon this supposition, the whole money of the country must have
      gone from it, and returned to it again, two different times in so short a
      period, without any body’s knowing any thing of the matter. The channel of
      circulation, however, never appeared more empty than usual during any part
      of this period. Few people wanted money who had wherewithal to pay for it.
      The profits of foreign trade, indeed, were greater than usual during the
      whole war, but especially towards the end of it. This occasioned, what it
      always occasions, a general over-trading in all the ports of Great
      Britain; and this again occasioned the usual complaint of the scarcity of
      money, which always follows over-trading. Many people wanted it, who had
      neither wherewithal to buy it, nor credit to borrow it; and because the
      debtors found it difficult to borrow, the creditors found it difficult to
      get payment. Gold and silver, however, were generally to be had for their
      value, by those who had that value to give for them.
    
      The enormous expense of the late war, therefore, must have been chiefly
      defrayed, not by the exportation of gold and silver, but by that of
      British commodities of some kind or other. When the government, or those
      who acted under them, contracted with a merchant for a remittance to some
      foreign country, he would naturally endeavour to pay his foreign
      correspondent, upon whom he granted a bill, by sending abroad rather
      commodities than gold and silver. If the commodities of Great Britain were
      not in demand in that country, he would endeavour to send them to some
      other country in which he could purchase a bill upon that country. The
      transportation of commodities, when properly suited to the market, is
      always attended with a considerable profit; whereas that of gold and
      silver is scarce ever attended with any. When those metals are sent abroad
      in order to purchase foreign commodities, the merchant’s profit arises,
      not from the purchase, but from the sale of the returns. But when they are
      sent abroad merely to pay a debt, he gets no returns, and consequently no
      profit. He naturally, therefore, exerts his invention to find out a way of
      paying his foreign debts, rather by the exportation of commodities, than
      by that of gold and silver. The great quantity of British goods, exported
      during the course of the late war, without bringing back any returns, is
      accordingly remarked by the author of the Present State of the Nation.
    
      Besides the three sorts of gold and silver above mentioned, there is in
      all great commercial countries a good deal of bullion alternately imported
      and exported, for the purposes of foreign trade. This bullion, as it
      circulates among different commercial countries, in the same manner as the
      national coin circulates in every country, may be considered as the money
      of the great mercantile republic. The national coin receives its movement
      and direction from the commodities circulated within the precincts of each
      particular country; the money in the mercantile republic, from those
      circulated between different countries. Both are employed in facilitating
      exchanges, the one between different individuals of the same, the other
      between those of different nations. Part of this money of the great
      mercantile republic may have been, and probably was, employed in carrying
      on the late war. In time of a general war, it is natural to suppose that a
      movement and direction should be impressed upon it, different from what it
      usually follows in profound peace, that it should circulate more about the
      seat of the war, and be more employed in purchasing there, and in the
      neighbouring countries, the pay and provisions of the different armies.
      But whatever part of this money of the mercantile republic Great Britain
      may have annually employed in this manner, it must have been annually
      purchased, either with British commodities, or with something else that
      had been purchased with them; which still brings us back to commodities,
      to the annual produce of the land and labour of the country, as the
      ultimate resources which enabled us to carry on the war. It is natural,
      indeed, to suppose, that so great an annual expense must have been
      defrayed from a great annual produce. The expense of 1761, for example,
      amounted to more than £19,000,000. No accumulation could have supported so
      great an annual profusion. There is no annual produce, even of gold and
      silver, which could have supported it. The whole gold and silver annually
      imported into both Spain and Portugal, according to the best accounts,
      does not commonly much exceed £6,000,000 sterling, which, in some years,
      would scarce have paid four months expense of the late war.
    
      The commodities most proper for being transported to distant countries, in
      order to purchase there either the pay and provisions of an army, or some
      part of the money of the mercantile republic to be employed in purchasing
      them, seem to be the finer and more improved manufactures; such as contain
      a great value in a small bulk, and can therefore be exported to a great
      distance at little expense. A country whose industry produces a great
      annual surplus of such manufactures, which are usually exported to foreign
      countries, may carry on for many years a very expensive foreign war,
      without either exporting any considerable quantity of gold and silver, or
      even having any such quantity to export. A considerable part of the annual
      surplus of its manufactures must, indeed, in this case, be exported
      without bringing back any returns to the country, though it does to the
      merchant; the government purchasing of the merchant his bills upon foreign
      countries, in order to purchase there the pay and provisions of an army.
      Some part of this surplus, however, may still continue to bring back a
      return. The manufacturers during; the war will have a double demand upon
      them, and be called upon first to work up goods to be sent abroad, for
      paying the bills drawn upon foreign countries for the pay and provisions
      of the army: and, secondly, to work up such as are necessary for
      purchasing the common returns that had usually been consumed in the
      country. In the midst of the most destructive foreign war, therefore, the
      greater part of manufactures may frequently flourish greatly; and, on the
      contrary, they may decline on the return of peace. They may flourish
      amidst the ruin of their country, and begin to decay upon the return of
      its prosperity. The different state of many different branches of the
      British manufactures during the late war, and for some time after the
      peace, may serve as an illustration of what has been just now said.
    
      No foreign war, of great expense or duration, could conveniently be
      carried on by the exportation of the rude produce of the soil. The expense
      of sending such a quantity of it into a foreign country as might purchase
      the pay and provisions of an army would be too great. Few countries, too,
      produce much more rude produce than what is sufficient for the subsistence
      of their own inhabitants. To send abroad any great quantity of it,
      therefore, would be to send abroad a part of the necessary subsistence of
      the people. It is otherwise with the exportation of manufactures. The
      maintenance of the people employed in them is kept at home, and only the
      surplus part of their work is exported. Mr Hume frequently takes notice of
      the inability of the ancient kings of England to carry on, without
      interruption, any foreign war of long duration. The English in those days
      had nothing wherewithal to purchase the pay and provisions of their armies
      in foreign countries, but either the rude produce of the soil, of which no
      considerable part could be spared from the home consumption, or a few
      manufactures of the coarsest kind, of which, as well as of the rude
      produce, the transportation was too expensive. This inability did not
      arise from the want of money, but of the finer and more improved
      manufactures. Buying and selling was transacted by means of money in
      England then as well as now. The quantity of circulating money must have
      borne the same proportion, to the number and value of purchases and sales
      usually transacted at that time, which it does to those transacted at
      present; or, rather, it must have borne a greater proportion, because
      there was then no paper, which now occupies a great part of the employment
      of gold and silver. Among nations to whom commerce and manufactures are
      little known, the sovereign, upon extraordinary occasions, can seldom draw
      any considerable aid from his subjects, for reasons which shall be
      explained hereafter. It is in such countries, therefore, that he generally
      endeavours to accumulate a treasure, as the only resource against such
      emergencies. Independent of this necessity, he is, in such a situation,
      naturally disposed to the parsimony requisite for accumulation. In that
      simple state, the expense even of a sovereign is not directed by the
      vanity which delights in the gaudy finery of a court, but is employed in
      bounty to his tenants, and hospitality to his retainers. But bounty and
      hospitality very seldom lead to extravagance; though vanity almost always
      does. Every Tartar chief, accordingly, has a treasure. The treasures of
      Mazepa, chief of the Cossacks in the Ukraine, the famous ally of Charles
      XII., are said to have been very great. The French kings of the
      Merovingian race had all treasures. When they divided their kingdom among
      their different children, they divided their treasures too. The Saxon
      princes, and the first kings after the Conquest, seem likewise to have
      accumulated treasures. The first exploit of every new reign was commonly
      to seize the treasure of the preceding king, as the most essential measure
      for securing the succession. The sovereigns of improved and commercial
      countries are not under the same necessity of accumulating treasures,
      because they can generally draw from their subjects extraordinary aids
      upon extraordinary occasions. They are likewise less disposed to do so.
      They naturally, perhaps necessarily, follow the mode of the times; and
      their expense comes to be regulated by the same extravagant vanity which
      directs that of all the other great proprietors in their dominions. The
      insignificant pageantry of their court becomes every day more brilliant;
      and the expense of it not only prevents accumulation, but frequently
      encroaches upon the funds destined for more necessary expenses. What
      Dercyllidas said of the court of Persia, may be applied to that of several
      European princes, that he saw there much splendour, but little strength,
      and many servants, but few soldiers.
    
      The importation of gold and silver is not the principal, much less the
      sole benefit, which a nation derives from its foreign trade. Between
      whatever places foreign trade is carried on, they all of them derive two
      distinct benefits from it. It carries out that surplus part of the produce
      of their land and labour for which there is no demand among them, and
      brings back in return for it something else for which there is a demand.
      It gives a value to their superfluities, by exchanging them for something
      else, which may satisfy a part of their wants and increase their
      enjoyments. By means of it, the narrowness of the home market does not
      hinder the division of labour in any particular branch of art or
      manufacture from being carried to the highest perfection. By opening a
      more extensive market for whatever part of the produce of their labour may
      exceed the home consumption, it encourages them to improve its productive
      power, and to augment its annual produce to the utmost, and thereby to
      increase the real revenue and wealth of the society. These great and
      important services foreign trade is continually occupied in performing to
      all the different countries between which it is carried on. They all
      derive great benefit from it, though that in which the merchant resides
      generally derives the greatest, as he is generally more employed in
      supplying the wants, and carrying out the superfluities of his own, than
      of any other particular country. To import the gold and silver which may
      be wanted into the countries which have no mines, is, no doubt a part of
      the business of foreign commerce. It is, however, a most insignificant
      part of it. A country which carried on foreign trade merely upon this
      account, could scarce have occasion to freight a ship in a century.
    
      It is not by the importation of gold and silver that the discovery of
      America has enriched Europe. By the abundance of the American mines, those
      metals have become cheaper. A service of plate can now be purchased for
      about a third part of the corn, or a third part of the labour, which it
      would have cost in the fifteenth century. With the same annual expense of
      labour and commodities, Europe can annually purchase about three times the
      quantity of plate which it could have purchased at that time. But when a
      commodity comes to be sold for a third part of what bad been its usual
      price, not only those who purchased it before can purchase three times
      their former quantity, but it is brought down to the level of a much
      greater number of purchasers, perhaps to more than ten, perhaps to more
      than twenty times the former number. So that there may be in Europe at
      present, not only more than three times, but more than twenty or thirty
      times the quantity of plate which would have been in it, even in its
      present state of improvement, had the discovery of the American mines
      never been made. So far Europe has, no doubt, gained a real conveniency,
      though surely a very trifling one. The cheapness of gold and silver
      renders those metals rather less fit for the purposes of money than they
      were before. In order to make the same purchases, we must load ourselves
      with a greater quantity of them, and carry about a shilling in our pocket,
      where a groat would have done before. It is difficult to say which is most
      trifling, this inconveniency, or the opposite conveniency. Neither the one
      nor the other could have made any very essential change in the state of
      Europe. The discovery of America, however, certainly made a most essential
      one. By opening a new and inexhaustible market to all the commodities of
      Europe, it gave occasion to new divisions of labour and improvements of
      art, which in the narrow circle of the ancient commerce could never have
      taken place, for want of a market to take off the greater part of their
      produce. The productive powers of labour were improved, and its produce
      increased in all the different countries of Europe, and together with it
      the real revenue and wealth of the inhabitants. The commodities of Europe
      were almost all new to America, and many of those of America were new to
      Europe. A new set of exchanges, therefore, began to take place, which had
      never been thought of before, and which should naturally have proved as
      advantageous to the new, as it certainly did to the old continent. The
      savage injustice of the Europeans rendered an event, which ought to have
      been beneficial to all, ruinous and destructive to several of those
      unfortunate countries.
    
      The discovery of a passage to the East Indies by the Cape of Good Hope,
      which happened much about the same time, opened perhaps a still more
      extensive range to foreign commerce, than even that of America,
      notwithstanding the greater distance. There were but two nations in
      America, in any respect, superior to the savages, and these were destroyed
      almost as soon as discovered. The rest were mere savages. But the empires
      of China, Indostan, Japan, as well as several others in the East Indies,
      without having richer mines of gold or silver, were, in every other
      respect, much richer, better cultivated, and more advanced in all arts and
      manufactures, than either Mexico or Peru, even though we should credit,
      what plainly deserves no credit, the exaggerated accounts of the Spanish
      writers concerning the ancient state of those empires. But rich and
      civilized nations can always exchange to a much greater value with one
      another, than with savages and barbarians. Europe, however, has hitherto
      derived much less advantage from its commerce with the East Indies, than
      from that with America. The Portuguese monopolised the East India trade to
      themselves for about a century; and it was only indirectly, and through
      them, that the other nations of Europe could either send out or receive
      any goods from that country. When the Dutch, in the beginning of the last
      century, began to encroach upon them, they vested their whole East India
      commerce in an exclusive company. The English, French, Swedes, and Danes,
      have all followed their example; so that no great nation of Europe has
      ever yet had the benefit of a free commerce to the East Indies. No other
      reason need be assigned why it has never been so advantageous as the trade
      to America, which, between almost every nation of Europe and its own
      colonies, is free to all its subjects. The exclusive privileges of those
      East India companies, their great riches, the great favour and protection
      which these have procured them from their respective governments, have
      excited much envy against them. This envy has frequently represented their
      trade as altogether pernicious, on account of the great quantities of
      silver which it every year exports from the countries from which it is
      carried on. The parties concerned have replied, that their trade by this
      continual exportation of silver, might indeed tend to impoverish Europe in
      general, but not the particular country from which it was carried on;
      because, by the exportation of a part of the returns to other European
      countries, it annually brought home a much greater quantity of that metal
      than it carried out. Both the objection and the reply are founded in the
      popular notion which I have been just now examining. It is therefore
      unnecessary to say any thing further about either. By the annual
      exportation of silver to the East Indies, plate is probably somewhat
      dearer in Europe than it otherwise might have been; and coined silver
      probably purchases a larger quantity both of labour and commodities. The
      former of these two effects is a very small loss, the latter a very small
      advantage; both too insignificant to deserve any part of the public
      attention. The trade to the East Indies, by opening a market to the
      commodities of Europe, or, what comes nearly to the same thing, to the
      gold and silver which is purchased with those commodities, must
      necessarily tend to increase the annual production of European
      commodities, and consequently the real wealth and revenue of Europe. That
      it has hitherto increased them so little, is probably owing to the
      restraints which it everywhere labours under.
    
      I thought it necessary, though at the hazard of being tedious, to examine
      at full length this popular notion, that wealth consists in money or in
      gold and silver. Money, in common language, as I have already observed,
      frequently signifies wealth; and this ambiguity of expression has rendered
      this popular notion so familiar to us, that even they who are convinced of
      its absurdity, are very apt to forget their own principles, and, in the
      course of their reasonings, to take it for granted as a certain and
      undeniable truth. Some of the best English writers upon commerce set out
      with observing, that the wealth of a country consists, not in its gold and
      silver only, but in its lands, houses, and consumable goods of all
      different kinds. In the course of their reasonings, however, the lands,
      houses, and consumable goods, seem to slip out of their memory; and the
      strain of their argument frequently supposes that all wealth consists in
      gold and silver, and that to multiply those metals is the great object of
      national industry and commerce.
    
      The two principles being established, however, that wealth consisted in
      gold and silver, and that those metals could be brought into a country
      which had no mines, only by the balance of trade, or by exporting to a
      greater value than it imported; it necessarily became the great object of
      political economy to diminish as much as possible the importation of
      foreign goods for home consumption, and to increase as much as possible
      the exportation of the produce of domestic industry. Its two great engines
      for enriching the country, therefore, were restraints upon importation,
      and encouragement to exportation.
    
      The restraints upon importation were of two kinds.
    
      First, restraints upon the importation of such foreign goods for home
      consumption as could be produced at home, from whatever country they were
      imported.
    
      Secondly, restraints upon the importation of goods of almost all kinds,
      from those particular countries with which the balance of trade was
      supposed to be disadvantageous.
    
      Those different restraints consisted sometimes in high duties, and
      sometimes in absolute prohibitions.
    
      Exportation was encouraged sometimes by drawbacks, sometimes by bounties,
      sometimes by advantageous treaties of commerce with foreign states, and
      sometimes by the establishment of colonies in distant countries.
    
      Drawbacks were given upon two different occasions. When the home
      manufactures were subject to any duty or excise, either the whole or a
      part of it was frequently drawn back upon their exportation; and when
      foreign goods liable to a duty were imported, in order to be exported
      again, either the whole or a part of this duty was sometimes given back
      upon such exportation.
    
      Bounties were given for the encouragement, either of some beginning
      manufactures, or of such sorts of industry of other kinds as were supposed
      to deserve particular favour.
    
      By advantageous treaties of commerce, particular privileges were procured
      in some foreign state for the goods and merchants of the country, beyond
      what were granted to those of other countries.
    
      By the establishment of colonies in distant countries, not only particular
      privileges, but a monopoly was frequently procured for the goods and
      merchants of the country which established them.
    
      The two sorts of restraints upon importation above mentioned, together
      with these four encouragements to exportation, constitute the six
      principal means by which the commercial system proposes to increase the
      quantity of gold and silver in any country, by turning the balance of
      trade in its favour. I shall consider each of them in a particular
      chapter, and, without taking much farther notice of their supposed
      tendency to bring money into the country, I shall examine chiefly what are
      likely to be the effects of each of them upon the annual produce of its
      industry. According as they tend either to increase or diminish the value
      of this annual produce, they must evidently tend either to increase or
      diminish the real wealth and revenue of the country.
    


CHAPTER II.
OF RESTRAINTS UPON IMPORTATION FROM
FOREIGN COUNTRIES OF SUCH GOODS AS CAN BE PRODUCED AT HOME.


    
      By restraining, either by high duties, or by absolute prohibitions, the
      importation of such goods from foreign countries as can be produced at
      home, the monopoly of the home market is more or less secured to the
      domestic industry employed in producing them. Thus the prohibition of
      importing either live cattle or salt provisions from foreign countries,
      secures to the graziers of Great Britain the monopoly of the home market
      for butcher’s meat. The high duties upon the importation of corn, which,
      in times of moderate plenty, amount to a prohibition, give a like
      advantage to the growers of that commodity. The prohibition of the
      importation of foreign woollen is equally favourable to the woollen
      manufacturers. The silk manufacture, though altogether employed upon
      foreign materials, has lately obtained the same advantage. The linen
      manufacture has not yet obtained it, but is making great strides towards
      it. Many other sorts of manufactures have, in the same manner obtained in
      Great Britain, either altogether, or very nearly, a monopoly against their
      countrymen. The variety of goods, of which the importation into Great
      Britain is prohibited, either absolutely, or under certain circumstances,
      greatly exceeds what can easily be suspected by those who are not well
      acquainted with the laws of the customs.
    
      That this monopoly of the home market frequently gives great encouragement
      to that particular species of industry which enjoys it, and frequently
      turns towards that employment a greater share of both the labour and stock
      of the society than would otherwise have gone to it, cannot be doubted.
      But whether it tends either to increase the general industry of the
      society, or to give it the most advantageous direction, is not, perhaps,
      altogether so evident.
    
      The general industry of the society can never exceed what the capital of
      the society can employ. As the number of workmen that can be kept in
      employment by any particular person must bear a certain proportion to his
      capital, so the number of those that can be continually employed by all
      the members of a great society must bear a certain proportion to the whole
      capital of the society, and never can exceed that proportion. No
      regulation of commerce can increase the quantity of industry in any
      society beyond what its capital can maintain. It can only divert a part of
      it into a direction into which it might not otherwise have gone; and it is
      by no means certain that this artificial direction is likely to be more
      advantageous to the society, than that into which it would have gone of
      its own accord.
    
      Every individual is continually exerting himself to find out the most
      advantageous employment for whatever capital he can command. It is his own
      advantage, indeed, and not that of the society, which he has in view. But
      the study of his own advantage naturally, or rather necessarily, leads him
      to prefer that employment which is most advantageous to the society.
    
      First, every individual endeavours to employ his capital as near home as
      he can, and consequently as much as he can in the support of domestic
      industry, provided always that he can thereby obtain the ordinary, or not
      a great deal less than the ordinary profits of stock.
    
      Thus, upon equal, or nearly equal profits, every wholesale merchant
      naturally prefers the home trade to the foreign trade of consumption, and
      the foreign trade of consumption to the carrying trade. In the home trade,
      his capital is never so long out of his sight as it frequently is in the
      foreign trade of consumption. He can know better the character and
      situation of the persons whom he trusts; and if he should happen to be
      deceived, he knows better the laws of the country from which he must seek
      redress. In the carrying trade, the capital of the merchant is, as it
      were, divided between two foreign countries, and no part of it is ever
      necessarily brought home, or placed under his own immediate view and
      command. The capital which an Amsterdam merchant employs in carrying corn
      from Koningsberg to Lisbon, and fruit and wine from Lisbon to Koningsberg,
      must generally be the one half of it at Koningsberg, and the other half at
      Lisbon. No part of it need ever come to Amsterdam. The natural residence
      of such a merchant should either be at Koningsberg or Lisbon; and it can
      only be some very particular circumstances which can make him prefer the
      residence of Amsterdam. The uneasiness, however, which he feels at being
      separated so far from his capital, generally determines him to bring part
      both of the Koningsberg goods which he destines for the market of Lisbon,
      and of the Lisbon goods which he destines for that of Koningsberg, to
      Amsterdam; and though this necessarily subjects him to a double charge of
      loading and unloading as well as to the payment of some duties and
      customs, yet, for the sake of having some part of his capital always under
      his own view and command, he willingly submits to this extraordinary
      charge; and it is in this manner that every country which has any
      considerable share of the carrying trade, becomes always the emporium, or
      general market, for the goods of all the different countries whose trade
      it carries on. The merchant, in order to save a second loading and
      unloading, endeavours always to sell in the home market, as much of the
      goods of all those different countries as he can; and thus, so far as he
      can, to convert his carrying trade into a foreign trade of consumption. A
      merchant, in the same manner, who is engaged in the foreign trade of
      consumption, when he collects goods for foreign markets, will always be
      glad, upon equal or nearly equal profits, to sell as great a part of them
      at home as he can. He saves himself the risk and trouble of exportation,
      when, so far as he can, he thus converts his foreign trade of consumption
      into a home trade. Home is in this manner the centre, if I may say so,
      round which the capitals of the inhabitants of every country are
      continually circulating, and towards which they are always tending,
      though, by particular causes, they may sometimes be driven off and
      repelled from it towards more distant employments. But a capital employed
      in the home trade, it has already been shown, necessarily puts into motion
      a greater quantity of domestic industry, and gives revenue and employment
      to a greater number of the inhabitants of the country, than an equal
      capital employed in the foreign trade of consumption; and one employed in
      the foreign trade of consumption has the same advantage over an equal
      capital employed in the carrying trade. Upon equal, or only nearly equal
      profits, therefore, every individual naturally inclines to employ his
      capital in the manner in which it is likely to afford the greatest support
      to domestic industry, and to give revenue and employment to the greatest
      number of people of his own country.
    
      Secondly, every individual who employs his capital in the support of
      domestic industry, necessarily endeavours so to direct that industry, that
      its produce may be of the greatest possible value.
    
      The produce of industry is what it adds to the subject or materials upon
      which it is employed. In proportion as the value of this produce is great
      or small, so will likewise be the profits of the employer. But it is only
      for the sake of profit that any man employs a capital in the support of
      industry; and he will always, therefore, endeavour to employ it in the
      support of that industry of which the produce is likely to be of the
      greatest value, or to exchange for the greatest quantity either of money
      or of other goods.
    
      But the annual revenue of every society is always precisely equal to the
      exchangeable value of the whole annual produce of its industry, or rather
      is precisely the same thing with that exchangeable value. As every
      individual, therefore, endeavours as much as he can, both to employ his
      capital in the support of domestic industry, and so to direct that
      industry that its produce maybe of the greatest value; every individual
      necessarily labours to render the annual revenue of the society as great
      as he can. He generally, indeed, neither intends to promote the public
      interest, nor knows how much he is promoting it. By preferring the support
      of domestic to that of foreign industry, he intends only his own security;
      and by directing that industry in such a manner as its produce may be of
      the greatest value, he intends only his own gain; and he is in this, as in
      many other cases, led by an invisible hand to promote an end which was no
      part of his intention. Nor is it always the worse for the society that it
      was no part of it. By pursuing his own interest, he frequently promotes
      that of the society more effectually than when he really intends to
      promote it. I have never known much good done by those who affected to
      trade for the public good. It is an affectation, indeed, not very common
      among merchants, and very few words need be employed in dissuading them
      from it.
    
      What is the species of domestic industry which his capital can employ, and
      of which the produce is likely to be of the greatest value, every
      individual, it is evident, can in his local situation judge much better
      than any statesman or lawgiver can do for him. The statesman, who should
      attempt to direct private people in what manner they ought to employ their
      capitals, would not only load himself with a most unnecessary attention,
      but assume an authority which could safely be trusted, not only to no
      single person, but to no council or senate whatever, and which would
      nowhere be so dangerous as in the hands of a man who had folly and
      presumption enough to fancy himself fit to exercise it.
    
      To give the monopoly of the home market to the produce of domestic
      industry, in any particular art or manufacture, is in some measure to
      direct private people in what manner they ought to employ their capitals,
      and must in almost all cases be either a useless or a hurtful regulation.
      If the produce of domestic can be brought there as cheap as that of
      foreign industry, the regulation is evidently useless. If it cannot, it
      must generally be hurtful. It is the maxim of every prudent master of a
      family, never to attempt to make at home what it will cost him more to
      make than to buy. The tailor does not attempt to make his own shoes, but
      buys them of the shoemaker. The shoemaker does not attempt to make his own
      clothes, but employs a tailor. The farmer attempts to make neither the one
      nor the other, but employs those different artificers. All of them find it
      for their interest to employ their whole industry in a way in which they
      have some advantage over their neighbours, and to purchase with a part of
      its produce, or, what is the same thing, with the price of a part of it,
      whatever else they have occasion for.
    
      What is prudence in the conduct of every private family, can scarce be
      folly in that of a great kingdom. If a foreign country can supply us with
      a commodity cheaper than we ourselves can make it, better buy it of them
      with some part of the produce of our own industry, employed in a way in
      which we have some advantage. The general industry of the country being
      always in proportion to the capital which employs it, will not thereby be
      diminished, no more than that of the abovementioned artificers; but only
      left to find out the way in which it can be employed with the greatest
      advantage. It is certainly not employed to the greatest advantage, when it
      is thus directed towards an object which it can buy cheaper than it can
      make. The value of its annual produce is certainly more or less
      diminished, when it is thus turned away from producing commodities
      evidently of more value than the commodity which it is directed to
      produce. According to the supposition, that commodity could be purchased
      from foreign countries cheaper than it can be made at home; it could
      therefore have been purchased with a part only of the commodities, or,
      what is the same thing, with a part only of the price of the commodities,
      which the industry employed by an equal capital would have produced at
      home, had it been left to follow its natural course. The industry of the
      country, therefore, is thus turned away from a more to a less advantageous
      employment; and the exchangeable value of its annual produce, instead of
      being increased, according to the intention of the lawgiver, must
      necessarily be diminished by every such regulation.
    
      By means of such regulations, indeed, a particular manufacture may
      sometimes be acquired sooner than it could have been otherwise, and after
      a certain time may be made at home as cheap, or cheaper, than in the
      foreign country. But though the industry of the society may be thus
      carried with advantage into a particular channel sooner than it could have
      been otherwise, it will by no means follow that the sum-total, either of
      its industry, or of its revenue, can ever be augmented by any such
      regulation. The industry of the society can augment only in proportion as
      its capital augments, and its capital can augment only in proportion to
      what can be gradually saved out of its revenue. But the immediate effect
      of every such regulation is to diminish its revenue; and what diminishes
      its revenue is certainly not very likely to augment its capital faster
      than it would have augmented of its own accord, had both capital and
      industry been left to find out their natural employments.
    
      Though, for want of such regulations, the society should never acquire the
      proposed manufacture, it would not upon that account necessarily be the
      poorer in anyone period of its duration. In every period of its duration
      its whole capital and industry might still have been employed, though upon
      different objects, in the manner that was most advantageous at the time.
      In every period its revenue might have been the greatest which its capital
      could afford, and both capital and revenue might have been augmented with
      the greatest possible rapidity.
    
      The natural advantages which one country has over another, in producing
      particular commodities, are sometimes so great, that it is acknowledged by
      all the world to be in vain to struggle with them. By means of glasses,
      hot-beds, and hot-walls, very good grapes can be raised in Scotland, and
      very good wine, too, can be made of them, at about thirty times the
      expense for which at least equally good can be brought from foreign
      countries. Would it be a reasonable law to prohibit the importation of all
      foreign wines, merely to encourage the making of claret and Burgundy in
      Scotland? But if there would be a manifest absurdity in turning towards
      any employment thirty times more of the capital and industry of the
      country than would be necessary to purchase from foreign countries an
      equal quantity of the commodities wanted, there must be an absurdity,
      though not altogether so glaring, yet exactly of the same kind, in turning
      towards any such employment a thirtieth, or even a three hundredth part
      more of either. Whether the advantages which one country has over another
      be natural or acquired, is in this respect of no consequence. As long as
      the one country has those advantages, and the other wants them, it will
      always be more advantageous for the latter rather to buy of the former
      than to make. It is an acquired advantage only, which one artificer has
      over his neighbour, who exercises another trade; and yet they both find it
      more advantageous to buy of one another, than to make what does not belong
      to their particular trades.
    
      Merchants and manufacturers are the people who derive the greatest
      advantage from this monopoly of the home market. The prohibition of the
      importation of foreign cattle and of salt provisions, together with the
      high duties upon foreign corn, which in times of moderate plenty amount to
      a prohibition, are not near so advantageous to the graziers and farmers of
      Great Britain, as other regulations of the same kind are to its merchants
      and manufacturers. Manufactures, those of the finer kind especially, are
      more easily transported from one country to another than corn or cattle.
      It is in the fetching and carrying manufactures, accordingly, that foreign
      trade is chiefly employed. In manufactures, a very small advantage will
      enable foreigners to undersell our own workmen, even in the home market.
      It will require a very great one to enable them to do so in the rude
      produce of the soil. If the free importation of foreign manufactures were
      permitted, several of the home manufactures would probably suffer, and
      some of them perhaps go to ruin altogether, and a considerable part of the
      stock and industry at present employed in them, would be forced to find
      out some other employment. But the freest importation of the rude produce
      of the soil could have no such effect upon the agriculture of the country.
    
      If the importation of foreign cattle, for example, were made ever so free,
      so few could be imported, that the grazing trade of Great Britain could be
      little affected by it. Live cattle are, perhaps, the only commodity of
      which the transportation is more expensive by sea than by land. By land
      they carry themselves to market. By sea, not only the cattle, but their
      food and their water too, must be carried at no small expense and
      inconveniency. The short sea between Ireland and Great Britain, indeed,
      renders the importation of Irish cattle more easy. But though the free
      importation of them, which was lately permitted only for a limited time,
      were rendered perpetual, it could have no considerable effect upon the
      interest of the graziers of Great Britain. Those parts of Great Britain
      which border upon the Irish sea are all grazing countries. Irish cattle
      could never be imported for their use, but must be drove through those
      very extensive countries, at no small expense and inconveniency, before
      they could arrive at their proper market. Fat cattle could not be drove so
      far. Lean cattle, therefore, could only be imported; and such importation
      could interfere not with the interest of the feeding or fattening
      countries, to which, by reducing the price of lean cattle it would rather
      be advantageous, but with that of the breeding countries only. The small
      number of Irish cattle imported since their importation was permitted,
      together with the good price at which lean cattle still continue to sell,
      seem to demonstrate, that even the breeding countries of Great Britain are
      never likely to be much affected by the free importation of Irish cattle.
      The common people of Ireland, indeed, are said to have sometimes opposed
      with violence the exportation of their cattle. But if the exporters had
      found any great advantage in continuing the trade, they could easily, when
      the law was on their side, have conquered this mobbish opposition.
    
      Feeding and fattening countries, besides, must always be highly improved,
      whereas breeding countries are generally uncultivated. The high price of
      lean cattle, by augmenting the value of uncultivated land, is like a
      bounty against improvement. To any country which was highly improved
      throughout, it would be more advantageous to import its lean cattle than
      to breed them. The province of Holland, accordingly, is said to follow
      this maxim at present. The mountains of Scotland, Wales, and
      Northumberland, indeed, are countries not capable of much improvement, and
      seem destined by nature to be the breeding countries of Great Britain. The
      freest importation of foreign cattle could have no other effect than to
      hinder those breeding countries from taking advantage of the increasing
      population and improvement of the rest of the kingdom, from raising their
      price to an exorbitant height, and from laying a real tax upon all the
      more improved and cultivated parts of the country.
    
      The freest importation of salt provisions, in the same manner, could have
      as little effect upon the interest of the graziers of Great Britain as
      that of live cattle. Salt provisions are not only a very bulky commodity,
      but when compared with fresh meat they are a commodity both of worse
      quality, and, as they cost more labour and expense, of higher price. They
      could never, therefore, come into competition with the fresh meat, though
      they might with the salt provisions of the country. They might be used for
      victualling ships for distant voyages, and such like uses, but could never
      make any considerable part of the food of the people. The small quantity
      of salt provisions imported from Ireland since their importation was
      rendered free, is an experimental proof that our graziers have nothing to
      apprehend from it. It does not appear that the price of butcher’s meat has
      ever been sensibly affected by it.
    
      Even the free importation of foreign corn could very little affect the
      interest of the farmers of Great Britain. Corn is a much more bulky
      commodity than butcher’s meat. A pound of wheat at a penny is as dear as a
      pound of butcher’s meat at fourpence. The small quantity of foreign corn
      imported even in times of the greatest scarcity, may satisfy our farmers
      that they can have nothing to fear from the freest importation. The
      average quantity imported, one year with another, amounts only, according
      to the very well informed author of the Tracts upon the Corn Trade, to
      23,728 quarters of all sorts of grain, and does not exceed the five
      hundredth and seventy-one part of the annual consumption. But as the
      bounty upon corn occasions a greater exportation in years of plenty, so it
      must, of consequence, occasion a greater importation in years of scarcity,
      than in the actual state of tillage would otherwise take place. By means
      of it, the plenty of one year does not compensate the scarcity of another;
      and as the average quantity exported is necessarily augmented by it, so
      must likewise, in the actual state of tillage, the average quantity
      imported. If there were no bounty, as less corn would be exported, so it
      is probable that, one year with another, less would be imported than at
      present. The corn-merchants, the fetchers and carriers of corn between
      Great Britain and foreign countries, would have much less employment, and
      might suffer considerably; but the country gentlemen and farmers could
      suffer very little. It is in the corn-merchants, accordingly, rather than
      the country gentlemen and farmers, that I have observed the greatest
      anxiety for the renewal and continuation of the bounty.
    
      Country gentlemen and farmers are, to their great honour, of all people,
      the least subject to the wretched spirit of monopoly. The undertaker of a
      great manufactory is sometimes alarmed if another work of the same kind is
      established within twenty miles of him; the Dutch undertaker of the
      woollen manufacture at Abbeville, stipulated that no work of the same kind
      should be established within thirty leagues of that city. Farmers and
      country gentlemen, on the contrary, are generally disposed rather to
      promote, than to obstruct, the cultivation and improvement of their
      neighbours farms and estates. They have no secrets, such as those of the
      greater part of manufacturers, but are generally rather fond of
      communicating to their neighbours, and of extending as far as possible any
      new practice which they may have found to be advantageous. “Pius
      quaestus”, says old Cato, “stabilissimusque, minimeque invidiosus;
      minimeque male cogitantes sunt, qui in eo studio occupati sunt.” Country
      gentlemen and farmers, dispersed in different parts of the country, cannot
      so easily combine as merchants and manufacturers, who being collected into
      towns, and accustomed to that exclusive corporation spirit which prevails
      in them, naturally endeavour to obtain, against all their countrymen, the
      same exclusive privilege which they generally possess against the
      inhabitants of their respective towns. They accordingly seem to have been
      the original inventors of those restraints upon the importation of foreign
      goods, which secure to them the monopoly of the home market. It was
      probably in imitation of them, and to put themselves upon a level with
      those who, they found, were disposed to oppress them, that the country
      gentlemen and farmers of Great Britain so far forgot the generosity which
      is natural to their station, as to demand the exclusive privilege of
      supplying their countrymen with corn and butcher’s meat. They did not,
      perhaps, take time to consider how much less their interest could be
      affected by the freedom of trade, than that of the people whose example
      they followed.
    
      To prohibit, by a perpetual law, the importation of foreign corn and
      cattle, is in reality to enact, that the population and industry of the
      country shall, at no time, exceed what the rude produce of its own soil
      can maintain.
    
      There seem, however, to be two cases, in which it will generally be
      advantageous to lay some burden upon foreign, for the encouragement of
      domestic industry.
    
      The first is, when some particular sort of industry is necessary for the
      defence of the country. The defence of Great Britain, for example, depends
      very much upon the number of its sailors and shipping. The act of
      navigation, therefore, very properly endeavours to give the sailors and
      shipping of Great Britain the monopoly of the trade of their own country,
      in some cases, by absolute prohibitions, and in others, by heavy burdens
      upon the shipping of foreign countries. The following are the principal
      dispositions of this act.
    
      First, All ships, of which the owners, masters, and three-fourths of the
      mariners, are not British subjects, are prohibited, upon pain of
      forfeiting ship and cargo, from trading to the British settlements and
      plantations, or from being employed in the coasting trade of Great
      Britain.
    
      Secondly, A great variety of the most bulky articles of importation can be
      brought into Great Britain only, either in such ships as are above
      described, or in ships of the country where those goods are produced, and
      of which the owners, masters, and three-fourths of the mariners, are of
      that particular country; and when imported even in ships of this latter
      kind, they are subject to double aliens duty. If imported in ships of any
      other country, the penalty is forfeiture of ship and goods. When this act
      was made, the Dutch were, what they still are, the great carriers of
      Europe; and by this regulation they were entirely excluded from being the
      carriers to Great Britain, or from importing to us the goods of any other
      European country.
    
      Thirdly, A great variety of the most bulky articles of importation are
      prohibited from being imported, even in British ships, from any country
      but that in which they are produced, under pain of forfeiting ship and
      cargo. This regulation, too, was probably intended against the Dutch.
      Holland was then, as now, the great emporium for all European goods; and
      by this regulation, British ships were hindered from loading in Holland
      the goods of any other European country.
    
      Fourthly, Salt fish of all kinds, whale fins, whalebone, oil, and blubber,
      not caught by and cured on board British vessels, when imported into Great
      Britain, are subject to double aliens duty. The Dutch, as they are still
      the principal, were then the only fishers in Europe that attempted to
      supply foreign nations with fish. By this regulation, a very heavy burden
      was laid upon their supplying Great Britain.
    
      When the act of navigation was made, though England and Holland were not
      actually at war, the most violent animosity subsisted between the two
      nations. It had begun during the government of the long parliament, which
      first framed this act, and it broke out soon after in the Dutch wars,
      during that of the Protector and of Charles II. It is not impossible,
      therefore, that some of the regulations of this famous act may have
      proceeded from national animosity. They are as wise, however, as if they
      had all been dictated by the most deliberate wisdom. National animosity,
      at that particular time, aimed at the very same object which the most
      deliberate wisdom would have recommended, the diminution of the naval
      power of Holland, the only naval power which could endanger the security
      of England.
    
      The act of navigation is not favourable to foreign commerce, or to the
      growth of that opulence which can arise from it. The interest of a nation,
      in its commercial relations to foreign nations, is, like that of a
      merchant with regard to the different people with whom he deals, to buy as
      cheap, and to sell as dear as possible. But it will be most likely to buy
      cheap, when, by the most perfect freedom of trade, it encourages all
      nations to bring to it the goods which it has occasion to purchase; and,
      for the same reason, it will be most likely to sell dear, when its markets
      are thus filled with the greatest number of buyers. The act of navigation,
      it is true, lays no burden upon foreign ships that come to export the
      produce of British industry. Even the ancient aliens duty, which used to
      be paid upon all goods, exported as well as imported, has, by several
      subsequent acts, been taken off from the greater part of the articles of
      exportation. But if foreigners, either by prohibitions or high duties, are
      hindered from coming to sell, they cannot always afford to come to buy;
      because, coming without a cargo, they must lose the freight from their own
      country to Great Britain. By diminishing the number of sellers, therefore,
      we necessarily diminish that of buyers, and are thus likely not only to
      buy foreign goods dearer, but to sell our own cheaper, than if there was a
      more perfect freedom of trade. As defence, however, is of much more
      importance than opulence, the act of navigation is, perhaps, the wisest of
      all the commercial regulations of England.
    
      The second case, in which it will generally be advantageous to lay some
      burden upon foreign for the encouragement of domestic industry, is when
      some tax is imposed at home upon the produce of the latter. In this case,
      it seems reasonable that an equal tax should be imposed upon the like
      produce of the former. This would not give the monopoly of the borne
      market to domestic industry, nor turn towards a particular employment a
      greater share of the stock and labour of the country, than what would
      naturally go to it. It would only hinder any part of what would naturally
      go to it from being turned away by the tax into a less natural direction,
      and would leave the competition between foreign and domestic industry,
      after the tax, as nearly as possible upon the same footing as before it.
      In Great Britain, when any such tax is laid upon the produce of domestic
      industry, it is usual, at the same time, in order to stop the clamorous
      complaints of our merchants and manufacturers, that they will be undersold
      at home, to lay a much heavier duty upon the importation of all foreign
      goods of the same kind.
    
      This second limitation of the freedom of trade, according to some people,
      should, upon most occasions, be extended much farther than to the precise
      foreign commodities which could come into competition with those which had
      been taxed at home. When the necessaries of life have been taxed in any
      country, it becomes proper, they pretend, to tax not only the like
      necessaries of life imported from other countries, but all sorts of
      foreign goods which can come into competition with any thing that is the
      produce of domestic industry. Subsistence, they say, becomes necessarily
      dearer in consequence of such taxes; and the price of labour must always
      rise with the price of the labourer’s subsistence. Every commodity,
      therefore, which is the produce of domestic industry, though not
      immediately taxed itself, becomes dearer in consequence of such taxes,
      because the labour which produces it becomes so. Such taxes, therefore,
      are really equivalent, they say, to a tax upon every particular commodity
      produced at home. In order to put domestic upon the same footing with
      foreign industry, therefore, it becomes necessary, they think, to lay some
      duty upon every foreign commodity, equal to this enhancement of the price
      of the home commodities with which it can come into competition.
    
      Whether taxes upon the necessaries of life, such as those in Great Britain
      upon soap, salt, leather, candles, etc. necessarily raise the price of
      labour, and consequently that of all other commodities, I shall consider
      hereafter, when I come to treat of taxes. Supposing, however, in the mean
      time, that they have this effect, and they have it undoubtedly, this
      general enhancement of the price of all commodities, in consequence of
      that labour, is a case which differs in the two following respects from
      that of a particular commodity, of which the price was enhanced by a
      particular tax immediately imposed upon it.
    
      First, It might always be known with great exactness, how far the price of
      such a commodity could be enhanced by such a tax; but how far the general
      enhancement of the price of labour might affect that of every different
      commodity about which labour was employed, could never be known with any
      tolerable exactness. It would be impossible, therefore, to proportion,
      with any tolerable exactness, the tax of every foreign, to the enhancement
      of the price of every home commodity.
    
      Secondly, Taxes upon the necessaries of life have nearly the same effect
      upon the circumstances of the people as a poor soil and a bad climate.
      Provisions are thereby rendered dearer, in the same manner as if it
      required extraordinary labour and expense to raise them. As, in the
      natural scarcity arising from soil and climate, it would be absurd to
      direct the people in what manner they ought to employ their capitals and
      industry, so is it likewise in the artificial scarcity arising from such
      taxes. To be left to accommodate, as well as they could, their industry to
      their situation, and to find out those employments in which,
      notwithstanding their unfavourable circumstances, they might have some
      advantage either in the home or in the foreign market, is what, in both
      cases, would evidently be most for their advantage. To lay a new-tax upon
      them, because they are already overburdened with taxes, and because they
      already pay too dear for the necessaries of life, to make them likewise
      pay too dear for the greater part of other commodities, is certainly a
      most absurd way of making amends.
    
      Such taxes, when they have grown up to a certain height, are a curse equal
      to the barrenness of the earth, and the inclemency of the heavens, and yet
      it is in the richest and most industrious countries that they have been
      most generally imposed. No other countries could support so great a
      disorder. As the strongest bodies only can live and enjoy health under an
      unwholesome regimen, so the nations only, that in every sort of industry
      have the greatest natural and acquired advantages, can subsist and prosper
      under such taxes. Holland is the country in Europe in which they abound
      most, and which, from peculiar circumstances, continues to prosper, not by
      means of them, as has been most absurdly supposed, but in spite of them.
    
      As there are two cases in which it will generally be advantageous to lay
      some burden upon foreign for the encouragement of domestic industry, so
      there are two others in which it may sometimes be a matter of
      deliberation, in the one, how far it is proper to continue the free
      importation of certain foreign goods; and, in the other, how far, or in
      what manner, it may be proper to restore that free importation, after it
      has been for some time interrupted.
    
      The case in which it may sometimes be a matter of deliberation how far it
      is proper to continue the free importation of certain foreign goods, is
      when some foreign nation restrains, by high duties or prohibitions, the
      importation of some of our manufactures into their country. Revenge, in
      this case, naturally dictates retaliation, and that we should impose the
      like duties and prohibitions upon the importation of some or all of their
      manufactures into ours. Nations, accordingly, seldom fail to retaliate in
      this manner. The French have been particularly forward to favour their own
      manufactures, by restraining the importation of such foreign goods as
      could come into competition with them. In this consisted a great part of
      the policy of Mr Colbert, who, notwithstanding his great abilities, seems
      in this case to have been imposed upon by the sophistry of merchants and
      manufacturers, who are always demanding a monopoly against their
      countrymen. It is at present the opinion of the most intelligent men in
      France, that his operations of this kind have not been beneficial to his
      country. That minister, by the tariff of 1667, imposed very high duties
      upon a great number of foreign manufactures. Upon his refusing to moderate
      them in favour of the Dutch, they, in 1671, prohibited the importation of
      the wines, brandies, and manufactures of France. The war of 1672 seems to
      have been in part occasioned by this commercial dispute. The peace of
      Nimeguen put an end to it in 1678, by moderating some of those duties in
      favour of the Dutch, who in consequence took off their prohibition. It was
      about the same time that the French and English began mutually to oppress
      each other’s industry, by the like duties and prohibitions, of which the
      French, however, seem to have set the first example, The spirit of
      hostility which has subsisted between the two nations ever since, has
      hitherto hindered them from being moderated on either side. In 1697, the
      Ehglish prohibited the importation of bone lace, the manufacture of
      Flanders. The government of that country, at that time under the dominion
      of Spain, prohibited, in return, the importation of English woollens. In
      1700, the prohibition of importing bone lace into England was taken oft;
      upon condition that the importation of English woollens into Flanders
      should be put on the same footing as before.
    
      There may be good policy in retaliations of this kind, when there is a
      probability that they will procure the repeal of the high duties or
      prohibitions complained of. The recovery of a great foreign market will
      generally more than compensate the transitory inconveniency of paying
      dearer during a short time for some sorts of goods. To judge whether such
      retaliations are likely to produce such an effect, does not, perhaps,
      belong so much to the science of a legislator, whose deliberations ought
      to be governed by general principles, which are always the same, as to the
      skill of that insidious and crafty animal vulgarly called a statesman or
      politician, whose councils are directed by the momentary fluctuations of
      affairs. When there is no probability that any such repeal can be
      procured, it seems a bad method of compensating the injury done to certain
      classes of our people, to do another injury ourselves, not only to those
      classes, but to almost all the other classes of them. When our neighbours
      prohibit some manufacture of ours, we generally prohibit, not only the
      same, for that alone would seldom affect them considerably, but some other
      manufacture of theirs. This may, no doubt, give encouragement to some
      particular class of workmen among ourselves, and, by excluding some of
      their rivals, may enable them to raise their price in the home market.
      Those workmen however, who suffered by our neighbours prohibition, will
      not be benefited by ours. On the contrary, they, and almost all the other
      classes of our citizens, will thereby be obliged to pay dearer than before
      for certain goods. Every such law, therefore, imposes a real tax upon the
      whole country, not in favour of that particular class of workmen who were
      injured by our neighbours prohibitions, but of some other class.
    
      The case in which it may sometimes be a matter of deliberation, how far,
      or in what manner, it is proper to restore the free importation of foreign
      goods, after it has been for some time interrupted, is when particular
      manufactures, by means of high duties or prohibitions upon all foreign
      goods which can come into competition with them, have been so far extended
      as to employ a great multitude of hands. Humanity may in this case require
      that the freedom of trade should be restored only by slow gradations, and
      with a good deal of reserve and circumspection. Were those high duties and
      prohibitions taken away all at once, cheaper foreign goods of the same
      kind might be poured so fast into the home market, as to deprive all at
      once many thousands of our people of their ordinary employment and means
      of subsistence. The disorder which this would occasion might no doubt be
      very considerable. It would in all probability, however, be much less than
      is commonly imagined, for the two following reasons.
    
      First, All those manufactures of which any part is commonly exported to
      other European countries without a bounty, could be very little affected
      by the freest importation of foreign goods. Such manufactures must be sold
      as cheap abroad as any other foreign goods of the same quality and kind,
      and consequently must be sold cheaper at home. They would still,
      therefore, keep possession of the home market; and though a capricious man
      of fashion might sometimes prefer foreign wares, merely because they were
      foreign, to cheaper and better goods of the same kind that were made at
      home, this folly could, from the nature of things, extend to so few, that
      it could make no sensible impression upon the general employment of the
      people. But a great part of all the different branches of our woollen
      manufacture, of our tanned leather, and of our hardware, are annually
      exported to other European countries without any bounty, and these are the
      manufactures which employ the greatest number of hands. The silk, perhaps,
      is the manufacture which would suffer the most by this freedom of trade,
      and after it the linen, though the latter much less than the former.
    
      Secondly, Though a great number of people should, by thus restoring the
      freedom of trade, be thrown all at once out of their ordinary employment
      and common method of subsistence, it would by no means follow that they
      would thereby be deprived either of employment or subsistence. By the
      reduction of the army and navy at the end of the late war, more than
      100,000 soldiers and seamen, a number equal to what is employed in the
      greatest manufactures, were all at once thrown out of their ordinary
      employment: but though they no doubt suffered some inconveniency, they
      were not thereby deprived of all employment and subsistence. The greater
      part of the seamen, it is probable, gradually betook themselves to the
      merchant service as they could find occasion, and in the mean time both
      they and the soldiers were absorbed in the great mass of the people, and
      employed in a great variety of occupations. Not only no great convulsion,
      but no sensible disorder, arose from so great a change in the situation of
      more than 100,000 men, all accustomed to the use of arms, and many of them
      to rapine and plunder. The number of vagrants was scarce anywhere sensibly
      increased by it; even the wages of labour were not reduced by it in any
      occupation, so far as I have been able to learn, except in that of seamen
      in the merchant service. But if we compare together the habits of a
      soldier and of any sort of manufacturer, we shall find that those of the
      latter do not tend so much to disqualify him from being employed in a new
      trade, as those of the former from being employed in any. The manufacturer
      has always been accustomed to look for his subsistence from his labour
      only; the soldier to expect it from his pay. Application and industry have
      been familiar to the one; idleness and dissipation to the other. But it is
      surely much easier to change the direction of industry from one sort of
      labour to another, than to turn idleness and dissipation to any. To the
      greater part of manufactures, besides, it has already been observed, there
      are other collateral manufactures of so similar a nature, that a workman
      can easily transfer his industry from one of them to another. The greater
      part of such workmen, too, are occasionally employed in country labour.
      The stock which employed them in a particular manufacture before, will
      still remain in the country, to employ an equal number of people in some
      other way. The capital of the country remaining the same, the demand for
      labour will likewise be the same, or very nearly the same, though it may
      be exerted in different places, and for different occupations. Soldiers
      and seamen, indeed, when discharged from the king’s service, are at
      liberty to exercise any trade within any town or place of Great Britain or
      Ireland. Let the same natural liberty of exercising what species of
      industry they please, be restored to all his Majesty’s subjects, in the
      same manner as to soldiers and seamen; that is, break down the exclusive
      privileges of corporations, and repeal the statute of apprenticeship, both
      which are really encroachments upon natural Liberty, and add to those the
      repeal of the law of settlements, so that a poor workman, when thrown out
      of employment, either in one trade or in one place, may seek for it in
      another trade or in another place, without the fear either of a
      prosecution or of a removal; and neither the public nor the individuals
      will suffer much more from the occasional disbanding some particular
      classes of manufacturers, than from that of the soldiers. Our
      manufacturers have no doubt great merit with their country, but they
      cannot have more than those who defend it with their blood, nor deserve to
      be treated with more delicacy.
    
      To expect, indeed, that the freedom of trade should ever be entirely
      restored in Great Britain, is as absurd as to expect that an Oceana or
      Utopia should ever be established in it. Not only the prejudices of the
      public, but, what is much more unconquerable, the private interests of
      many individuals, irresistibly oppose it. Were the officers of the army to
      oppose, with the same zeal and unanimity, any reduction in the number of
      forces, with which master manufacturers set themselves against every law
      that is likely to increase the number of their rivals in the home market;
      were the former to animate their soldiers. In the same manner as the
      latter inflame their workmen, to attack with violence and outrage the
      proposers of any such regulation; to attempt to reduce the army would be
      as dangerous as it has now become to attempt to diminish, in any respect,
      the monopoly which our manufacturers have obtained against us. This
      monopoly has so much increased the number of some particular tribes of
      them, that, like an overgrown standing army, they have become formidable
      to the government, and, upon many occasions, intimidate the legislature.
      The member of parliament who supports every proposal for strengthening
      this monopoly, is sure to acquire not only the reputation of understanding
      trade, but great popularity and influence with an order of men whose
      numbers and wealth render them of great importance. If he opposes them, on
      the contrary, and still more, if he has authority enough to be able to
      thwart them, neither the most acknowledged probity, nor the highest rank,
      nor the greatest public services, can protect him from the most infamous
      abuse and detraction, from personal insults, nor sometimes from real
      danger, arising from the insolent outrage of furious and disappointed
      monopolists.
    
      The undertaker of a great manufacture, who, by the home markets being
      suddenly laid open to the competition of foreigners, should be obliged to
      abandon his trade, would no doubt suffer very considerably. That part of
      his capital which had usually been employed in purchasing materials, and
      in paying his workmen, might, without much difficulty, perhaps, find
      another employment; but that part of it which was fixed in workhouses, and
      in the instruments of trade, could scarce be disposed of without
      considerable loss. The equitable regard, therefore, to his interest,
      requires that changes of this kind should never be introduced suddenly,
      but slowly, gradually, and after a very long warning. The legislature,
      were it possible that its deliberations could be always directed, not by
      the clamorous importunity of partial interests, but by an extensive view
      of the general good, ought, upon this very account, perhaps, to be
      particularly careful, neither to establish any new monopolies of this
      kind, nor to extend further those which are already established. Every
      such regulation introduces some degree of real disorder into the
      constitution of the state, which it will be difficult afterwards to cure
      without occasioning another disorder.
    
      How far it may be proper to impose taxes upon the importation of foreign
      goods, in order not to prevent their importation, but to raise a revenue
      for government, I shall consider hereafter when I come to treat of taxes.
      Taxes imposed with a view to prevent, or even to diminish importation, are
      evidently as destructive of the revenue of the customs as of the freedom
      of trade.
    


CHAPTER III.
OF THE EXTRAORDINARY RESTRAINTS UPON
THE IMPORTATION OF GOODS OF ALMOST ALL KINDS, FROM THOSE COUNTRIES WITH WHICH
THE BALANCE IS SUPPOSED TO BE DISADVANTAGEOUS.


    
      Part I—Of the Unreasonableness of those Restraints, even upon the
      Principles of the Commercial System.
    
      To lay extraordinary restraints upon the importation of goods of almost
      all kinds, from those particular countries with which the balance of trade
      is supposed to be disadvantageous, is the second expedient by which the
      commercial system proposes to increase the quantity of gold and silver.
      Thus, in Great Britain, Silesia lawns may be imported for home
      consumption, upon paying certain duties; but French cambrics and lawns are
      prohibited to be imported, except into the port of London, there to be
      warehoused for exportation. Higher duties are imposed upon the wines of
      France than upon those of Portugal, or indeed of any other country. By
      what is called the impost 1692, a duty of five and-twenty per cent. of the
      rate or value, was laid upon all French goods; while the goods of other
      nations were, the greater part of them, subjected to much lighter duties,
      seldom exceeding five per cent. The wine, brandy, salt, and vinegar of
      France, were indeed excepted; these commodities being subjected to other
      heavy duties, either by other laws, or by particular clauses of the same
      law. In 1696, a second duty of twenty-five per cent. the first not having
      been thought a sufficient discouragement, was imposed upon all French
      goods, except brandy; together with a new duty of five-and-twenty pounds
      upon the ton of French wine, and another of fifteen pounds upon the ton of
      French vinegar. French goods have never been omitted in any of those
      general subsidies or duties of five per cent. which have been imposed upon
      all, or the greater part, of the goods enumerated in the book of rates. If
      we count the one-third and two-third subsidies as making a complete
      subsidy between them, there have been five of these general subsidies; so
      that, before the commencement of the present war, seventy-five per cent.
      may be considered as the lowest duty to which the greater part of the
      goods of the growth, produce, or manufacture of France, were liable. But
      upon the greater part of goods, those duties are equivalent to a
      prohibition. The French, in their turn, have, I believe, treated our goods
      and manufactures just as hardly; though I am not so well acquainted with
      the particular hardships which they have imposed upon them. Those mutual
      restraints have put an end to almost all fair commerce between the two
      nations; and smugglers are now the principal importers, either of British
      goods into France, or of French goods into Great Britain. The principles
      which I have been examining, in the foregoing chapter, took their origin
      from private interest and the spirit of monopoly; those which I am going
      te examine in this, from national prejudice and animosity. They are,
      accordingly, as might well be expected, still more unreasonable. They are
      so, even upon the principles of the commercial system.
    
      First, Though it were certain that in the case of a free trade between
      France and England, for example, the balance would be in favour of France,
      it would by no means follow that such a trade would be disadvantageous to
      England, or that the general balance of its whole trade would thereby be
      turned more against it. If the wines of France are better and cheaper than
      those of Portugal, or its linens than those of Germany, it would be more
      advantageous for Great Britain to purchase both the wine and the foreign
      linen which it had occasion for of France, than of Portugal and Germany.
      Though the value of the annual importations from France would thereby be
      greatly augmented, the value of the whole annual importations would be
      diminished, in proportion as the French goods of the same quality were
      cheaper than those of the other two countries. This would be the case,
      even upon the supposition that the whole French goods imported were to be
      consumed in Great Britain.
    
      But, Secondly, A great part of them might be re-exported to other
      countries, where, being sold with profit, they might bring back a return,
      equal in value, perhaps, to the prime cost of the whole French goods
      imported. What has frequently been said of the East India trade, might
      possibly be true of the French; that though the greater part of East India
      goods were bought with gold and silver, the re-exportation of a part of
      them to other countries brought back more gold and silver to that which
      carried on the trade, than the prime cost of the whole amounted to. One of
      the most important branches of the Dutch trade at present, consists in the
      carriage of French goods to other European countries. Some part even of
      the French wine drank in Great Britain, is clandestinely imported from
      Holland and Zealand. If there was either a free trade between France and
      England, or if French goods could be imported upon paying only the same
      duties as those of other European nations, to be drawn back upon
      exportation, England might have some share of a trade which is found so
      advantageous to Holland.
    
      Thirdly, and lastly, There is no certain criterion by which we can
      determine on which side what is called the balance between any two
      countries lies, or which of them exports to the greatest value. National
      prejudice and animosity, prompted always by the private interest of
      particular traders, are the principles which generally direct our judgment
      upon all questions concerning it. There are two criterions, however, which
      have frequently been appealed to upon such occasions, the custom-house
      books and the course of exchange. The custom-house books, I think, it is
      now generally acknowledged, are a very uncertain criterion, on account of
      the inaccuracy of the valuation at which the greater part of goods are
      rated in them. The course of exchange is, perhaps, almost equally so.
    
      When the exchange between two places, such as London and Paris, is at par,
      it is said to be a sign that the debts due from London to Paris are
      compensated by those due from Paris to London. On the contrary, when a
      premium is paid at London for a bill upon Paris, it is said to be a sign
      that the debts due from London to Paris are not compensated by those due
      from Paris to London, but that a balance in money must be sent out from
      the latter place; for the risk, trouble, and expense, of exporting which,
      the premium is both demanded and given. But the ordinary state of debt and
      credit between those two cities must necessarily be regulated, it is said,
      by the ordinary course of their dealings with one another. When neither of
      them imports from from other to a greater amount than it exports to that
      other, the debts and credits of each may compensate one another. But when
      one of them imports from the other to a greater value than it exports to
      that other, the former necessarily becomes indebted to the latter in a
      greater sum than the latter becomes indebted to it: the debts and credits
      of each do not compensate one another, and money must be sent out from
      that place of which the debts overbalance the credits. The ordinary course
      of exchange, therefore, being an indication of the ordinary state of debt
      and credit between two places, must likewise be an indication of the
      ordinary course of their exports and imports, as these necessarily
      regulate that state.
    
      But though the ordinary course of exchange shall be allowed to be a
      sufficient indication of the ordinary state of debt and credit between any
      two places, it would not from thence follow, that the balance of trade was
      in favour of that place which had the ordinary state of debt and credit in
      its favour. The ordinary state of debt and credit between any two places
      is not always entirely regulated by the ordinary course of their dealings
      with one another, but is often influenced by that of the dealings of
      either with many other places. If it is usual, for example, for the
      merchants of England to pay for the goods which they buy of Hamburg,
      Dantzic, Riga, etc. by bills upon Holland, the ordinary state of debt and
      credit between England and Holland will not be regulated entirely by the
      ordinary course of the dealings of those two countries with one another,
      but will be influenced by that of the dealings in England with those other
      places. England may be obliged to send out every year money to Holland,
      though its annual exports to that country may exceed very much the annual
      value of its imports from thence, and though what is called the balance of
      trade may be very much in favour of England.
    
      In the way, besides, in which the par of exchange has hitherto been
      computed, the ordinary course of exchange can afford no sufficient
      indication that the ordinary state of debt and credit is in favour of that
      country which seems to have, or which is supposed to have, the ordinary
      course of exchange in its favour; or, in other words, the real exchange
      may be, and in fact often is, so very different from the computed one,
      that, from the course of the latter, no certain conclusion can, upon many
      occasions, be drawn concerning that of the former.
    
      When for a sum or money paid in England, containing, according to the
      standard of the English mint, a certain number of ounces of pure silver,
      you receive a bill for a sum of money to be paid in France, containing,
      according to the standard of the French mint, an equal number of ounces of
      pure silver, exchange is said to be at par between England and France.
      When you pay more, you are supposed to give a premium, and exchange is
      said to be against England, and in favour of France. When you pay less,
      you are supposed to get a premium, and exchange is said to be against
      France, and in favour of England.
    
      But, first, We cannot always judge of the value of the current money of
      different countries by the standard of their respective mints. In some it
      is more, in others it is less worn, clipt, and otherwise degenerated from
      that standard. But the value of the current coin of every country,
      compared with that of any other country, is in proportion, not to the
      quantity of pure silver which it ought to contain, but to that which it
      actually does contain. Before the reformation of the silver coin in King
      William’s time, exchange between England and Holland, computed in the
      usual manner, according to the standard of their respective mints, was
      five-and twenty per cent. against England. But the value of the current
      coin of England, as we learn from Mr Lowndes, was at that time rather more
      than five-and-twenty per cent. below its standard value. The real
      exchange, therefore, may even at that time have been in favour of England,
      notwithstanding the computed exchange was so much against it; a smaller
      number or ounces of pure silver, actually paid in England, may have
      purchased a bill for a greater number of ounces of pure silver to be paid
      in Holland, and the man who was supposed to give, may in reality have got
      the premium. The French coin was, before the late reformation of the
      English gold coin, much less wore than the English, and was perhaps two or
      three per cent. nearer its standard. If the computed exchange with France,
      therefore, was not more than two or three per cent. against England, the
      real exchange might have been in its favour. Since the reformation of the
      gold coin, the exchange has been constantly in favour of England, and
      against France.
    
      Secondly, In some countries the expense of coinage is defrayed by the
      government; in others, it is defrayed by the private people, who carry
      their bullion to the mint, and the government even derives some revenue
      from the coinage. In England it is defrayed by the government; and if you
      carry a pound weight of standard silver to the mint, you get back
      sixty-two shillings, containing a pound weight of the like standard
      silver. In France a duty of eight per cent. is deducted for the coinage,
      which not only defrays the expense of it, but affords a small revenue to
      the government. In England, as the coinage costs nothing, the current coin
      can never be much more valuable than the quantity of bullion which it
      actually contains. In France, the workmanship, as you pay for it, adds to
      the value, in the same manner as to that of wrought plate. A sum of French
      money, therefore, containing an equal weight of pure silver, is more
      valuable than a sum of English money containing an equal weight of pure
      silver, and must require more bullion, or other commodities, to purchase
      it. Though the current coin of the two countries, therefore, were equally
      near the standards of their respective mints, a sum of English money could
      not well purchase a sum of French money containing an equal number of
      ounces of pure silver, nor, consequently, a bill upon France for such a
      sum. If, for such a bill, no more additional money was paid than what was
      sufficient to compensate the expense of the French coinage, the real
      exchange might be at par between the two countries; their debts and
      credits might mutually compensate one another, while the computed exchange
      was considerably in favour of France. If less than this was paid, the real
      exchange might be in favour of England, while the computed was in favour
      of France.
    
      Thirdly, and lastly, In some places, as at Amsterdam, Hamburg, Venice,
      etc. foreign bills of exchange are paid in what they call bank money;
      while in others, as at London, Lisbon, Antwerp, Leghorn, etc. they are
      paid in the common currency of the country. What is called bank money, is
      always of more value than the same nominal sum of common currency. A
      thousand guilders in the bank of Amsterdam, for example, are of more value
      than a thousand guilders of Amsterdam currency. The difference between
      them is called the agio of the bank, which at Amsterdam is generally about
      five per cent. Supposing the current money of the two countries equally
      near to the standard of their respective mints, and that the one pays
      foreign bills in this common currency, while the other pays them in bank
      money, it is evident that the computed exchange may be in favour of that
      which pays in bank money, though the real exchange should be in favour of
      that which pays in current money; for the same reason that the computed
      exchange may be in favour of that which pays in better money, or in money
      nearer to its own standard, though the real exchange should be in favour
      of that which pays in worse. The computed exchange, before the late
      reformation of the gold coin, was generally against London with Amsterdam,
      Hamburg, Venice, and, I believe, with all other places which pay in what
      is called bank money. It will by no means follow, however, that the real
      exchange was against it. Since the reformation of the gold coin, it has
      been in favour of London, even with those places. The computed exchange
      has generally been in favour of London with Lisbon, Antwerp, Leghorn, and,
      if you except France, I believe with most other parts of Europe that pay
      in common currency; and it is not improbable that the real exchange was so
      too.
    
      Digression concerning Banks of Deposit, particularly concerning that of
      Amsterdam.
    
      The currency of a great state, such as France or England, generally
      consists almost entirely of its own coin. Should this currency, therefore,
      be at any time worn, clipt, or otherwise degraded below its standard
      value, the state, by a reformation of its coin, can effectually
      re-establish its currency. But the currency of a small state, such as
      Genoa or Hamburg, can seldom consist altogether in its own coin, but must
      be made up, in a great measure, of the coins of all the neighbouring
      states with which its inhabitants have a continual intercourse. Such a
      state, therefore, by reforming its coin, will not always be able to reform
      its currency. If foreign bills of exchange are paid in this currency, the
      uncertain value of any sum, of what is in its own nature so uncertain,
      must render the exchange always very much against such a state, its
      currency being in all foreign states necessarily valued even below what it
      is worth.
    
      In order to remedy the inconvenience to which this disadvantageous
      exchange must have subjected their merchants, such small states, when they
      began to attend to the interest of trade, have frequently enacted that
      foreign bills of exchange of a certain value should be paid, not in common
      currency, but by an order upon, or by a transfer in the books of a certain
      bank, established upon the credit, and under the protection of the state,
      this bank being always obliged to pay, in good and true money, exactly
      according to the standard of the state. The banks of Venice, Genoa,
      Amsterdam, Hamburg, and Nuremberg, seem to have been all originally
      established with this view, though some of them may have afterwards been
      made subservient to other purposes. The money of such banks, being better
      than the common currency of the country, necessarily bore an agio, which
      was greater or smaller, according as the currency was supposed to be more
      or less degraded below the standard of the state. The agio of the bank of
      Hamburg, for example, which is said to be commonly about fourteen per
      cent. is the supposed difference between the good standard money of the
      state, and the clipt, worn, and diminished currency, poured into it from
      all the neighbouring states.
    
      Before 1609, the great quantity of clipt and worn foreign coin which the
      extensive trade of Amsterdam brought from all parts of Europe, reduced the
      value of its currency about nine per cent. below that of good money fresh
      from the mint. Such money no sooner appeared, than it was melted down or
      carried away, as it always is in such circumstances. The merchants, with
      plenty of currency, could not always find a sufficient quantity of good
      money to pay their bills of exchange; and the value of those bills, in
      spite of several regulations which were made to prevent it, became in a
      great measure uncertain.
    
      In order to remedy these inconveniencies, a bank was established in 1609,
      under the guarantee of the city. This bank received both foreign coin, and
      the light and worn coin of the country, at its real intrinsic value in the
      good standard money of the country, deducting only so much as was
      necessary for defraying the expense of coinage and the other necessary
      expense of management. For the value which remained after this small
      deduction was made, it gave a credit in its books. This credit was called
      bank money, which, as it represented money exactly according to the
      standard of the mint, was always of the same real value, and intrinsically
      worth more than current money. It was at the same time enacted, that all
      bills drawn upon or negotiated at Amsterdam, of the value of 600 guilders
      and upwards, should be paid in bank money, which at once took away all
      uncertainty in the value of those bills. Every merchant, in consequence of
      this regulation, was obliged to keep an account with the bank, in order to
      pay his foreign bills of exchange, which necessarily occasioned a certain
      demand for bank money.
    
      Bank money, over and above both its intrinsic superiority to currency, and
      the additional value which this demand necessarily gives it, has likewise
      some other advantages, It is secure from fire, robbery, and other
      accidents; the city of Amsterdam is bound for it; it can be paid away by a
      simple transfer, without the trouble of counting, or the risk of
      transporting it from one place to another. In consequence of those
      different advantages, it seems from the beginning to have borne an agio;
      and it is generally believed that all the money originally deposited in
      the bank, was allowed to remain there, nobody caring to demand payment of
      a debt which he could sell for a premium in the market. By demanding
      payment of the bank, the owner of a bank credit would lose this premium.
      As a shilling fresh from the mint will buy no more goods in the market
      than one of our common worn shillings, so the good and true money which
      might be brought from the coffers of the bank into those of a private
      person, being mixed and confounded with the common currency of the
      country, would be of no more value than that currency, from which it could
      no longer be readily distinguished. While it remained in the coffers of
      the bank, its superiority was known and ascertained. When it had come into
      those of a private person, its superiority could not well be ascertained
      without more trouble than perhaps the difference was worth. By being
      brought from the coffers of the bank, besides, it lost all the other
      advantages of bank money; its security, its easy and safe transferability,
      its use in paying foreign bills of exchange. Over and above all this, it
      could not be brought from those coffers, as will appear by and by, without
      previously paying for the keeping.
    
      Those deposits of coin, or those deposits which the bank was bound to
      restore in coin, constituted the original capital of the bank, or the
      whole value of what was represented by what is called bank money. At
      present they are supposed to constitute but a very small part of it. In
      order to facilitate the trade in bullion, the bank has been for these many
      years in the practice of giving credit in its books, upon deposits of gold
      and silver bullion. This credit is generally about five per cent. below
      the mint price of such bullion. The bank grants at the same time what is
      called a recipice or receipt, entitling the person who makes the deposit,
      or the bearer, to take out the bullion again at any time within six
      months, upon transferring to the bank a quantity of bank money equal to
      that for which credit had been given in its books when the deposit was
      made, and upon paying one-fourth per cent. for the keeping, if the deposit
      was in silver; and one-half per cent. if it was in gold; but at the same
      time declaring, that in default of such payment, and upon the expiration
      of this term, the deposit should belong to the bank, at the price at which
      it had been received, or for which credit had been given in the transfer
      books. What is thus paid for the keeping of the deposit may be considered
      as a sort of warehouse rent; and why this warehouse rent should be so much
      dearer for gold than for silver, several different reasons have been
      assigned. The fineness of gold, it has been said, is more difficult to be
      ascertained than that of silver. Frauds are more easily practised, and
      occasion a greater loss in the most precious metal. Silver, besides, being
      the standard metal, the state, it has been said, wishes to encourage more
      the making of deposits of silver than those of gold.
    
      Deposits of bullion are most commonly made when the price is somewhat
      lower than ordinary, and they are taken out again when it happens to rise.
      In Holland the market price of bullion is generally above the mint price,
      for the same reason that it was so in England before the late reformation
      of the gold coin. The difference is said to be commonly from about six to
      sixteen stivers upon the mark, or eight ounces of silver, of eleven parts
      of fine and one part alloy. The bank price, or the credit which the bank
      gives for the deposits of such silver (when made in foreign coin, of which
      the fineness is well known and ascertained, such as Mexico dollars), is
      twenty-two guilders the mark: the mint price is about twenty-three
      guilders, and the market price is from twenty-three guilders six, to
      twenty-three guilders sixteen stivers, or from two to three per cent.
      above the mint price.
    
      The following are the prices at which the bank of Amsterdam at present
      {September 1775} receives bullion and coin of different kinds:
    

                              SILVER
     Mexico dollars .................  22  Guilders / mark
     French crowns ..................  22
     English silver coin.............  22
     Mexico dollars, new coin........  21  10
     Ducatoons.......................   3   0
     Rix-dollars.....................   2   8

    

      Bar silver, containing 11-12ths fine silver, 21 Guilders / mark, and in
      this proportion down to 1-4th fine, on which 5 guilders are given. Fine
      bars,................. 28 Guilders / mark.
    

                              GOLD
     Portugal coin.................  310  Guilders / mark
     Guineas.......................  310
     Louis d’ors, new..............  310
     Ditto        old..............  300
     New ducats....................    4  19  8  per ducat

    

      Bar or ingot gold is received in proportion to its fineness, compared with
      the above foreign gold coin. Upon fine bars the bank gives 340 per mark.
      In general, however, something more is given upon coin of a known
      fineness, than upon gold and silver bars, of which the fineness cannot be
      ascertained but by a process of melting and assaying.
    
      The proportions between the bank price, the mint price, and the market
      price of gold bullion, are nearly the same. A person can generally sell
      his receipt for the difference between the mint price of bullion and the
      market price. A receipt for bullion is almost always worth something, and
      it very seldom happens, therefore, that anybody suffers his receipts to
      expire, or allows his bullion to fall to the bank at the price at which it
      had been received, either by not taking it out before the end of the six
      months, or by neglecting to pay one fourth or one half per cent. in order
      to obtain a new receipt for another six months. This, however, though it
      happens seldom, is said to happen sometimes, and more frequently with
      regard to gold than with regard to silver, on account of the higher
      warehouse rent which is paid for the keeping of the more precious metal.
    
      The person who, by making a deposit of bullion, obtains both a bank credit
      and a receipt, pays his bills of exchange as they become due, with his
      bank credit; and either sells or keeps his receipt, according as he judges
      that the price of bullion is likely to rise or to fall. The receipt and
      the bank credit seldom keep long together, and there is no occasion that
      they should. The person who has a receipt, and who wants to take out
      bullion, finds always plenty of bank credits, or bank money, to buy at the
      ordinary price, and the person who has bank money, and wants to take out
      bullion, finds receipts always in equal abundance.
    
      The owners of bank credits, and the holders of receipts, constitute two
      different sorts of creditors against the bank. The holder of a receipt
      cannot draw out the bullion for which it is granted, without re-assigning
      to the bank a sum of bank money equal to the price at which the bullion
      had been received. If he has no bank money of his own, he must purchase it
      of those who have it. The owner of bank money cannot draw out bullion,
      without producing to the bank receipts for the quantity which he wants. If
      he has none of his own, he must buy them of those who have them. The
      holder of a receipt, when he purchases bank money, purchases the power of
      taking out a quantity of bullion, of which the mint price is five per
      cent. above the bank price. The agio of five per cent. therefore, which he
      commonly pays for it, is paid, not for an imaginary, but for a real value.
      The owner of bank money, when he purchases a receipt, purchases the power
      of taking out a quantity of bullion, of which the market price is commonly
      from two to three per cent. above the mint price. The price which he pays
      for it, therefore, is paid likewise for a real value. The price of the
      receipt, and the price of the bank money, compound or make up between them
      the full value or price of the bullion.
    
      Upon deposits of the coin current in the country, the bank grant receipts
      likewise, as well as bank credits; but those receipts are frequently of no
      value and will bring no price in the market. Upon ducatoons, for example,
      which in the currency pass for three guilders three stivers each, the bank
      gives a credit of three guilders only, or five per cent. below their
      current value. It grants a receipt likewise, entitling the bearer to take
      out the number of ducatoons deposited at any time within six months, upon
      paying one fourth per cent. for the keeping. This receipt will frequently
      bring no price in the market. Three guilders, bank money, generally sell
      in the market for three guilders three stivers, the full value of the
      ducatoons, if they were taken out of the bank; and before they can be
      taken out, one-fourth per cent. must be paid for the keeping, which would
      be mere loss to the holder of the receipt. If the agio of the bank,
      however, should at any time fall to three per cent. such receipts might
      bring some price in the market, and might sell for one and three-fourths
      per cent. But the agio of the bank being now generally about five per
      cent. such receipts are frequently allowed to expire, or, as they express
      it, to fall to the bank. The receipts which are given for deposits of gold
      ducats fall to it yet more frequently, because a higher warehouse rent, or
      one half per cent. must be paid for the keeping of them, before they can
      be taken out again. The five per cent. which the bank gains, when deposits
      either of coin or bullion are allowed to fall to it, maybe considered as
      the warehouse rent for the perpetual keeping of such deposits.
    
      The sum of bank money, for which the receipts are expired, must be very
      considerable. It must comprehend the whole original capital of the bank,
      which, it is generally supposed, has been allowed to remain there from the
      time it was first deposited, nobody caring either to renew his receipt, or
      to take out his deposit, as, for the reasons already assigned, neither the
      one nor the other could be done without loss. But whatever may be the
      amount of this sum, the proportion which it bears to the whole mass of
      bank money is supposed to be very small. The bank of Amsterdam has, for
      these many years past, been the great warehouse of Europe for bullion, for
      which the receipts are very seldom allowed to expire, or, as they express
      it, to fall to the bank. The far greater part of the bank money, or of the
      credits upon the books of the bank, is supposed to have been created, for
      these many years past, by such deposits, which the dealers in bullion are
      continually both making and withdrawing.
    
      No demand can be made upon the bank, but by means of a recipice or
      receipt. The smaller mass of bank money, for which the receipts are
      expired, is mixed and confounded with the much greater mass for which they
      are still in force; so that, though there may be a considerable sum of
      bank money, for which there are no receipts, there is no specific sum or
      portion of it which may not at any time be demanded by one. The bank
      cannot be debtor to two persons for the same thing; and the owner of bank
      money who has no receipt, cannot demand payment of the bank till he buys
      one. In ordinary and quiet times, he can find no difficulty in getting one
      to buy at the market price, which generally corresponds with the price at
      which he can sell the coin or bullion it entitles him to take out of the
      bank.
    
      It might be otherwise during a public calamity; an invasion, for example,
      such as that of the French in 1672. The owners of bank money being then
      all eager to draw it out of the bank, in order to have it in their own
      keeping, the demand for receipts might raise their price to an exorbitant
      height. The holders of them might form extravagant expectations, and,
      instead of two or three per cent. demand half the bank money for which
      credit had been given upon the deposits that the receipts had respectively
      been granted for. The enemy, informed of the constitution of the bank,
      might even buy them up, in order to prevent the carrying away of the
      treasure. In such emergencies, the bank, it is supposed, would break
      through its ordinary rule of making payment only to the holders of
      receipts. The holders of receipts, who had no bank money, must have
      received within two or three per cent. of the value of the deposit for
      which their respective receipts had been granted. The bank, therefore, it
      is said, would in this case make no scruple of paying, either with money
      or bullion, the full value of what the owners of bank money, who could get
      no receipts, were credited for in its books; paying, at the same time, two
      or three per cent. to such holders of receipts as had no bank money, that
      being the whole value which, in this state of things, could justly be
      supposed due to them.
    
      Even in ordinary and quiet times, it is the interest of the holders of
      receipts to depress the agio, in order either to buy bank money (and
      consequently the bullion which their receipts would then enable them to
      take out of the bank ) so much cheaper, or to sell their receipts to those
      who have bank money, and who want to take out bullion, so much dearer; the
      price of a receipt being generally equal to the difference between the
      market price of bank money and that of the coin or bullion for which the
      receipt had been granted. It is the interest of the owners of bank money,
      on the contrary, to raise the agio, in order either to sell their bank
      money so much dearer, or to buy a receipt so much cheaper. To prevent the
      stock-jobbing tricks which those opposite interests might sometimes
      occasion, the bank has of late years come to the resolution, to sell at
      all times bank money for currency at five per cent. agio, and to buy it in
      again at four per cent. agio. In consequence of this resolution, the agio
      can never either rise above five, or sink below four per cent.; and the
      proportion between the market price of bank and that of current money is
      kept at all times very near the proportion between their intrinsic values.
      Before this resolution was taken, the market price of bank money used
      sometimes to rise so high as nine per cent. agio, and sometimes to sink so
      low as par, according as opposite interests happened to influence the
      market.
    
      The bank of Amsterdam professes to lend out no part of what is deposited
      with it, but for every guilder for which it gives credit in its books, to
      keep in its repositories the value of a guilder either in money or
      bullion. That it keeps in its repositories all the money or bullion for
      which there are receipts in force for which it is at all times liable to
      be called upon, and which in reality is continually going from it, and
      returning to it again, cannot well be doubted. But whether it does so
      likewise with regard to that part of its capital for which the receipts
      are long ago expired, for which, in ordinary and quiet times, it cannot be
      called upon, and which, in reality, is very likely to remain with it for
      ever, or as long as the states of the United Provinces subsist, may
      perhaps appear more uncertain. At Amsterdam, however, no point of faith is
      better established than that, for every guilder circulated as bank money,
      there is a correspondent guilder in gold or silver to be found in the
      treasures of the bank. The city is guarantee that it should be so. The
      bank is under the direction of the four reigning burgomasters who are
      changed every year. Each new set of burgomasters visits the treasure,
      compares it with the books, receives it upon oath, and delivers it over,
      with the same awful solemnity to the set which succeeds; and in that sober
      and religious country, oaths are not yet disregarded. A rotation of this
      kind seems alone a sufficient security against any practices which cannot
      be avowed. Amidst all the revolutions which faction has ever occasioned in
      the government of Amsterdam, the prevailing party has at no time accused
      their predecessors of infidelity in the administration of the bank. No
      accusation could have affected more deeply the reputation and fortune of
      the disgraced party; and if such an accusation could have been supported,
      we may be assured that it would have been brought. In 1672, when the
      French king was at Utrecht, the bank of Amsterdam paid so readily, as left
      no doubt of the fidelity with which it had observed its engagements. Some
      of the pieces which were then brought from its repositories, appeared to
      have been scorched with the fire which happened in the town-house soon
      after the bank was established. Those pieces, therefore, must have lain
      there from that time.
    
      What may be the amount of the treasure in the bank, is a question which
      has long employed the speculations of the curious. Nothing but conjecture
      can be offered concerning it. It is generally reckoned, that there are
      about 2000 people who keep accounts with the bank; and allowing them to
      have, one with another, the value of £1500 sterling lying upon their
      respective accounts (a very large allowance), the whole quantity of bank
      money, and consequently of treasure in the bank, will amount to about
      £3,000,000 sterling, or, at eleven guilders the pound sterling, 33,000,000
      of guilders; a great sum, and sufficient to carry on a very extensive
      circulation, but vastly below the extravagant ideas which some people have
      formed of this treasure.
    
      The city of Amsterdam derives a considerable revenue from the bank.
      Besides what may be called the warehouse rent above mentioned, each
      person, upon first opening an account with the bank, pays a fee of ten
      guilders; and for every new account, three guilders three stivers; for
      every transfer, two stivers; and if the transfer is for less than 300
      guilders, six stivers, in order to discourage the multiplicity of small
      transactions. The person who neglects to balance his account twice in the
      year, forfeits twenty-five guilders. The person who orders a transfer for
      more than is upon his account, is obliged to pay three per cent. for the
      sum overdrawn, and his order is set aside into the bargain. The bank is
      supposed, too, to make a considerable profit by the sale of the foreign
      coin or bullion which sometimes falls to it by the expiring of receipts,
      and which is always kept till it can be sold with advantage. It makes a
      profit, likewise, by selling bank money at five per cent. agio, and buying
      it in at four. These different emoluments amount to a good deal more than
      what is necessary for paying the salaries of officers, and defraying the
      expense of management. What is paid for the keeping of bullion upon
      receipts, is alone supposed to amount to a neat annual revenue of between
      150,000 and 200,000 guilders. Public utility, however, and not revenue,
      was the original object of this institution. Its object was to relieve the
      merchants from the inconvenience of a disadvantageous exchange. The
      revenue which has arisen from it was unforeseen, and may be considered as
      accidental. But it is now time to return from this long digression, into
      which I have been insensibly led, in endeavouring to explain the reasons
      why the exchange between the countries which pay in what is called bank
      money, and those which pay in common currency, should generally appear to
      be in favour of the former, and against the latter. The former pay in a
      species of money, of which the intrinsic value is always the same, and
      exactly agreeable to the standard of their respective mints; the latter is
      a species of money, of which the intrinsic value is continually varying,
      and is almost always more or less below that standard.
    


    
      PART II.—Of the Unreasonableness of those extraordinary Restraints,
      upon other Principles.
    
      In the foregoing part of this chapter, I have endeavoured to show, even
      upon the principles of the commercial system, how unnecessary it is to lay
      extraordinary restraints upon the importation of goods from those
      countries with which the balance of trade is supposed to be
      disadvantageous.
    
      Nothing, however, can be more absurd than this whole doctrine of the
      balance of trade, upon which, not only these restraints, but almost all
      the other regulations of commerce, are founded. When two places trade with
      one another, this doctrine supposes that, if the balance be even, neither
      of them either loses or gains; but if it leans in any degree to one side,
      that one of them loses, and the other gains, in proportion to its
      declension from the exact equilibrium. Both suppositions are false. A
      trade, which is forced by means of bounties and monopolies, may be, and
      commonly is, disadvantageous to the country in whose favour it is meant to
      be established, as I shall endeavour to show hereafter. But that trade
      which, without force or constraint, is naturally and regularly carried on
      between any two places, is always advantageous, though not always equally
      so, to both.
    
      By advantage or gain, I understand, not the increase of the quantity of
      gold and silver, but that of the exchangeable value of the annual produce
      of the land and labour of the country, or the increase of the annual
      revenue of its inhabitants.
    
      If the balance be even, and if the trade between the two places consist
      altogether in the exchange of their native commodities, they will, upon
      most occasions, not only both gain, but they will gain equally, or very
      nearly equally; each will, in this case, afford a market for a part of the
      surplus produce of the other; each will replace a capital which had been
      employed in raising and preparing for the market this part of the surplus
      produce of the other, and which had been distributed among, and given
      revenue and maintenance to, a certain number of its inhabitants. Some part
      of the inhabitants of each, therefore, will directly derive their revenue
      and maintenance from the other. As the commodities exchanged, too, are
      supposed to be of equal value, so the two capitals employed in the trade
      will, upon most occasions, be equal, or very nearly equal; and both being
      employed in raising the native commodities of the two countries, the
      revenue and maintenance which their distribution will afford to the
      inhabitants of each will be equal, or very nearly equal. This revenue and
      maintenance, thus mutually afforded, will be greater or smaller, in
      proportion to the extent of their dealings. If these should annually
      amount to £100,000, for example, or to £1,000,000, on each side, each of
      them will afford an annual revenue, in the one case, of £100,000, and, in
      the other, of £1,000,000, to the inhabitants of the other.
    
      If their trade should be of such a nature, that one of them exported to
      the other nothing but native commodities, while the returns of that other
      consisted altogether in foreign goods; the balance, in this case, would
      still be supposed even, commodities being paid for with commodities. They
      would, in this case too, both gain, but they would not gain equally; and
      the inhabitants of the country which exported nothing but native
      commodities, would derive the greatest revenue from the trade. If England,
      for example, should import from France nothing but the native commodities
      of that country, and not having such commodities of its own as were in
      demand there, should annually repay them by sending thither a large
      quantity of foreign goods, tobacco, we shall suppose, and East India
      goods; this trade, though it would give some revenue to the inhabitants of
      both countries, would give more to those of France than to those of
      England. The whole French capital annually employed in it would annually
      be distributed among the people of France; but that part of the English
      capital only, which was employed in producing the English commodities with
      which those foreign goods were purchased, would be annually distributed
      among the people of England. The greater part of it would replace the
      capitals which had been employed in Virginia, Indostan, and China, and
      which had given revenue and maintenance to the inhabitants of those
      distant countries. If the capitals were equal, or nearly equal, therefore,
      this employment of the French capital would augment much more the revenue
      of the people of France, than that of the English capital would the
      revenue of the people of England. France would, in this case, carry on a
      direct foreign trade of consumption with England; whereas England would
      carry on a round-about trade of the same kind with France. The different
      effects of a capital employed in the direct, and of one employed in the
      round-about foreign trade of consumption, have already been fully
      explained.
    
      There is not, probably, between any two countries, a trade which consists
      altogether in the exchange, either of native commodities on both sides, or
      of native commodities on one side, and of foreign goods on the other.
      Almost all countries exchange with one another, partly native and partly
      foreign goods. That country, however, in whose cargoes there is the
      greatest proportion of native, and the least of foreign goods, will always
      be the principal gainer.
    
      If it was not with tobacco and East India goods, but with gold and silver,
      that England paid for the commodities annually imported from France, the
      balance, in this case, would be supposed uneven, commodities not being
      paid for with commodities, but with gold and silver. The trade, however,
      would in this case, as in the foregoing, give some revenue to the
      inhabitants of both countries, but more to those of France than to those
      of England. It would give some revenue to those of England. The capital
      which had been employed in producing the English goods that purchased this
      gold and silver, the capital which had been distributed among, and given
      revenue to, certain inhabitants of England, would thereby be replaced, and
      enabled to continue that employment. The whole capital of England would no
      more be diminished by this exportation of gold and silver, than by the
      exportation of an equal value of any other goods. On the contrary, it
      would, in most cases, be augmented. No goods are sent abroad but those for
      which the demand is supposed to be greater abroad than at home, and of
      which the returns, consequently, it is expected, will be of more value at
      home than the commodities exported. If the tobacco which in England is
      worth only £100,000, when sent to France, will purchase wine which is in
      England worth £110,000, the exchange will augment the capital of England
      by £10,000. If £100,000 of English gold, in the same manner, purchase
      French wine, which in England is worth £110,000, this exchange will
      equally augment the capital of England by £10,000. As a merchant, who has
      £110,000 worth of wine in his cellar, is a richer man than he who has only
      £100,000 worth of tobacco in his warehouse, so is he likewise a richer man
      than he who has only £100,000 worth of gold in his coffers. He can put
      into motion a greater quantity of industry, and give revenue, maintenance,
      and employment, to a greater number of people, than either of the other
      two. But the capital of the country is equal to the capital of all its
      different inhabitants; and the quantity of industry which can be annually
      maintained in it is equal to what all those different capitals can
      maintain. Both the capital of the country, therefore, and the quantity of
      industry which can be annually maintained in it, must generally be
      augmented by this exchange. It would, indeed, be more advantageous for
      England that it could purchase the wines of France with its own hardware
      and broad cloth, than with either the tobacco of Virginia, or the gold and
      silver of Brazil and Peru. A direct foreign trade of consumption is always
      more advantageous than a round-about one. But a round-about foreign trade
      of consumption, which is carried on with gold and silver, does not seem to
      be less advantageous than any other equally round-about one. Neither is a
      country which has no mines, more likely to be exhausted of gold and silver
      by this annual exportation of those metals, than one which does not grow
      tobacco by the like annual exportation of that plant. As a country which
      has wherewithal to buy tobacco will never be long in want of it, so
      neither will one be long in want of gold and silver which has wherewithal
      to purchase those metals.
    
      It is a losing trade, it is said, which a workman carries on with the
      alehouse; and the trade which a manufacturing nation would naturally carry
      on with a wine country, may be considered as a trade of the same nature. I
      answer, that the trade with the alehouse is not necessarily a losing
      trade. In its own nature it is just as advantageous as any other, though,
      perhaps, somewhat more liable to be abused. The employment of a brewer,
      and even that of a retailer of fermented liquors, are as necessary
      divisions of labour as any other. It will generally be more advantageous
      for a workman to buy of the brewer the quantity he has occasion for, than
      to brew it himself; and if he is a poor workman, it will generally be more
      advantageous for him to buy it by little and little of the retailer, than
      a large quantity of the brewer. He may no doubt buy too much of either, as
      he may of any other dealers in his neighbourhood; of the butcher, if he is
      a glutton; or of the draper, if he affects to be a beau among his
      companions. It is advantageous to the great body of workmen,
      notwithstanding, that all these trades should be free, though this freedom
      may be abused in all of them, and is more likely to be so, perhaps, in
      some than in others. Though individuals, besides, may sometimes ruin their
      fortunes by an excessive consumption of fermented liquors, there seems to
      be no risk that a nation should do so. Though in every country there are
      many people who spend upon such liquors more than they can afford, there
      are always many more who spend less. It deserves to be remarked, too, that
      if we consult experience, the cheapness of wine seems to be a cause, not
      of drunkenness, but of sobriety. The inhabitants of the wine countries are
      in general the soberest people of Europe; witness the Spaniards, the
      Italians, and the inhabitants of the southern provinces of France. People
      are seldom guilty of excess in what is their daily fare. Nobody affects
      the character of liberality and good fellowship, by being profuse of a
      liquor which is as cheap as small beer. On the contrary, in the countries
      which, either from excessive heat or cold, produce no grapes, and where
      wine consequently is dear and a rarity, drunkenness is a common vice, as
      among the northern nations, and all those who live between the tropics,
      the negroes, for example on the coast of Guinea. When a French regiment
      comes from some of the northern provinces of France, where wine is
      somewhat dear, to be quartered in the southern, where it is very cheap,
      the soldiers, I have frequently heard it observed, are at first debauched
      by the cheapness and novelty of good wine; but after a few months
      residence, the greater part of them become as sober as the rest of the
      inhabitants. Were the duties upon foreign wines, and the excises upon
      malt, beer, and ale, to be taken away all at once, it might, in the same
      manner, occasion in Great Britain a pretty general and temporary
      drunkenness among the middling and inferior ranks of people, which would
      probably be soon followed by a permanent and almost universal sobriety. At
      present, drunkenness is by no means the vice of people of fashion, or of
      those who can easily afford the most expensive liquors. A gentleman drunk
      with ale has scarce ever been seen among us. The restraints upon the wine
      trade in Great Britain, besides, do not so much seem calculated to hinder
      the people from going, if I may say so, to the alehouse, as from going
      where they can buy the best and cheapest liquor. They favour the wine
      trade of Portugal, and discourage that of France. The Portuguese, it is
      said, indeed, are better customers for our manufactures than the French,
      and should therefore be encouraged in preference to them. As they give us
      their custom, it is pretended we should give them ours. The sneaking arts
      of underling tradesmen are thus erected into political maxims for the
      conduct of a great empire; for it is the most underling tradesmen only who
      make it a rule to employ chiefly their own customers. A great trader
      purchases his goods always where they are cheapest and best, without
      regard to any little interest of this kind.
    
      By such maxims as these, however, nations have been taught that their
      interest consisted in beggaring all their neighbours. Each nation has been
      made to look with an invidious eye upon the prosperity of all the nations
      with which it trades, and to consider their gain as its own loss.
      Commerce, which ought naturally to be, among nations as among individuals,
      a bond of union and friendship, has become the most fertile source of
      discord and animosity. The capricious ambition of kings and ministers has
      not, during the present and the preceding century, been more fatal to the
      repose of Europe, than the impertinent jealousy of merchants and
      manufacturers. The violence and injustice of the rulers of mankind is an
      ancient evil, for which, I am afraid, the nature of human affairs can
      scarce admit of a remedy: but the mean rapacity, the monopolizing spirit,
      of merchants and manufacturers, who neither are, nor ought to be, the
      rulers of mankind, though it cannot, perhaps, be corrected, may very
      easily be prevented from disturbing the tranquillity of anybody but
      themselves.
    
      That it was the spirit of monopoly which originally both invented and
      propagated this doctrine, cannot be doubted and they who first taught it,
      were by no means such fools as they who believed it. In every country it
      always is, and must be, the interest of the great body of the people, to
      buy whatever they want of those who sell it cheapest. The proposition is
      so very manifest, that it seems ridiculous to take any pains to prove it;
      nor could it ever have been called in question, had not the interested
      sophistry of merchants and manufacturers confounded the common sense of
      mankind. Their interest is, in this respect, directly opposite to that of
      the great body of the people. As it is the interest of the freemen of a
      corporation to hinder the rest of the inhabitants from employing any
      workmen but themselves; so it is the interest of the merchants and
      manufacturers of every country to secure to themselves the monopoly of the
      home market. Hence, in Great Britain, and in most other European
      countries, the extraordinary duties upon almost all goods imported by
      alien merchants. Hence the high duties and prohibitions upon all those
      foreign manufactures which can come into competition with our own. Hence,
      too, the extraordinary restraints upon the importation of almost all sorts
      of goods from those countries with which the balance of trade is supposed
      to be disadvantageous; that is, from those against whom national animosity
      happens ta be most violently inflamed.
    
      The wealth of neighbouring nations, however, though dangerous in war and
      politics, is certainly advantageous in trade. In a state of hostility, it
      may enable our enemies to maintain fleets and armies superior to our own;
      but in a state of peace and commerce it must likewise enable them to
      exchange with us to a greater value, and to afford a better market, either
      for the immediate produce of our own industry, or for whatever is
      purchased with that produce. As a rich man is likely to be a better
      customer to the industrious people in his neighbourhood, than a poor, so
      is likewise a rich nation. A rich man, indeed, who is himself a
      manufacturer, is a very dangerous neighbour to all those who deal in the
      same way. All the rest of the neighbourhood, however, by far the greatest
      number, profit by the good market which his expense affords them. They
      even profit by his underselling the poorer workmen who deal in the same
      way with him. The manufacturers of a rich nation, in the same manner, may
      no doubt be very dangerous rivals to those of their neighbours. This very
      competition, however, is advantageous to the great body of the people, who
      profit greatly, besides, by the good market which the great expense of
      such a nation affords them in every other way. Private people, who want to
      make a fortune, never think of retiring to the remote and poor provinces
      of the country, but resort either to the capital, or to some of the great
      commercial towns. They know, that where little wealth circulates, there is
      little to be got; but that where a great deal is in motion, some share of
      it may fall to them. The same maxim which would in this manner direct the
      common sense of one, or ten, or twenty individuals, should regulate the
      judgment of one, or ten, or twenty millions, and should make a whole
      nation regard the riches of its neighbours, as a probable cause and
      occasion for itself to acquire riches. A nation that would enrich itself
      by foreign trade, is certainly most likely to do so, when its neighbours
      are all rich, industrious and commercial nations. A great nation,
      surrounded on all sides by wandering savages and poor barbarians, might,
      no doubt, acquire riches by the cultivation of its own lands, and by its
      own interior commerce, but not by foreign trade. It seems to have been in
      this manner that the ancient Egyptians and the modern Chinese acquired
      their great wealth. The ancient Egyptians, it is said, neglected foreign
      commerce, and the modern Chinese, it is known, hold it in the utmost
      contempt, and scarce deign to afford it the decent protection of the laws.
      The modern maxims of foreign commerce, by aiming at the impoverishment of
      all our neighbours, so far as they are capable of producing their intended
      effect, tend to render that very commerce insignificant and contemptible.
    
      It is in consequence of these maxims, that the commerce between France and
      England has, in both countries, been subjected to so many discouragements
      and restraints. If those two countries, however, were to consider their
      real interest, without either mercantile jealousy or national animosity,
      the commerce of France might be more advantageous to Great Britain than
      that of any other country, and, for the same reason, that of Great Britain
      to France. France is the nearest neighbour to Great Britain. In the trade
      between the southern coast of England and the northern and north-western
      coast of France, the returns might be expected, in the same manner as in
      the inland trade, four, five, or six times in the year. The capital,
      therefore, employed in this trade could, in each of the two countries,
      keep in motion four, five, or six times the quantity of industry, and
      afford employment and subsistence to four, five, or six times the number
      of people, which all equal capital could do in the greater part of the
      other branches of foreign trade. Between the parts of France and Great
      Britain most remote from one another, the returns might be expected, at
      least, once in the year; and even this trade would so far be at least
      equally advantageous, as the greater part of the other branches of our
      foreign European trade. It would be, at least, three times more
      advantageous than the boasted trade with our North American colonies, in
      which the returns were seldom made in less than three years, frequently
      not in less than four or five years. France, besides, is supposed to
      contain 24,000,000 of inhabitants. Our North American colonies were never
      supposed to contain more than 3,000,000; and France is a much richer
      country than North America; though, on account of the more unequal
      distribution of riches, there is much more poverty and beggary in the one
      country than in the other. France, therefore, could afford a market at
      least eight times more extensive, and, on account of the superior
      frequency of the returns, four-and-twenty times more advantageous than
      that which our North American colonies ever afforded. The trade of Great
      Britain would be just as advantageous to France, and, in proportion to the
      wealth, population, and proximity of the respective countries, would have
      the same superiority over that which France carries on with her own
      colonies. Such is the very great difference between that trade which the
      wisdom of both nations has thought proper to discourage, and that which it
      has favoured the most.
    
      But the very same circumstances which would have rendered an open and free
      commerce between the two countries so advantageous to both, have
      occasioned the principal obstructions to that commerce. Being neighbours,
      they are necessarily enemies, and the wealth and power of each becomes,
      upon that account, more formidable to the other; and what would increase
      the advantage of national friendship, serves only to inflame the violence
      of national animosity. They are both rich and industrious nations; and the
      merchants and manufacturers of each dread the competition of the skill and
      activity of those of the other. Mercantile jealousy is excited, and both
      inflames, and is itself inflamed, by the violence of national animosity,
      and the traders of both countries have announced, with all the passionate
      confidence of interested falsehood, the certain ruin of each, in
      consequence of that unfavourable balance of trade, which, they pretend,
      would be the infallible effect of an unrestrained commerce with the other.
    
      There is no commercial country in Europe, of which the approaching ruin
      has not frequently been foretold by the pretended doctors of this system,
      from all unfavourably balance of trade. After all the anxiety, however,
      which they have excited about this, after all the vain attempts of almost
      all trading nations to turn that balance in their own favour, and against
      their neighbours, it does not appear that any one nation in Europe has
      been, in any respect, impoverished by this cause. Every town and country,
      on the contrary, in proportion as they have opened their ports to all
      nations, instead of being ruined by this free trade, as the principles of
      the commercial system would lead us to expect, have been enriched by it.
      Though there are in Europe indeed, a few towns which, in same respects,
      deserve the name of free ports, there is no country which does so.
      Holland, perhaps, approaches the nearest to this character of any, though
      still very remote from it; and Holland, it is acknowledged, not only
      derives its whole wealth, but a great part of its necessary subsistence,
      from foreign trade.
    
      There is another balance, indeed, which has already been explained, very
      different from the balance of trade, and which, according as it happens to
      be either favourable or unfavourable, necessarily occasions the prosperity
      or decay of every nation. This is the balance of the annual produce and
      consumption. If the exchangeable value of the annual produce, it has
      already been observed, exceeds that of the annual consumption, the capital
      of the society must annually increase in proportion to this excess. The
      society in this case lives within its revenue; and what is annually saved
      out of its revenue, is naturally added to its capital, and employed so as
      to increase still further the annual produce. If the exchangeable value of
      the annual produce, on the contrary, fall short of the annual consumption,
      the capital of the society must annually decay in proportion to this
      deficiency. The expense of the society, in this case, exceeds its revenue,
      and necessarily encroaches upon its capital. Its capital, therefore, must
      necessarily decay, and, together with it, the exchangeable value of the
      annual produce of its industry.
    
      This balance of produce and consumption is entirely different from what is
      called the balance of trade. It might take place in a nation which had no
      foreign trade, but which was entirely separated from all the world. It may
      take place in the whole globe of the earth, of which the wealth,
      population, and improvement, may be either gradually increasing or
      gradually decaying.
    
      The balance of produce and consumption may be constantly in favour of a
      nation, though what is called the balance of trade be generally against
      it. A nation may import to a greater value than it exports for half a
      century, perhaps, together; the gold and silver which comes into it during
      all this time, may be all immediately sent out of it; its circulating coin
      may gradually decay, different sorts of paper money being substituted in
      its place, and even the debts, too, which it contracts in the principal
      nations with whom it deals, may be gradually increasing; and yet its real
      wealth, the exchangeable value of the annual produce of its lands and
      labour, may, during the same period, have been increasing in a much
      greater proportion. The state of our North American colonies, and of the
      trade which they carried on with Great Britain, before the commencement of
      the present disturbances, {This paragraph was written in the year 1775.}
      may serve as a proof that this is by no means an impossible supposition.
    


CHAPTER IV.
OF DRAWBACKS.


    
      Merchants and manufacturers are not contented with the monopoly of the
      home market, but desire likewise the most extensive foreign sale for their
      goods. Their country has no jurisdiction in foreign nations, and therefore
      can seldom procure them any monopoly there. They are generally obliged,
      therefore, to content themselves with petitioning for certain
      encouragements to exportation.
    
      Of these encouragements, what are called drawbacks seem to be the most
      reasonable. To allow the merchant to draw back upon exportation, either
      the whole, or a part of whatever excise or inland duty is imposed upon
      domestic industry, can never occasion the exportation of a greater
      quantity of goods than what would have been exported had no duty been
      imposed. Such encouragements do not tend to turn towards any particular
      employment a greater share of the capital of the country, than what would
      go to that employment of its own accord, but only to hinder the duty from
      driving away any part of that share to other employments. They tend not to
      overturn that balance which naturally establishes itself among all the
      various employments of the society, but to hinder it from being overturned
      by the duty. They tend not to destroy, but to preserve, what it is in most
      cases advantageous to preserve, the natural division and distribution of
      labour in the society.
    
      The same thing may be said of the drawbacks upon the re-exportation of
      foreign goods imported, which, in Great Britain, generally amount to by
      much the largest part of the duty upon importation. By the second of the
      rules, annexed to the act of parliament, which imposed what is now called
      the old subsidy, every merchant, whether English or alien. was allowed to
      draw back half that duty upon exportation; the English merchant, provided
      the exportation took place within twelve months; the alien, provided it
      took place within nine months. Wines, currants, and wrought silks, were
      the only goods which did not fall within this rule, having other and more
      advantageous allowances. The duties imposed by this act of parliament
      were, at that time, the only duties upon the importation of foreign goods.
      The term within which this, and all other drawbacks could be claimed, was
      afterwards (by 7 Geo. I. chap. 21. sect. 10.) extended to three years.
    
      The duties which have been imposed since the old subsidy, are, the greater
      part of them, wholly drawn back upon exportation. This general rule,
      however, is liable to a great number of exceptions; and the doctrine of
      drawbacks has become a much less simple matter than it was at their first
      institution.
    
      Upon the exportation of some foreign goods, of which it was expected that
      the importation would greatly exceed what was necessary for the home
      consumption, the whole duties are drawn back, without retaining even half
      the old subsidy. Before the revolt of our North American colonies, we had
      the monopoly of the tobacco of Maryland and Virginia. We imported about
      ninety-six thousand hogsheads, and the home consumption was not supposed
      to exceed fourteen thousand. To facilitate the great exportation which was
      necessary, in order to rid us of the rest, the whole duties were drawn
      back, provided the exportation took place within three years.
    
      We still have, though not altogether, yet very nearly, the monopoly of the
      sugars of our West Indian islands. If sugars are exported within a year,
      therefore, all the duties upon importation are drawn back; and if exported
      within three years, all the duties, except half the old subsidy, which
      still continues to be retained upon the exportation of the greater part of
      goods. Though the importation of sugar exceeds a good deal what is
      necessary for the home consumption, the excess is inconsiderable, in
      comparison of what it used to be in tobacco.
    
      Some goods, the particular objects of the jealousy of our own
      manufacturers, are prohibited to be imported for home consumption. They
      may, however, upon paying certain duties, be imported and warehoused for
      exportation. But upon such exportation no part of these duties is drawn
      back. Our manufacturers are unwilling, it seems, that even this restricted
      importation should be encouraged, and are afraid lest some part of these
      goods should be stolen out of the warehouse, and thus come into
      competition with their own. It is under these regulations only that we can
      import wrought silks, French cambrics and lawns, calicoes, painted,
      printed, stained, or dyed, etc.
    
      We are unwilling even to be the carriers of French goods, and choose
      rather to forego a profit to ourselves than to suffer those whom we
      consider as our enemies to make any profit by our means. Not only half the
      old subsidy, but the second twenty-five per cent. is retained upon the
      exportation of all French goods.
    
      By the fourth of the rules annexed to the old subsidy, the drawback
      allowed upon the exportation of all wines amounted to a great deal more
      than half the duties which were at that time paid upon their importation;
      and it seems at that time to have been the object of the legislature to
      give somewhat more than ordinary encouragement to the carrying trade in
      wine. Several of the other duties, too which were imposed either at the
      same time or subsequent to the old subsidy, what is called the additional
      duty, the new subsidy, the one-third and two-thirds subsidies, the impost
      1692, the tonnage on wine, were allowed to be wholly drawn back upon
      exportation. All those duties, however, except the additional duty and
      impost 1692, being paid down in ready money upon importation, the interest
      of so large a sum occasioned an expense, which made it unreasonable to
      expect any profitable carrying trade in this article. Only a part,
      therefore of the duty called the impost on wine, and no part of the
      twenty-five pounds the ton upon French wines, or of the duties imposed in
      1745, in 1763, and in 1778, were allowed to be drawn back upon
      exportation. The two imposts of five per cent. imposed in 1779 and 1781,
      upon all the former duties of customs, being allowed to be wholly drawn
      back upon the exportation of all other goods, were likewise allowed to be
      drawn back upon that of wine. The last duty that has been particularly
      imposed upon wine, that of 1780, is allowed to be wholly drawn back; an
      indulgence which, when so many heavy duties are retained, most probably
      could never occasion the exportation of a single ton of wine. These rules
      took place with regard to all places of lawful exportation, except the
      British colonies in America.
    
      The 15th Charles II, chap. 7, called an act for the encouragement of
      trade, had given Great Britain the monopoly of supplying the colonies with
      all the commodities of the growth or manufacture of Europe, and
      consequently with wines. In a country of so extensive a coast as our North
      American and West Indian colonies, where our authority was always so very
      slender, and where the inhabitants were allowed to carry out in their own
      ships their non-enumerated commodities, at first to all parts of Europe,
      and afterwards to all parts of Europe south of Cape Finisterre, it is not
      very probable that this monopoly could ever be much respected; and they
      probably at all times found means of bringing back some cargo from the
      countries to which they were allowed to carry out one. They seem, however,
      to have found some difficulty in importing European wines from the places
      of their growth; and they could not well import them from Great Britain,
      where they were loaded with many heavy duties, of which a considerable
      part was not drawn back upon exportation. Madeira wine, not being an
      European commodity, could be imported directly into America and the West
      Indies, countries which, in all their non-enumerated commodities, enjoyed
      a free trade to the island of Madeira. These circumstances had probably
      introduced that general taste for Madeira wine, which our officers found
      established in all our colonies at the commencement of the war which began
      in 1755, and which they brought back with them to the mother country,
      where that wine had not been much in fashion before. Upon the conclusion
      of that war, in 1763 (by the 4th Geo. III, chap. 15, sect. 12), all the
      duties except £3, 10s. were allowed to be drawn back upon the exportation
      to the colonies of all wines, except French wines, to the commerce and
      consumption of which national prejudice would allow no sort of
      encouragement. The period between the granting of this indulgence and the
      revolt of our North American colonies, was probably too short to admit of
      any considerable change in the customs of those countries.
    
      The same act which, in the drawbacks upon all wines, except French wines,
      thus favoured the colonies so much more than other countries, in those
      upon the greater part of other commodities, favoured them much less. Upon
      the exportation of the greater part of commodities to other countries,
      half the old subsidy was drawn back. But this law enacted, that no part of
      that duty should be drawn back upon the exportation to the colonies of any
      commodities of the growth or manufacture either of Europe or the East
      Indies, except wines, white calicoes, and muslins.
    
      Drawbacks were, perhaps, originally granted for the encouragement of the
      carrying trade, which, as the freight of the ship is frequently paid by
      foreigners in money, was supposed to be peculiarly fitted for bringing
      gold and silver into the country. But though the carrying trade certainly
      deserves no peculiar encouragement, though the motive of the institution
      was, perhaps, abundantly foolish, the institution itself seems reasonable
      enough. Such drawbacks cannot force into this trade a greater share of the
      capital of the country than what would have gone to it of its own accord,
      had there been no duties upon importation; they only prevent its being
      excluded altogether by those duties. The carrying trade, though it
      deserves no preference, ought not to be precluded, but to be left free,
      like all other trades. It is a necessary resource to those capitals which
      cannot find employment, either in the agriculture or in the manufactures
      of the country, either in its home trade, or in its foreign trade of
      consumption.
    
      The revenue of the customs, instead of suffering, profits from such
      drawbacks, by that part of the duty which is retained. If the whole duties
      had been retained, the foreign goods upon which they are paid could seldom
      have been exported, nor consequently imported, for want of a market. The
      duties, therefore, of which a part is retained, would never have been
      paid.
    
      These reasons seem sufficiently to justify drawbacks, and would justify
      them, though the whole duties, whether upon the produce of domestic
      industry or upon foreign goods, were always drawn back upon exportation.
      The revenue of excise would, in this case indeed, suffer a little, and
      that of the customs a good deal more; but the natural balance of industry,
      the natural division and distribution of labour, which is always more or
      less disturbed by such duties, would be more nearly re-established by such
      a regulation.
    
      These reasons, however, will justify drawbacks only upon exporting goods
      to those countries which are altogether foreign and independent, not to
      those in which our merchants and manufacturers enjoy a monopoly. A
      drawback, for example, upon the exportation of European goods to our
      American colonies, will not always occasion a greater exportation than
      what would have taken place without it. By means of the monopoly which our
      merchants and manufacturers enjoy there, the same quantity might
      frequently, perhaps, be sent thither, though the whole duties were
      retained. The drawback, therefore, may frequently be pure loss to the
      revenue of excise and customs, without altering the state of the trade, or
      rendering it in any respect more extensive. How far such drawbacks can be
      justified as a proper encouragement to the industry of our colonies, or
      how far it is advantageous to the mother country that they should be
      exempted from taxes which are paid by all the rest of their
      fellow-subjects, will appear hereafter, when I come to treat of colonies.
    
      Drawbacks, however, it must always be understood, are useful only in those
      cases in which the goods, for the exportation of which they are given, are
      really exported to some foreign country, and not clandestinely re-imported
      into our own. That some drawbacks, particularly those upon tobacco, have
      frequently been abused in this manner, and have given occasion to many
      frauds, equally hurtful both to the revenue and to the fair trader, is
      well known.
    


CHAPTER V.
OF BOUNTIES.


    
      Bounties upon exportation are, in Great Britain, frequently petitioned
      for, and sometimes granted, to the produce of particular branches of
      domestic industry. By means of them, our merchants and manufacturers, it
      is pretended, will be enabled to sell their goods as cheap or cheaper than
      their rivals in the foreign market. A greater quantity, it is said, will
      thus be exported, and the balance of trade consequently turned more in
      favour of our own country. We cannot give our workmen a monopoly in the
      foreign, as we have done in the home market. We cannot force foreigners to
      buy their goods, as we have done our own countrymen. The next best
      expedient, it has been thought, therefore, is to pay them for buying. It
      is in this manner that the mercantile system proposes to enrich the whole
      country, and to put money into all our pockets, by means of the balance of
      trade.
    
      Bounties, it is allowed, ought to be given to those branches of trade only
      which cannot be carried on without them. But every branch of trade in
      which the merchant can sell his goods for a price which replaces to him,
      with the ordinary profits of stock, the whole capital employed in
      preparing and sending them to market, can be carried on without a bounty.
      Every such branch is evidently upon a level with all the other branches of
      trade which are carried on without bounties, and cannot, therefore,
      require one more than they. Those trades only require bounties, in which
      the merchant is obliged to sell his goods for a price which does not
      replace to him his capital, together with the ordinary profit, or in which
      he is obliged to sell them for less than it really cost him to send them
      to market. The bounty is given in order to make up this loss, and to
      encourage him to continue, or, perhaps, to begin a trade, of which the
      expense is supposed to be greater than the returns, of which every
      operation eats up a part of the capital employed in it, and which is of
      such a nature, that if all other trades resembled it, there would soon be
      no capital left in the country.
    
      The trades, it is to be observed, which are carried on by means of
      bounties, are the only ones which can be carried on between two nations
      for any considerable time together, in such a manner as that one of them
      shall always and regularly lose, or sell its goods for less than it
      really cost to send them to market. But if the bounty did not repay to the
      merchant what he would otherwise lose upon the price of his goods, his own
      interest would soon oblige him to employ his stock in another way, or to
      find out a trade in which the price of the goods would replace to him,
      with the ordinary profit, the capital employed in sending them to market.
      The effect of bounties, like that of all the other expedients of the
      mercantile system, can only be to force the trade of a country into a
      channel much less advantageous than that in which it would naturally run
      of its own accord.
    
      The ingenious and well-informed author of the Tracts upon the Corn Trade
      has shown very clearly, that since the bounty upon the exportation of corn
      was first established, the price of the corn exported, valued moderately
      enough, has exceeded that of the corn imported, valued very high, by a
      much greater sum than the amount of the whole bounties which have been
      paid during that period. This, he imagines, upon the true principles of
      the mercantile system, is a clear proof that this forced corn trade is
      beneficial to the nation, the value of the exportation exceeding that of
      the importation by a much greater sum than the whole extraordinary expense
      which the public has been at in order to get it exported. He does not
      consider that this extraordinary expense, or the bounty, is the smallest
      part of the expense which the exportation of corn really costs the
      society. The capital which the farmer employed in raising it must likewise
      be taken into the account. Unless the price of the corn, when sold in the
      foreign markets, replaces not only the bounty, but this capital, together
      with the ordinary profits of stock, the society is a loser by the
      difference, or the national stock is so much diminished. But the very
      reason for which it has been thought necessary to grant a bounty, is the
      supposed insufficiency of the price to do this.
    
      The average price of corn, it has been said, has fallen considerably since
      the establishment of the bounty. That the average price of corn began to
      fall somewhat towards the end of the last century, and has continued to do
      so during the course of the sixty-four first years of the present, I have
      already endeavoured to show. But this event, supposing it to be real, as I
      believe it to be, must have happened in spite of the bounty, and cannot
      possibly have happened in consequence of it. It has happened in France, as
      well as in England, though in France there was not only no bounty, but,
      till 1764, the exportation of corn was subjected to a general prohibition.
      This gradual fall in the average price of grain, it is probable,
      therefore, is ultimately owing neither to the one regulation nor to the
      other, but to that gradual and insensible rise in the real value of
      silver, which, in the first book of this discourse, I have endeavoured to
      show, has taken place in the general market of Europe during the course of
      the present century. It seems to be altogether impossible that the bounty
      could ever contribute to lower the price of grain.
    
      In years of plenty, it has already been observed, the bounty, by
      occasioning an extraordinary exportation, necessarily keeps up the price
      of corn in the home market above what it would naturally fall to. To do so
      was the avowed purpose of the institution. In years of scarcity, though
      the bounty is frequently suspended, yet the great exportation which it
      occasions in years of plenty, must frequently hinder, more or less, the
      plenty of one year from relieving the scarcity of another. Both in years
      of plenty and in years of scarcity, therefore, the bounty necessarily
      tends to raise the money price of corn somewhat higher than it otherwise
      would be in the home market.
    
      That in the actual state of tillage the bounty must necessarily have this
      tendency, will not, I apprehend, be disputed by any reasonable person. But
      it has been thought by many people, that it tends to encourage tillage,
      and that in two different ways; first, by opening a more extensive foreign
      market to the corn of the farmer, it tends, they imagine, to increase the
      demand for, and consequently the production of, that commodity; and,
      secondly by securing to him a better price than he could otherwise expect
      in the actual state of tillage, it tends, they suppose, to encourage
      tillage. This double encouragement must they imagine, in a long period of
      years, occasion such an increase in the production of corn, as may lower
      its price in the home market, much more than the bounty can raise it in
      the actual state which tillage may, at the end of that period, happen to
      be in.
    
      I answer, that whatever extension of the foreign market can be occasioned
      by the bounty must, in every particular year, be altogether at the expense
      of the home market; as every bushel of corn, which is exported by means of
      the bounty, and which would not have been exported without the bounty,
      would have remained in the home market to increase the consumption, and to
      lower the price of that commodity. The corn bounty, it is to be observed,
      as well as every other bounty upon exportation, imposes two different
      taxes upon the people; first, the tax which they are obliged to
      contribute, in order to pay the bounty; and, secondly, the tax which
      arises from the advanced price of the commodity in the home market, and
      which, as the whole body of the people are purchasers of corn, must, in
      this particular commodity, be paid by the whole body of the people. In
      this particular commodity, therefore, this second tax is by much the
      heaviest of the two. Let us suppose that, taking one year with another,
      the bounty of 5s. upon the exportation of the quarter of wheat raises the
      price of that commodity in the home market only 6d. the bushel, or 4s. the
      quarter higher than it otherwise would have been in the actual state of
      the crop. Even upon this very moderate supposition, the great body of the
      people, over and above contributing the tax which pays the bounty of 5s.
      upon every quarter of wheat exported, must pay another of 4s. upon every
      quarter which they themselves consume. But according to the very well
      informed author of the Tracts upon the Corn Trade, the average proportion
      of the corn exported to that consumed at home, is not more than that of
      one to thirty-one. For every 5s. therefore, which they contribute to the
      payment of the first tax, they must contribute £6:4s. to the payment of
      the second. So very heavy a tax upon the first necessary of life-must
      either reduce the subsistence of the labouring poor, or it must occasion
      some augmentation in their pecuniary wages, proportionable to that in the
      pecuniary price of their subsistence. So far as it operates in the one
      way, it must reduce the ability of the labouring poor to educate and bring
      up their children, and must, so far, tend to restrain the population of
      the country. So far as it operates in the other, it must reduce the
      ability of the employers of the poor, to employ so great a number as they
      otherwise might do, and must so far tend to restrain the industry of the
      country. The extraordinary exportation of corn, therefore occasioned by
      the bounty, not only in every particular year diminishes the home, just as
      much as it extends the foreign market and consumption, but, by restraining
      the population and industry of the country, its final tendency is to stint
      and restrain the gradual extension of the home market; and thereby, in the
      long-run, rather to diminish than to augment the whole market and
      consumption of corn.
    
      This enhancement of the money price of corn, however, it has been thought,
      by rendering that commodity more profitable to the farmer, must
      necessarily encourage its production.
    
      I answer, that this might be the case, if the effect of the bounty was to
      raise the real price of corn, or to enable the farmer, with an equal
      quantity of it, to maintain a greater number of labourers in the same
      manner, whether liberal, moderate, or scanty, than other labourers are
      commonly maintained in his neighbourhood. But neither the bounty, it is
      evident, nor any other human institution, can have any such effect. It is
      not the real, but the nominal price of corn, which can in any considerable
      degree be affected by the bounty. And though the tax, which that
      institution imposes upon the whole body of the people, may be very
      burdensome to those who pay it, it is of very little advantage to those
      who receive it.
    
      The real effect of the bounty is not so much to raise the real value of
      corn, as to degrade the real value of silver; or to make an equal quantity
      of it exchange for a smaller quantity, not only of corn, but of all other
      home made commodities; for the money price of corn regulates that of all
      other home made commodities.
    
      It regulates the money price of labour, which must always be such as to
      enable the labourer to purchase a quantity of corn sufficient to maintain
      him and his family, either in the liberal, moderate, or scanty manner, in
      which the advancing, stationary, or declining, circumstances of the
      society, oblige his employers to maintain him.
    
      It regulates the money price of all the other parts of the rude produce of
      land, which, in every period of improvement, must bear a certain
      proportion to that of corn, though this proportion is different in
      different periods. It regulates, for example, the money price of grass and
      hay, of butcher’s meat, of horses, and the maintenance of horses, of land
      carriage consequently, or of the greater part of the inland commerce of
      the country.
    
      By regulating the money price of all the other parts of the rude produce
      of land, it regulates that of the materials of almost all manufactures; by
      regulating the money price of labour, it regulates that of manufacturing
      art and industry; and by regulating both, it regulates that of the
      complete manufacture. The money price of labour, and of every thing that
      is the produce, either of land or labour, must necessarily either rise or
      fall in proportion to the money price of corn.
    
      Though in consequence of the bounty, therefore, the farmer should be
      enabled to sell his corn for 4s. the bushel, instead of 3s:6d. and to pay
      his landlord a money rent proportionable to this rise in the money price
      of his produce; yet if, in consequence of this rise in the price of corn,
      4s. will purchase no more home made goods of any other kind than 3s. 6d.
      would have done before, neither the circumstances of the farmer, nor those
      of the landlord, will be much mended by this change. The farmer will not
      be able to cultivate much better; the landlord will not be able to live
      much better. In the purchase of foreign commodities, this enhancement in
      the price of corn may give them some little advantage. In that of home
      made commodities, it can give them none at all. And almost the whole
      expense of the farmer, and the far greater part even of that of the
      landlord, is in home made commodities.
    
      That degradation in the value of silver, which is the effect of the
      fertility of the mines, and which operates equally, or very nearly
      equally, through the greater part of the commercial world, is a matter of
      very little consequence to any particular country. The consequent rise of
      all money prices, though it does not make those who receive them really
      richer, does not make them really poorer. A service of plate becomes
      really cheaper, and every thing else remains precisely of the same real
      value as before.
    
      But that degradation in the value of silver, which, being the effect
      either of the peculiar situation or of the political institutions of a
      particular country, takes place only in that country, is a matter of very
      great consequence, which, far from tending to make anybody really richer,
      tends to make every body really poorer. The rise in the money price of all
      commodities, which is in this case peculiar to that country, tends to
      discourage more or less every sort of industry which is carried on within
      it, and to enable foreign nations, by furnishing almost all sorts of goods
      for a smaller quantity of silver than its own workmen can afford to do, to
      undersell them, not only in the foreign, but even in the home market.
    
      It is the peculiar situation of Spain and Portugal, as proprietors of the
      mines, to be the distributers of gold and silver to all the other
      countries of Europe. Those metals ought naturally, therefore, to be
      somewhat cheaper in Spain and Portugal than in any other part of Europe.
      The difference, however, should be no more than the amount of the freight
      and insurance; and, on account of the great value and small bulk of those
      metals, their freight is no great matter, and their insurance is the same
      as that of any other goods of equal value. Spain and Portugal, therefore,
      could suffer very little from their peculiar situation, if they did not
      aggravate its disadvantages by their political institutions.
    
      Spain by taxing, and Portugal by prohibiting, the exportation of gold and
      silver, load that exportation with the expense of smuggling, and raise the
      value of those metals in other countries so much more above what it is in
      their own, by the whole amount of this expense. When you dam up a stream
      of water, as soon as the dam is full, as much water must run over the
      dam-head as if there was no dam at all. The prohibition of exportation
      cannot detain a greater quantity of gold and silver in Spain and Portugal,
      than what they can afford to employ, than what the annual produce of their
      land and labour will allow them to employ, in coin, plate, gilding, and
      other ornaments of gold and silver. When they have got this quantity, the
      dam is full, and the whole stream which flows in afterwards must run over.
      The annual exportation of gold and silver from Spain and Portugal,
      accordingly, is, by all accounts, notwithstanding these restraints, very
      near equal to the whole annual importation. As the water, however, must
      always be deeper behind the dam-head than before it, so the quantity of
      gold and silver which these restraints detain in Spain and Portugal, must,
      in proportion to the annual produce of their land and labour, be greater
      than what is to be found in other countries. The higher and stronger the
      dam-head, the greater must be the difference in the depth of water behind
      and before it. The higher the tax, the higher the penalties with which the
      prohibition is guarded, the more vigilant and severe the police which
      looks after the execution of the law, the greater must be the difference
      in the proportion of gold and silver to the annual produce of the land and
      labour of Spain and Portugal, and to that of other countries. It is said,
      accordingly, to be very considerable, and that you frequently find there a
      profusion of plate in houses, where there is nothing else which would in
      other countries be thought suitable or correspondent to this sort of
      magnificence. The cheapness of gold and silver, or, what is the same
      thing, the dearness of all commodities, which is the necessary effect of
      this redundancy of the precious metals, discourages both the agriculture
      and manufactures of Spain and Portugal, and enables foreign nations to
      supply them with many sorts of rude, and with almost all sorts of
      manufactured produce, for a smaller quantity of gold and silver than what
      they themselves can either raise or make them for at home. The tax and
      prohibition operate in two different ways. They not only lower very much
      the value of the precious metals in Spain and Portugal, but by detaining
      there a certain quantity of those metals which would otherwise flow over
      other countries, they keep up their value in those other countries
      somewhat above what it otherwise would be, and thereby give those
      countries a double advantage in their commerce with Spain and Portugal.
      Open the flood-gates, and there will presently be less water above, and
      more below the dam-head, and it will soon come to a level in both places.
      Remove the tax and the prohibition, and as the quantity of gold and silver
      will diminish considerably in Spain and Portugal, so it will increase
      somewhat in other countries; and the value of those metals, their
      proportion to the annual produce of land and labour, will soon come to a
      level, or very near to a level, in all. The loss which Spain and Portugal
      could sustain by this exportation of their gold and silver, would be
      altogether nominal and imaginary. The nominal value of their goods, and of
      the annual produce of their land and labour, would fall, and would be
      expressed or represented by a smaller quantity of silver than before; but
      their real value would be the same as before, and would be sufficient to
      maintain, command, and employ the same quantity of labour. As the nominal
      value of their goods would fall, the real value of what remained of their
      gold and silver would rise, and a smaller quantity of those metals would
      answer all the same purposes of commerce and circulation which had
      employed a greater quantity before. The gold and silver which would go
      abroad would not go abroad for nothing, but would bring back an equal
      value of goods of some kind or other. Those goods, too, would not be all
      matters of mere luxury and expense, to be consumed by idle people, who
      produce nothing in return for their consumption. As the real wealth and
      revenue of idle people would not be augmented by this extraordinary
      exportation of gold and silver, so neither would their consumption be much
      augmented by it. Those goods would probably, the greater part of them, and
      certainly some part of them, consist in materials, tools, and provisions,
      for the employment and maintenance of industrious people, who would
      reproduce, with a profit, the full value of their consumption. A part of
      the dead stock of the society would thus be turned into active stock, and
      would put into motion a greater quantity of industry than had been
      employed before. The annual produce of their land and labour would
      immediately be augmented a little, and in a few years would probably be
      augmented a great deal; their industry being thus relieved from one of the
      most oppressive burdens which it at present labours under.
    
      The bounty upon the exportation of corn necessarily operates exactly in
      the same way as this absurd policy of Spain and Portugal. Whatever be the
      actual state of tillage, it renders our corn somewhat dearer in the home
      market than it otherwise would be in that state, and somewhat cheaper in
      the foreign; and as the average money price of corn regulates, more or
      less, that of all other commodities, it lowers the value of silver
      considerably in the one, and tends to raise it a little in the other. It
      enables foreigners, the Dutch in particular, not only to eat our corn
      cheaper than they otherwise could do, but sometimes to eat it cheaper than
      even our own people can do upon the same occasions; as we are assured by
      an excellent authority, that of Sir Matthew Decker. It hinders our own
      workmen from furnishing their goods for so small a quantity of silver as
      they otherwise might do, and enables the Dutch to furnish theirs for a
      smaller. It tends to render our manufactures somewhat dearer in every
      market, and theirs somewhat cheaper, than they otherwise would be, and
      consequently to give their industry a double advantage over our own.
    
      The bounty, as it raises in the home market, not so much the real, as the
      nominal price of our corn; as it augments, not the quantity of labour
      which a certain quantity of corn can maintain and employ, but only the
      quantity of silver which it will exchange for; it discourages our
      manufactures, without rendering any considerable service, either to our
      farmers or country gentlemen. It puts, indeed, a little more money into
      the pockets of both, and it will perhaps be somewhat difficult to persuade
      the greater part of them that this is not rendering them a very
      considerable service. But if this money sinks in its value, in the
      quantity of labour, provisions, and home-made commodities of all different
      kinds which it is capable of purchasing, as much as it rises in its
      quantity, the service will be little more than nominal and imaginary.
    
      There is, perhaps, but one set of men in the whole commonwealth to whom
      the bounty either was or could be essentially serviceable. These were the
      corn merchants, the exporters and importers of corn. In years of plenty,
      the bounty necessarily occasioned a greater exportation than would
      otherwise have taken place; and by hindering the plenty of the one year
      from relieving the scarcity of another, it occasioned in years of scarcity
      a greater importation than would otherwise have been necessary. It
      increased the business of the corn merchant in both; and in the years of
      scarcity, it not only enabled him to import a greater quantity, but to
      sell it for a better price, and consequently with a greater profit, than
      he could otherwise have made, if the plenty of one year had not been more
      or less hindered from relieving the scarcity of another. It is in this set
      of men, accordingly, that I have observed the greatest zeal for the
      continuance or renewal of the bounty.
    
      Our country gentlemen, when they imposed the high duties upon the
      exportation of foreign corn, which in times of moderate plenty amount to a
      prohibition, and when they established the bounty, seem to have imitated
      the conduct of our manufacturers. By the one institution, they secured to
      themselves the monopoly of the home market, and by the other they
      endeavoured to prevent that market from ever being overstocked with their
      commodity. By both they endeavoured to raise its real value, in the same
      manner as our manufacturers had, by the like institutions, raised the real
      value of many different sorts of manufactured goods. They did not,
      perhaps, attend to the great and essential difference which nature has
      established between corn and almost every other sort of goods. When,
      either by the monopoly of the home market, or by a bounty upon
      exportation, you enable our woollen or linen manufacturers to sell their
      goods for somewhat a better price than they otherwise could get for them,
      you raise, not only the nominal, but the real price of those goods; you
      render them equivalent to a greater quantity of labour and subsistence;
      you increase not only the nominal, but the real profit, the real wealth
      and revenue of those manufacturers; and you enable them, either to live
      better themselves, or to employ a greater quantity of labour in those
      particular manufactures. You really encourage those manufactures, and
      direct towards them a greater quantity of the industry of the country than
      what would properly go to them of its own accord. But when, by the like
      institutions, you raise the nominal or money price of corn, you do not
      raise its real value; you do not increase the real wealth, the real
      revenue, either of our farmers or country gentlemen; you do not encourage
      the growth of corn, because you do not enable them to maintain and employ
      more labourers in raising it. The nature of things has stamped upon corn a
      real value, which cannot be altered by merely altering its money price. No
      bounty upon exportation, no monopoly of the home market, can raise that
      value. The freest competition cannot lower it, Through the world in
      general, that value is equal to the quantity of labour which it can
      maintain, and in every particular place it is equal to the quantity of
      labour which it can maintain in the way, whether liberal, moderate, or
      scanty, in which labour is commonly maintained in that place. Woollen or
      linen cloth are not the regulating commodities by which the real value of
      all other commodities must be finally measured and determined; corn is.
      The real value of every other commodity is finally measured and determined
      by the proportion which its average money price bears to the average money
      price of corn. The real value of corn does not vary with those variations
      in its average money price, which sometimes occur from one century to
      another; it is the real value of silver which varies with them.
    
      Bounties upon the exportation of any homemade commodity are liable, first,
      to that general objection which may be made to all the different
      expedients of the mercantile system; the objection of forcing some part of
      the industry of the country into a channel less advantageous than that in
      which it would run of its own accord; and, secondly, to the particular
      objection of forcing it not only into a channel that is less advantageous,
      but into one that is actually disadvantageous; the trade which cannot be
      carried on but by means of a bounty being necessarily a losing trade. The
      bounty upon the exportation of corn is liable to this further objection,
      that it can in no respect promote the raising of that particular commodity
      of which it was meant to encourage the production. When our country
      gentlemen, therefore, demanded the establishment of the bounty, though
      they acted in imitation of our merchants and manufacturers, they did not
      act with that complete comprehension of their own interest, which commonly
      directs the conduct of those two other orders of people. They loaded the
      public revenue with a very considerable expense: they imposed a very heavy
      tax upon the whole body of the people; but they did not, in any sensible
      degree, increase the real value of their own commodity; and by lowering
      somewhat the real value of silver, they discouraged, in some degree, the
      general industry of the country, and, instead of advancing, retarded more
      or less the improvement of their own lands, which necessarily depend upon
      the general industry of the country.
    
      To encourage the production of any commodity, a bounty upon production,
      one should imagine, would have a more direct operation than one upon
      exportation. It would, besides, impose only one tax upon the people, that
      which they must contribute in order to pay the bounty. Instead of raising,
      it would tend to lower the price of the commodity in the home market; and
      thereby, instead of imposing a second tax upon the people, it might, at
      least in part, repay them for what they had contributed to the first.
      Bounties upon production, however, have been very rarely granted. The
      prejudices established by the commercial system have taught us to believe,
      that national wealth arises more immediately from exportation than from
      production. It has been more favoured, accordingly, as the more immediate
      means of bringing money into the country. Bounties upon production, it has
      been said too, have been found by experience more liable to frauds than
      those upon exportation. How far this is true, I know not. That bounties
      upon exportation have been abused, to many fraudulent purposes, is very
      well known. But it is not the interest of merchants and manufacturers, the
      great inventors of all these expedients, that the home market should be
      overstocked with their goods; an event which a bounty upon production
      might sometimes occasion. A bounty upon exportation, by enabling them to
      send abroad their surplus part, and to keep up the price of what remains
      in the home market, effectually prevents this. Of all the expedients of
      the mercantile system, accordingly, it is the one of which they are the
      fondest. I have known the different undertakers of some particular works
      agree privately among themselves to give a bounty out of their own pockets
      upon the exportation of a certain proportion of the goods which they dealt
      in. This expedient succeeded so well, that it more than doubled the price
      of their goods in the home market, notwithstanding a very considerable
      increase in the produce. The operation of the bounty upon corn must have
      been wonderfully different, if it has lowered the money price of that
      commodity.
    
      Something like a bounty upon production, however, has been granted upon
      some particular occasions. The tonnage bounties given to the white herring
      and whale fisheries may, perhaps, be considered as somewhat of this
      nature. They tend directly, it may be supposed, to render the goods
      cheaper in the home market than they otherwise would be. In other
      respects, their effects, it must be acknowledged, are the same as those of
      bounties upon exportation. By means of them, a part of the capital of the
      country is employed in bringing goods to market, of which the price does
      not repay the cost, together with the ordinary profits of stock.
    
      But though the tonnage bounties to those fisheries do not contribute to
      the opulence of the nation, it may, perhaps, be thought that they
      contribute to its defence, by augmenting the number of its sailors and
      shipping. This, it may be alleged, may sometimes be done by means of such
      bounties, at a much smaller expense than by keeping up a great standing
      navy, if I may use such an expression, in the same way as a standing army.
    
      Notwithstanding these favourable allegations, however, the following
      considerations dispose me to believe, that in granting at least one of
      these bounties, the legislature has been very grossly imposed upon:
    
      First, The herring-buss bounty seems too large.
    
      From the commencement of the winter fishing 1771, to the end of the winter
      fishing 1781, the tonnage bounty upon the herring-buss fishery has been at
      thirty shillings the ton. During these eleven years, the whole number of
      barrels caught by the herring-buss fishery of Scotland amounted to
      378,347. The herrings caught and cured at sea are called sea-sticks. In
      order to render them what are called merchantable herrings, it is
      necessary to repack them with an additional quantity of salt; and in this
      case, it is reckoned, that three barrels of sea-sticks are usually
      repacked into two barrels of merchantable herrings. The number of barrels
      of merchantable herrings, therefore, caught during these eleven years,
      will amount only, according to this account, to 252,231¼. During these
      eleven years, the tonnage bounties paid amounted to £155,463:11s. or
      8s:2¼d. upon every barrel of sea-sticks, and to 12s:3¾d. upon every barrel
      of merchantable herrings.
    
      The salt with which these herrings are cured is sometimes Scotch, and
      sometimes foreign salt; both which are delivered, free of all excise duty,
      to the fish-curers. The excise duty upon Scotch salt is at present 1s:6d.,
      that upon foreign salt 10s. the bushel. A barrel of herrings is supposed
      to require about one bushel and one-fourth of a bushel foreign salt. Two
      bushels are the supposed average of Scotch salt. If the herrings are
      entered for exportation, no part of this duty is paid up; if entered for
      home consumption, whether the herrings were cured with foreign or with
      Scotch salt, only one shilling the barrel is paid up. It was the old
      Scotch duty upon a bushel of salt, the quantity which, at a low
      estimation, had been supposed necessary for curing a barrel of herrings.
      In Scotland, foreign salt is very little used for any other purpose but
      the curing of fish. But from the 5th April 1771 to the 5th April 1782, the
      quantity of foreign salt imported amounted to 936,974 bushels, at
      eighty-four pounds the bushel; the quantity of Scotch salt delivered from
      the works to the fish-curers, to no more than 168,226, at fifty-six pounds
      the bushel only. It would appear, therefore, that it is principally
      foreign salt that is used in the fisheries. Upon every barrel of herrings
      exported, there is, besides, a bounty of 2s:8d. and more than two-thirds
      of the buss-caught herrings are exported. Put all these things together,
      and you will find that, during these eleven years, every barrel of
      buss-caught herrings, cured with Scotch salt, when exported, has cost
      government 17s:11¾d.; and, when entered for home consumption, 14s:3¾d.;
      and that every barrel cured with foreign salt, when exported, has cost
      government £1:7:5¾d.; and, when entered for home consumption, £1:3:9¾d.
      The price of a barrel of good merchantable herrings runs from seventeen
      and eighteen to four and five-and-twenty shillings; about a guinea at an
      average. {See the accounts at the end of this Book.}
    
      Secondly, The bounty to the white-herring fishery is a tonnage bounty, and
      is proportioned to the burden of the ship, not to her diligence or success
      in the fishery; and it has, I am afraid, been too common for the vessels
      to fit out for the sole purpose of catching, not the fish but the bounty.
      In the year 1759, when the bounty was at fifty shillings the ton, the
      whole buss fishery of Scotland brought in only four barrels of sea-sticks.
      In that year, each barrel of sea-sticks cost government, in bounties
      alone, £113:15s.; each barrel of merchantable herrings £159:7:6.
    
      Thirdly, The mode of fishing, for which this tonnage bounty in the white
      herring fishery has been given (by busses or decked vessels from twenty to
      eighty tons burden ), seems not so well adapted to the situation of
      Scotland, as to that of Holland, from the practice of which country it
      appears to have been borrowed. Holland lies at a great distance from the
      seas to which herrings are known principally to resort, and can,
      therefore, carry on that fishery only in decked vessels, which can carry
      water and provisions sufficient for a voyage to a distant sea; but the
      Hebrides, or Western Islands, the islands of Shetland, and the northern
      and north-western coasts of Scotland, the countries in whose neighbourhood
      the herring fishery is principally carried on, are everywhere intersected
      by arms of the sea, which run up a considerable way into the land, and
      which, in the language of the country, are called sea-lochs. It is to
      these sea-lochs that the herrings principally resort during the seasons in
      which they visit these seas; for the visits of this, and, I am assured, of
      many other sorts of fish, are not quite regular and constant. A
      boat-fishery, therefore, seems to be the mode of fishing best adapted to
      the peculiar situation of Scotland, the fishers carrying the herrings on
      shore as fast as they are taken, to be either cured or consumed fresh. But
      the great encouragement which a bounty of 30s. the ton gives to the
      buss-fishery, is necessarily a discouragement to the boat-fishery, which,
      having no such bounty, cannot bring its cured fish to market upon the same
      terms as the buss-fishery. The boat-fishery; accordingly, which, before
      the establishment of the buss-bounty, was very considerable, and is said
      to have employed a number of seamen, not inferior to what the buss-fishery
      employs at present, is now gone almost entirely to decay. Of the former
      extent, however, of this now ruined and abandoned fishery, I must
      acknowledge that I cannot pretend to speak with much precision. As no
      bounty was-paid upon the outfit of the boat-fishery, no account was taken
      of it by the officers of the customs or salt duties.
    
      Fourthly, In many parts of Scotland, during certain seasons of the year,
      herrings make no inconsiderable part of the food of the common people. A
      bounty which tended to lower their price in the home market, might
      contribute a good deal to the relief of a great number of our
      fellow-subjects, whose circumstances are by no means affluent. But the
      herring-bus bounty contributes to no such good purpose. It has ruined the
      boat fishery, which is by far the best adapted for the supply of the home
      market; and the additional bounty of 2s:8d. the barrel upon exportation,
      carries the greater part, more than two-thirds, of the produce of the
      buss-fishery abroad. Between thirty and forty years ago, before the
      establishment of the buss-bounty, 16s. the barrel, I have been assured,
      was the common price of white herrings. Between ten and fifteen years ago,
      before the boat-fishery was entirely ruined, the price was said to have
      run from seventeen to twenty shillings the barrel. For these last five
      years, it has, at an average, been at twenty-five shillings the barrel.
      This high price, however, may have been owing to the real scarcity of the
      herrings upon the coast of Scotland. I must observe, too, that the cask or
      barrel, which is usually sold with the herrings, and of which the price is
      included in all the foregoing prices, has, since the commencement of the
      American war, risen to about double its former price, or from about 3s. to
      about 6s. I must likewise observe, that the accounts I have received of
      the prices of former times, have been by no means quite uniform and
      consistent, and an old man of great accuracy and experience has assured
      me, that, more than fifty years ago, a guinea was the usual price of a
      barrel of good merchantable herrings; and this, I imagine, may still be
      looked upon as the average price. All accounts, however, I think, agree
      that the price has not been lowered in the home market in consequence of
      the buss-bounty.
    
      When the undertakers of fisheries, after such liberal bounties have been
      bestowed upon them, continue to sell their commodity at the same, or even
      at a higher price than they were accustomed to do before, it might be
      expected that their profits should be very great; and it is not improbable
      that those of some individuals may have been so. In general, however, I
      have every reason to believe they have been quite otherwise. The usual
      effect of such bounties is, to encourage rash undertakers to adventure in
      a business which they do not understand; and what they lose by their own
      negligence and ignorance, more than compensates all that they can gain by
      the utmost liberality of government. In 1750, by the same act which first
      gave the bounty of 30s. the ton for the encouragement of the white herring
      fishery (the 23d Geo. II. chap. 24), a joint stock company was erected,
      with a capital of £500,000, to which the subscribers (over and above all
      other encouragements, the tonnage bounty just now mentioned, the
      exportation bounty of 2s:8d. the barrel, the delivery of both British and
      foreign salt duty free) were, during the space of fourteen years, for
      every hundred pounds which they subscribed and paid into the stock of the
      society, entitled to three pounds a-year, to be paid by the
      receiver-general of the customs in equal half-yearly payments. Besides
      this great company, the residence of whose governor and directors was to
      be in London, it was declared lawful to erect different fishing chambers
      in all the different out-ports of the kingdom, provided a sum not less
      than £10,000 was subscribed into the capital of each, to be managed at its
      own risk, and for its own profit and loss. The same annuity, and the same
      encouragements of all kinds, were given to the trade of those inferior
      chambers as to that of the great company. The subscription of the great
      company was soon filled up, and several different fishing chambers were
      erected in the different out-ports of the kingdom. In spite of all these
      encouragements, almost all those different companies, both great and
      small, lost either the whole or the greater part of their capitals; scarce
      a vestige now remains of any of them, and the white-herring fishery is now
      entirely, or almost entirely, carried on by private adventurers.
    
      If any particular manufacture was necessary, indeed, for the defence of
      the society, it might not always be prudent to depend upon our neighbours
      for the supply; and if such manufacture could not otherwise be supported
      at home, it might not be unreasonable that all the other branches of
      industry should be taxed in order to support it. The bounties upon the
      exportation of British made sail-cloth, and British made gunpowder, may,
      perhaps, both be vindicated upon this principle.
    
      But though it can very seldom be reasonable to tax the industry of the
      great body of the people, in order to support that of some particular
      class of manufacturers; yet, in the wantonness of great prosperity, when
      the public enjoys a greater revenue than it knows well what to do with, to
      give such bounties to favourite manufactures, may, perhaps, be as natural
      as to incur any other idle expense. In public, as well as in private
      expenses, great wealth, may, perhaps, frequently be admitted as an apology
      for great folly. But there must surely be something more than ordinary
      absurdity in continuing such profusion in times of general difficulty and
      distress.
    
      What is called a bounty, is sometimes no more than a drawback, and,
      consequently, is not liable to the same objections as what is properly a
      bounty. The bounty, for example, upon refined sugar exported, may be
      considered as a drawback of the duties upon the brown and Muscovado
      sugars, from which it is made; the bounty upon wrought silk exported, a
      drawback of the duties upon raw and thrown silk imported; the bounty upon
      gunpowder exported, a drawback of the duties upon brimstone and saltpetre
      imported. In the language of the customs, those allowances only are called
      drawbacks which are given upon goods exported in the same form in which
      they are imported. When that form has been so altered by manufacture of
      any kind as to come under a new denomination, they are called bounties.
    
      Premiums given by the public to artists and manufacturers, who excel in
      their particular occupations, are not liable to the same objections as
      bounties. By encouraging extraordinary dexterity and ingenuity, they serve
      to keep up the emulation of the workmen actually employed in those
      respective occupations, and are not considerable enough to turn towards
      any one of them a greater share of the capital of the country than what
      would go to it of its own accord. Their tendency is not to overturn the
      natural balance of employments, but to render the work which is done in
      each as perfect and complete as possible. The expense of premiums,
      besides, is very trifling, that of bounties very great. The bounty upon
      corn alone has sometimes cost the public, in one year, more than £300,000.
    
      Bounties are sometimes called premiums, as drawbacks are sometimes called
      bounties. But we must, in all cases, attend to the nature of the thing,
      without paying any regard to the word.
    
      Digression concerning the Corn Trade and Corn Laws.
    
      I cannot conclude this chapter concerning bounties, without observing,
      that the praises which have been bestowed upon the law which establishes
      the bounty upon the exportation of corn, and upon that system of
      regulations which is connected with it, are altogether unmerited. A
      particular examination of the nature of the corn trade, and of the
      principal British laws which relate to it, will sufficiently demonstrate
      the truth of this assertion. The great importance of this subject must
      justify the length of the digression.
    
      The trade of the corn merchant is composed of four different branches,
      which, though they may sometimes be all carried on by the same person,
      are, in their own nature, four separate and distinct trades. These are,
      first, the trade of the inland dealer; secondly, that of the
      merchant-importer for home consumption; thirdly, that of the
      merchant-exporter of home produce for foreign consumption; and, fourthly,
      that of the merchant-carrier, or of the importer of corn, in order to
      export it again.
    
      I. The interest of the inland dealer, and that of the great body of the
      people, how opposite soever they may at first appear, are, even in years
      of the greatest scarcity, exactly the same. It is his interest to raise
      the price of his corn as high as the real scarcity of the season
      requires, and it can never be his interest to raise it higher. By raising
      the price, he discourages the consumption, and puts every body more or
      less, but particularly the inferior ranks of people, upon thrift and good
      management. If, by raising it too high, he discourages the consumption so
      much that the supply of the season is likely to go beyond the consumption
      of the season, and to last for some time after the next crop begins to
      come in, he runs the hazard, not only of losing a considerable part of
      his corn by natural causes, but of being obliged to sell what remains of
      it for much less than what he might have had for it several months
      before. If, by not raising the price high enough, he discourages the
      consumption so little, that the supply of the season is likely to fall
      short of the consumption of the season, he not only loses a part of the
      profit which he might otherwise have made, but he exposes the people to
      suffer before the end of the season, instead of the hardships of a
      dearth, the dreadful horrors of a famine. It is the interest of the
      people that their daily, weekly, and monthly consumption should be
      proportioned as exactly as possible to the supply of the season. The
      interest of the inland corn dealer is the same. By supplying them, as
      nearly as he can judge, in this proportion, he is likely to sell all his
      corn for the highest price, and with the greatest profit; and his
      knowledge of the state of the crop, and of his daily, weekly, and monthly
      sales, enables him to judge, with more or less accuracy, how far they
      really are supplied in this manner. Without intending the interest of the
      people, he is necessarily led, by a regard to his own interest, to treat
      them, even in years of scarcity, pretty much in the same manner as the
      prudent master of a vessel is sometimes obliged to treat his crew. When
      he foresees that provisions are likely to run short, he puts them upon
      short allowance. Though from excess of caution he should sometimes do
      this without any real necessity, yet all the inconveniencies which his
      crew can thereby suffer are inconsiderable, in comparison of the danger,
      misery, and ruin, to which they might sometimes be exposed by a less
      provident conduct. Though, from excess of avarice, in the same manner,
      the inland corn merchant should sometimes raise the price of his corn
      somewhat higher than the scarcity of the season requires, yet all the
      inconveniencies which the people can suffer from this conduct, which
      effectually secures them from a famine in the end of the season, are
      inconsiderable, in comparison of what they might have been exposed to by
      a more liberal way of dealing in the beginning of it the corn merchant
      himself is likely to suffer the most by this excess of avarice; not only
      from the indignation which it generally excites against him, but, though
      he should escape the effects of this indignation, from the quantity of
      corn which it necessarily leaves upon his hands in the end of the season,
      and which, if the next season happens to prove favourable, he must always
      sell for a much lower price than he might otherwise have had.
    
      Were it possible, indeed, for one great company of merchants to possess
      themselves of the whole crop of an extensive country, it might perhaps be
      their interest to deal with it, as the Dutch are said to do with the
      spiceries of the Moluccas, to destroy or throw away a considerable part of
      it, in order to keep up the price of the rest. But it is scarce possible,
      even by the violence of law, to establish such an extensive monopoly with
      regard to corn; and wherever the law leaves the trade free, it is of all
      commodities the least liable to be engrossed or monopolised by the force
      a few large capitals, which buy up the greater part of it. Not only its
      value far exceeds what the capitals of a few private men are capable of
      purchasing; but, supposing they were capable of purchasing it, the manner
      in which it is produced renders this purchase altogether impracticable.
      As, in every civilized country, it is the commodity of which the annual
      consumption is the greatest; so a greater quantity of industry is annually
      employed in producing corn than in producing any other commodity. When it
      first comes from the ground, too, it is necessarily divided among a
      greater number of owners than any other commodity; and these owners can
      never be collected into one place, like a number of independent
      manufacturers, but are necessarily scattered through all the different
      corners of the country. These first owners either immediately supply the
      consumers in their own neighbourhood, or they supply other inland dealers,
      who supply those consumers. The inland dealers in corn, therefore,
      including both the farmer and the baker, are necessarily more numerous
      than the dealers in any other commodity; and their dispersed situation
      renders it altogether impossible for them to enter into any general
      combination. If, in a year of scarcity, therefore, any of them should find
      that he had a good deal more corn upon hand than, at the current price, he
      could hope to dispose of before the end of the season, he would never
      think of keeping up this price to his own loss, and to the sole benefit of
      his rivals and competitors, but would immediately lower it, in order to
      get rid of his corn before the new crop began to come in. The same
      motives, the same interests, which would thus regulate the conduct of any
      one dealer, would regulate that of every other, and oblige them all in
      general to sell their corn at the price which, according to the best of
      their judgment, was most suitable to the scarcity or plenty of the season.
    
      Whoever examines, with attention, the history of the dearths and famines
      which have afflicted any part of Europe during either the course of the
      present or that of the two preceding centuries, of several of which we
      have pretty exact accounts, will find, I believe, that a dearth never has
      arisen from any combination among the inland dealers in corn, nor from any
      other cause but a real scarcity, occasioned sometimes, perhaps, and in
      some particular places, by the waste of war, but in by far the greatest
      number of cases by the fault of the seasons; and that a famine has never
      arisen from any other cause but the violence of government attempting, by
      improper means, to remedy the inconveniencies of a dearth.
    
      In an extensive corn country, between all the different parts of which
      there is a free commerce and communication, the scarcity occasioned by the
      most unfavourable seasons can never be so great as to produce a famine;
      and the scantiest crop, if managed with frugality and economy, will
      maintain, through the year, the same number of people that are commonly
      fed in a more affluent manner by one of moderate plenty. The seasons most
      unfavourable to the crop are those of excessive drought or excessive rain.
      But as corn grows equally upon high and low lands, upon grounds that are
      disposed to be too wet, and upon those that are disposed to be too dry,
      either the drought or the rain, which is hurtful to one part of the
      country, is favourable to another; and though, both in the wet and in the
      dry season, the crop is a good deal less than in one more properly
      tempered; yet, in both, what is lost in one part of the country is in some
      measure compensated by what is gained in the other. In rice countries,
      where the crop not only requires a very moist soil, but where, in a
      certain period of its growing, it must be laid under water, the effects of
      a drought are much more dismal. Even in such countries, however, the
      drought is, perhaps, scarce ever so universal as necessarily to occasion a
      famine, if the government would allow a free trade. The drought in Bengal,
      a few years ago, might probably have occasioned a very great dearth. Some
      improper regulations, some injudicious restraints, imposed by the servants
      of the East India Company upon the rice trade, contributed, perhaps, to
      turn that dearth into a famine.
    
      When the government, in order to remedy the inconveniencies of a dearth,
      orders all the dealers to sell their corn at what it supposes a reasonable
      price, it either hinders them from bringing it to market, which may
      sometimes produce a famine even in the beginning of the season; or, if
      they bring it thither, it enables the people, and thereby encourages them
      to consume it so fast as must necessarily produce a famine before the end
      of the season. The unlimited, unrestrained freedom of the corn trade, as
      it is the only effectual preventive of the miseries of a famine, so it is
      the best palliative of the inconveniencies of a dearth; for the
      inconveniencies of a real scarcity cannot be remedied; they can only be
      palliated. No trade deserves more the full protection of the law, and no
      trade requires it so much; because no trade is so much exposed to popular
      odium.
    
      In years of scarcity, the inferior ranks of people impute their distress
      to the avarice of the corn merchant, who becomes the object of their
      hatred and indignation. Instead of making profit upon such occasions,
      therefore, he is often in danger of being utterly ruined, and of having
      his magazines plundered and destroyed by their violence. It is in years of
      scarcity, however, when prices are high, that the corn merchant expects to
      make his principal profit. He is generally in contract with some farmers
      to furnish him, for a certain number of years, with a certain quantity of
      corn, at a certain price. This contract price is settled according to what
      is supposed to be the moderate and reasonable, that is, the ordinary or
      average price, which, before the late years of scarcity, was commonly
      about 28s. for the quarter of wheat, and for that of other grain in
      proportion. In years of scarcity, therefore, the corn merchant buys a
      great part of his corn for the ordinary price, and sells it for a much
      higher. That this extraordinary profit, however, is no more than
      sufficient to put his trade upon a fair level with other trades, and to
      compensate the many losses which he sustains upon other occasions, both
      from the perishable nature of the commodity itself, and from the frequent
      and unforeseen fluctuations of its price, seems evident enough, from this
      single circumstance, that great fortunes are as seldom made in this as in
      any other trade. The popular odium, however, which attends it in years of
      scarcity, the only years in which it can be very profitable, renders
      people of character and fortune averse to enter into it. It is abandoned
      to an inferior set of dealers; and millers, bakers, meal-men, and
      meal-factors, together with a number of wretched hucksters, are almost the
      only middle people that, in the home market, come between the grower and
      the consumer.
    
      The ancient policy of Europe, instead of discountenancing this popular
      odium against a trade so beneficial to the public, seems, on the contrary,
      to have authorised and encouraged it.
    
      By the 5th and 6th of Edward VI cap. 14, it was enacted, that whoever
      should buy any corn or grain, with intent to sell it again, should be
      reputed an unlawful engrosser, and should, for the first fault, suffer two
      months imprisonment, and forfeit the value of the corn; for the second,
      suffer six months imprisonment, and forfeit double the value; and, for the
      third, be set in the pillory, suffer imprisonment during the king’s
      pleasure, and forfeit all his goods and chattels. The ancient policy of
      most other parts of Europe was no better than that of England.
    
      Our ancestors seem to have imagined, that the people would buy their corn
      cheaper of the farmer than of the corn merchant, who, they were afraid,
      would require, over and above the price which he paid to the farmer, an
      exorbitant profit to himself. They endeavoured, therefore, to annihilate
      his trade altogether. They even endeavoured to hinder, as much as
      possible, any middle man of any kind from coming in between the grower and
      the consumer; and this was the meaning of the many restraints which they
      imposed upon the trade of those whom they called kidders, or carriers of
      corn; a trade which nobody was allowed to exercise without a licence,
      ascertaining his qualifications as a man of probity and fair dealing. The
      authority of three justices of the peace was, by the statute of Edward VI.
      necessary in order to grant this licence. But even this restraint was
      afterwards thought insufficient, and, by a statute of Elizabeth, the
      privilege of granting it was confined to the quarter-sessions.
    
      The ancient policy of Europe endeavoured, in this manner, to regulate
      agriculture, the great trade of the country, by maxims quite different
      from those which it established with regard to manufactures, the great
      trade of the towns. By leaving a farmer no other customers but either the
      consumers or their immediate factors, the kidders and carriers of corn, it
      endeavoured to force him to exercise the trade, not only of a farmer, but
      of a corn merchant, or corn retailer. On the contrary, it, in many cases,
      prohibited the manufacturer from exercising the trade of a shopkeeper, or
      from selling his own goods by retail. It meant, by the one law, to promote
      the general interest of the country, or to render corn cheap, without,
      perhaps, its being well understood how this was to be done. By the other,
      it meant to promote that of a particular order of men, the shopkeepers,
      who would be so much undersold by the manufacturer, it was supposed, that
      their trade would be ruined, if he was allowed to retail at all.
    
      The manufacturer, however, though he had been allowed to keep a shop, and
      to sell his own goods by retail, could not have undersold the common
      shopkeeper. Whatever part of his capital he might have placed in his shop,
      he must have withdrawn it from his manufacture. In order to carry on his
      business on a level with that of other people, as he must have had the
      profit of a manufacturer on the one part, so he must have had that of a
      shopkeeper upon the other. Let us suppose, for example, that in the
      particular town where he lived, ten per cent. was the ordinary profit both
      of manufacturing and shopkeeping stock; he must in this case have charged
      upon every piece of his own goods, which he sold in his shop, a profit of
      twenty per cent. When he carried them from his workhouse to his shop, he
      must have valued them at the price for which he could have sold them to a
      dealer or shopkeeper, who would have bought them by wholesale. If he
      valued them lower, he lost a part of the profit of his manufacturing
      capital. When, again, he sold them from his shop, unless he got the same
      price at which a shopkeeper would have sold them, he lost a part of the
      profit of his shop-keeping capital. Though he might appear, therefore, to
      make a double profit upon the same piece of goods, yet, as these goods
      made successively a part of two distinct capitals, he made but a single
      profit upon the whole capital employed about them; and if he made less
      than his profit, he was a loser, and did not employ his whole capital with
      the same advantage as the greater part of his neighbours.
    
      What the manufacturer was prohibited to do, the farmer was in some measure
      enjoined to do; to divide his capital between two different employments;
      to keep one part of it in his granaries and stack-yard, for supplying the
      occasional demands of the market, and to employ the other in the
      cultivation of his land. But as he could not afford to employ the latter
      for less than the ordinary profits of farming stock, so he could as little
      afford to employ the former for less than the ordinary profits of
      mercantile stock. Whether the stock which really carried on the business
      of a corn merchant belonged to the person who was called a farmer, or to
      the person who was called a corn merchant, an equal profit was in both
      cases requisite, in order to indemnify its owner for employing it in this
      manner, in order to put his business on a level with other trades, and in
      order to hinder him from having an interest to change it as soon as
      possible for some other. The farmer, therefore, who was thus forced to
      exercise the trade of a corn merchant, could not afford to sell his corn
      cheaper than any other corn merchant would have been obliged to do in the
      case of a free competition.
    
      The dealer who can employ his whole stock in one single branch of
      business, has an advantage of the same kind with the workman who can
      employ his whole labour in one single operation. As the latter acquires a
      dexterity which enables him, with the same two hands, to perform a much
      greater quantity of work, so the former acquires so easy and ready a
      method of transacting his business, of buying and disposing of his goods,
      that with the same capital he can transact a much greater quantity of
      business. As the one can commonly afford his work a good deal cheaper, so
      the other can commonly afford his goods somewhat cheaper, than if his
      stock and attention were both employed about a greater variety of objects.
      The greater part of manufacturers could not afford to retail their own
      goods so cheap as a vigilant and active shopkeeper, whose sole business it
      was to buy them by wholesale and to retail them again. The greater part of
      farmers could still less afford to retail their own corn, to supply the
      inhabitants of a town, at perhaps four or five miles distance from the
      greater part of them, so cheap as a vigilant and active corn merchant,
      whose sole business it was to purchase corn by wholesale, to collect it
      into a great magazine, and to retail it again.
    
      The law which prohibited the manufacturer from exercising the trade of a
      shopkeeper, endeavoured to force this division in the employment of stock
      to go on faster than it might otherwise have done. The law which obliged
      the farmer to exercise the trade of a corn merchant, endeavoured to hinder
      it from going on so fast. Both laws were evident violations of natural
      liberty, and therefore unjust; and they were both, too, as impolitic as
      they were unjust. It is the interest of every society, that things of this
      kind should never either he forced or obstructed. The man who employs
      either his labour or his stock in a greater variety of ways than his
      situation renders necessary, can never hurt his neighbour by underselling
      him. He may hurt himself, and he generally does so. Jack-of-all-trades
      will never be rich, says the proverb. But the law ought always to trust
      people with the care of their own interest, as in their local situations
      they must generally be able to judge better of it than the legislature can
      do. The law, however, which obliged the farmer to exercise the trade of a
      corn merchant was by far the most pernicious of the two.
    
      It obstructed not only that division in the employment of stock which is
      so advantageous to every society, but it obstructed likewise the
      improvement and cultivation of the land. By obliging the farmer to carry
      on two trades instead of one, it forced him to divide his capital into two
      parts, of which one only could be employed in cultivation. But if he had
      been at liberty to sell his whole crop to a corn merchant as fast as he
      could thresh it out, his whole capital might have returned immediately to
      the land, and have been employed in buying more cattle, and hiring more
      servants, in order to improve and cultivate it better. But by being
      obliged to sell his corn by retail, he was obliged to keep a great part of
      his capital in his granaries and stack-yard through the year, and could
      not therefore cultivate so well as with the same capital he might
      otherwise have done. This law, therefore, necessarily obstructed the
      improvement of the land, and, instead of tending to render corn cheaper,
      must have tended to render it scarcer, and therefore dearer, than it would
      otherwise have been.
    
      After the business of the farmer, that of the corn merchant is in reality
      the trade which, if properly protected and encouraged, would contribute
      the most to the raising of corn. It would support the trade of the farmer,
      in the same manner as the trade of the wholesale dealer supports that of
      the manufacturer.
    
      The wholesale dealer, by affording a ready market to the manufacturer, by
      taking his goods off his hand as fast as he can make them, and by
      sometimes even advancing their price to him before he has made them,
      enables him to keep his whole capital, and sometimes even more than his
      whole capital, constantly employed in manufacturing, and consequently to
      manufacture a much greater quantity of goods than if he was obliged to
      dispose of them himself to the immediate consumers, or even to the
      retailers. As the capital of the wholesale merchant, too, is generally
      sufficient to replace that of many manufacturers, this intercourse between
      him and them interests the owner of a large capital to support the owners
      of a great number of small ones, and to assist them in those losses and
      misfortunes which might otherwise prove ruinous to them.
    
      An intercourse of the same kind universally established between the
      farmers and the corn merchants, would be attended with effects equally
      beneficial to the farmers. They would be enabled to keep their whole
      capitals, and even more than their whole capitals constantly employed in
      cultivation. In case of any of those accidents to which no trade is more
      liable than theirs, they would find in their ordinary customer, the
      wealthy corn merchant, a person who had both an interest to support them,
      and the ability to do it; and they would not, as at present, be entirely
      dependent upon the forbearance of their landlord, or the mercy of his
      steward. Were it possible, as perhaps it is not, to establish this
      intercourse universally, and all at once; were it possible to turn all at
      once the whole farming stock of the kingdom to its proper business, the
      cultivation of land, withdrawing it from every other employment into which
      any part of it may be at present diverted; and were it possible, in order
      to support and assist, upon occasion, the operations of this great stock,
      to provide all at once another stock almost equally great; it is not,
      perhaps, very easy to imagine how great, how extensive, and how sudden,
      would be the improvement which this change of circumstances would alone
      produce upon the whole face of the country.
    
      The statute of Edward VI. therefore, by prohibiting as much as possible
      any middle man from coming in between the grower and the consumer,
      endeavoured to annihilate a trade, of which the free exercise is not only
      the best palliative of the inconveniencies of a dearth, but the best
      preventive of that calamity; after the trade of the farmer, no trade
      contributing so much to the growing of corn as that of the corn merchant.
    
      The rigour of this law was afterwards softened by several subsequent
      statutes, which successively permitted the engrossing of corn when the
      price of wheat should not exceed 20s. and 24s. 32s. and 40s. the quarter.
      At last, by the 15th of Charles II. c.7, the engrossing or buying of corn,
      in order to sell it again, as long as the price of wheat did not exceed
      48s. the quarter, and that of other grain in proportion, was declared
      lawful to all persons not being forestallers, that is, not selling again
      in the same market within three months. All the freedom which the trade of
      the inland corn dealer has ever yet enjoyed was bestowed upon it by this
      statute. The statute of the twelfth of the present king, which repeals
      almost all the other ancient laws against engrossers and forestallers,
      does not repeal the restrictions of this particular statute, which
      therefore still continue in force.
    
      This statute, however, authorises in some measure two very absurd popular
      prejudices.
    
      First, It supposes, that when the price of wheat has risen so high as 48s.
      the quarter, and that of other grain in proportion, corn is likely to be
      so engrossed as to hurt the people. But, from what has been already said,
      it seems evident enough, that corn can at no price be so engrossed by the
      inland dealers as to hurt the people; and 48s. the quarter, besides,
      though it may be considered as a very high price, yet, in years of
      scarcity, it is a price which frequently takes place immediately after
      harvest, when scarce any part of the new crop can be sold off, and when it
      is impossible even for ignorance to suppose that any part of it can be so
      engrossed as to hurt the people.
    
      Secondly, It supposes that there is a certain price at which corn is
      likely to be forestalled, that is, bought up in order to be sold again
      soon after in the same market, so as to hurt the people. But if a merchant
      ever buys up corn, either going to a particular market, or in a particular
      market, in order to sell it again soon after in the same market, it must
      be because he judges that the market cannot be so liberally supplied
      through the whole season as upon that particular occasion, and that the
      price, therefore, must soon rise. If he judges wrong in this, and if the
      price does not rise, he not only loses the whole profit of the stock which
      he employs in this manner, but a part of the stock itself, by the expense
      and loss which necessarily attend the storing and keeping of corn. He
      hurts himself, therefore, much more essentially than he can hurt even the
      particular people whom he may hinder from supplying themselves upon that
      particular market day, because they may afterwards supply themselves just
      as cheap upon any other market day. If he judges right, instead of hurting
      the great body of the people, he renders them a most important service. By
      making them feel the inconveniencies of a dearth somewhat earlier than
      they otherwise might do, he prevents their feeling them afterwards so
      severely as they certainly would do, if the cheapness of price encouraged
      them to consume faster than suited the real scarcity of the season. When
      the scarcity is real, the best thing that can be done for the people is,
      to divide the inconvenience of it as equally as possible, through all the
      different months and weeks and days of the year. The interest of the corn
      merchant makes him study to do this as exactly as he can; and as no other
      person can have either the same interest, or the same knowledge, or the
      same abilities, to do it so exactly as he, this most important operation
      of commerce ought to be trusted entirely to him; or, in other words, the
      corn trade, so far at least as concerns the supply of the home market,
      ought to be left perfectly free.
    
      The popular fear of engrossing and forestalling may be compared to the
      popular terrors and suspicions of witchcraft. The unfortunate wretches
      accused of this latter crime were not more innocent of the misfortunes
      imputed to them, than those who have been accused of the former. The law
      which put an end to all prosecutions against witchcraft, which put it out
      of any man’s power to gratify his own malice by accusing his neighbour of
      that imaginary crime, seems effectually to have put an end to those fears
      and suspicions, by taking away the great cause which encouraged and
      supported them. The law which would restore entire freedom to the inland
      trade of corn, would probably prove as effectual to put an end to the
      popular fears of engrossing and forestalling.
    
      The 15th of Charles II. c. 7, however, with all its imperfections, has,
      perhaps, contributed more, both to the plentiful supply of the home
      market, and to the increase of tillage, than any other law in the statute
      book. It is from this law that the inland corn trade has derived all the
      liberty and protection which it has ever yet enjoyed; and both the supply
      of the home market and the interest of tillage are much more effectually
      promoted by the inland, than either by the importation or exportation
      trade.
    
      The proportion of the average quantity of all sorts of grain imported into
      Great Britain to that of all sorts of grain consumed, it has been computed
      by the author of the Tracts upon the Corn Trade, does not exceed that of
      one to five hundred and seventy. For supplying the home market, therefore,
      the importance of the inland trade must be to that of the importation
      trade as five hundred and seventy to one.
    
      The average quantity of all sorts of grain exported from Great Britain
      does not, according to the same author, exceed the one-and-thirtieth part
      of the annual produce. For the encouragement of tillage, therefore, by
      providing a market for the home produce, the importance of the inland
      trade must be to that of the exportation trade as thirty to one.
    
      I have no great faith in political arithmetic, and I mean not to warrant
      the exactness of either of these computations. I mention them only in
      order to show of how much less consequence, in the opinion of the most
      judicious and experienced persons, the foreign trade of corn is than the
      home trade. The great cheapness of corn in the years immediately preceding
      the establishment of the bounty may, perhaps with reason, he ascribed in
      some measure to the operation of this statute of Charles II. which had
      been enacted about five-and-twenty years before, and which had, therefore,
      full time to produce its effect.
    
      A very few words will sufficiently explain all that I have to say
      concerning the other three branches of the corn trade.
    
      II. The trade of the merchant-importer of foreign corn for home
      consumption, evidently contributes to the immediate supply of the home
      market, and must so far be immediately beneficial to the great body of the
      people. It tends, indeed, to lower somewhat the average money price of
      corn, but not to diminish its real value, or the quantity of labour which
      it is capable of maintaining. If importation was at all times free, our
      farmers and country gentlemen would probably, one year with another, get
      less money for their corn than they do at present, when importation is at
      most times in effect prohibited; but the money which they got would be of
      more value, would buy more goods of all other kinds, and would employ more
      labour. Their real wealth, their real revenue, therefore, would be the
      same as at present, though it might be expressed by a smaller quantity of
      silver, and they would neither be disabled nor discouraged from
      cultivating corn as much as they do at present. On the contrary, as the
      rise in the real value of silver, in consequence of lowering the money
      price of corn, lowers somewhat the money price of all other commodities,
      it gives the industry of the country where it takes place some advantage
      in all foreign markets and thereby tends to encourage and increase that
      industry. But the extent of the home market for corn must be in proportion
      to the general industry of the country where it grows, or to the number of
      those who produce something else, and therefore, have something else, or,
      what comes to the same thing, the price of something else, to give in
      exchange for corn. But in every country, the home market, as it is the
      nearest and most convenient, so is it likewise the greatest and most
      important market for corn. That rise in the real value of silver,
      therefore, which is the effect of lowering the average money price of
      corn, tends to enlarge the greatest and most important market for corn,
      and thereby to encourage, instead of discouraging its growth.
    
      By the 22d of Charles II. c. 13, the importation of wheat, whenever the
      price in the home market did not exceed 53s:4d. the quarter, was subjected
      to a duty of 16s. the quarter; and to a duty of 8s. whenever the price did
      not exceed £4. The former of these two prices has, for more than a century
      past, taken place only in times of very great scarcity; and the latter
      has, so far as I know, not taken place at all. Yet, till wheat has risen
      above this latter price, it was, by this statute, subjected to a very high
      duty; and, till it had risen above the former, to a duty which amounted to
      a prohibition. The importation of other sorts of grain was restrained at
      rates and by duties, in proportion to the value of the grain, almost
      equally high. Before the 13th of the present king, the following were the
      duties payable upon the importation of the different sorts of grain:
    

     Grain.                     Duties.          Duties       Duties.
 Beans to 28s. per qr.  19s:10d. after till 40s. 16s:8d. then 12d.
 Barley to 28s.   -     19s:10d.         -  32s. 16s.     -   12d.
 Malt is prohibited by the annual malt-tax bill.
 Oats   to 16s.   -      5s:10d. after   -                    9½d.
 Pease   to 40s.  -     16s: 0d. after   -                    9¾d.
 Rye     to 36s.  -     19s:10d. till 40s.       16s:8d   -   12d.
 Wheat to 44s.    -     21s: 9d. till 53s:4d.    17s.     -    8s.
                          till £4, and after that about       1s:4d.
 Buck-wheat to 32s. per qr.     to pay 16s.

    

      These different duties were imposed, partly by the 22d of Charles II. in
      place of the old subsidy, partly by the new subsidy, by the one-third and
      two-thirds subsidy, and by the subsidy 1747. Subsequent laws still further
      increased those duties.
    
      The distress which, in years of scarcity, the strict execution of those
      laws might have brought upon the people, would probably have been very
      great; but, upon such occasions, its execution was generally suspended by
      temporary statutes, which permitted, for a limited time, the importation
      of foreign corn. The necessity of these temporary statutes sufficiently
      demonstrates the impropriety of this general one.
    
      These restraints upon importation, though prior to the establishment of
      the bounty, were dictated by the same spirit, by the same principles,
      which afterwards enacted that regulation. How hurtful soever in
      themselves, these, or some other restraints upon importation, became
      necessary in consequence of that regulation. If, when wheat was either
      below 48s. the quarter, or not much above it, foreign corn could have been
      imported, either duty free, or upon paying only a small duty, it might
      have been exported again, with the benefit of the bounty, to the great
      loss of the public revenue, and to the entire perversion of the
      institution, of which the object was to extend the market for the home
      growth, not that for the growth of foreign countries.
    
      III. The trade of the merchant-exporter of corn for foreign consumption,
      certainly does not contribute directly to the plentiful supply of the home
      market. It does so, however, indirectly. From whatever source this supply
      maybe usually drawn, whether from home growth, or from foreign
      importation, unless more corn is either usually grown, or usually imported
      into the country, than what is usually consumed in it, the supply of the
      home market can never be very plentiful. But unless the surplus can, in
      all ordinary cases, be exported, the growers will be careful never to grow
      more, and the importers never to import more, than what the bare
      consumption of the home market requires. That market will very seldom be
      overstocked; but it will generally be understocked; the people, whose
      business it is to supply it, being generally afraid lest their goods
      should be left upon their hands. The prohibition of exportation limits the
      improvement and cultivation of the country to what the supply of its own
      inhabitants require. The freedom of exportation enables it to extend
      cultivation for the supply of foreign nations.
    
      By the 12th of Charles II. c.4, the exportation of corn was permitted
      whenever the price of wheat did not exceed 40s. the quarter, and that of
      other grain in proportion. By the 15th of the same prince, this liberty
      was extended till the price of wheat exceeded 48s. the quarter; and by the
      22d, to all higher prices. A poundage, indeed, was to be paid to the king
      upon such exportation; but all grain was rated so low in the book of
      rates, that this poundage amounted only, upon wheat to 1s., upon oats to
      4d., and upon all other grain to 6d. the quarter. By the 1st of William
      and Mary, the act which established this bounty, this small duty was
      virtually taken off whenever the price of wheat did not exceed 48s. the
      quarter; and by the 11th and 12th of William III. c. 20, it was expressly
      taken off at all higher prices.
    
      The trade of the merchant-exporter was, in this manner, not only
      encouraged by a bounty, but rendered much more free than that of the
      inland dealer. By the last of these statutes, corn could be engrossed at
      any price for exportation; but it could not be engrossed for inland sale,
      except when the price did not exceed 48s. the quarter. The interest of the
      inland dealer, however, it has already been shown, can never be opposite
      to that of the great body of the people. That of the merchant-exporter
      may, and in fact sometimes is. If, while his own country labours under a
      dearth, a neighbouring country should be afflicted with a famine, it might
      be his interest to carry corn to the latter country, in such quantities as
      might very much aggravate the calamities of the dearth. The plentiful
      supply of the home market was not the direct object of those statutes;
      but, under the pretence of encouraging agriculture, to raise the money
      price of corn as high as possible, and thereby to occasion, as much as
      possible, a constant dearth in the home market. By the discouragement of
      importation, the supply of that market; even in times of great scarcity,
      was confined to the home growth; and by the encouragement of exportation,
      when the price was so high as 48s. the quarter, that market was not, even
      in times of considerable scarcity, allowed to enjoy the whole of that
      growth. The temporary laws, prohibiting, for a limited time, the
      exportation of corn, and taking off, for a limited time, the duties upon
      its importation, expedients to which Great Britain has been obliged so
      frequently to have recourse, sufficiently demonstrate the impropriety of
      her general system. Had that system been good, she would not so frequently
      have been reduced to the necessity of departing from it.
    
      Were all nations to follow the liberal system of free exportation and free
      importation, the different states into which a great continent was
      divided, would so far resemble the different provinces of a great empire.
      As among the different provinces of a great empire, the freedom of the
      inland trade appears, both from reason and experience, not only the best
      palliative of a dearth, but the most effectual preventive of a famine; so
      would the freedom of the exportation and importation trade be among the
      different states into which a great continent was divided. The larger the
      continent, the easier the communication through all the different parts of
      it, both by land and by water, the less would any one particular part of
      it ever be exposed to either of these calamities, the scarcity of any one
      country being more likely to be relieved by the plenty of some other. But
      very few countries have entirely adopted this liberal system. The freedom
      of the corn trade is almost everywhere more or less restrained, and in
      many countries is confined by such absurd regulations, as frequently
      aggravate the unavoidable misfortune of a dearth into the dreadful
      calamity of a famine. The demand of such countries for corn may frequently
      become so great and so urgent, that a small state in their neighbourhood,
      which happened at the same time to be labouring under some degree of
      dearth, could not venture to supply them without exposing itself to the
      like dreadful calamity. The very bad policy of one country may thus render
      it, in some measure, dangerous and imprudent to establish what would
      otherwise be the best policy in another. The unlimited freedom of
      exportation, however, would be much less dangerous in great states, in
      which the growth being much greater, the supply could seldom be much
      affected by any quantity or corn that was likely to be exported. In a
      Swiss canton, or in some of the little states in Italy, it may, perhaps,
      sometimes be necessary to restrain the exportation of corn. In such great
      countries as France or England, it scarce ever can. To hinder, besides,
      the farmer from sending his goods at all times to the best market, is
      evidently to sacrifice the ordinary laws of justice to an idea of public
      utility, to a sort of reasons of state; an act or legislative authority
      which ought to be exercised only, which can be pardoned only, in cases of
      the most urgent necessity. The price at which exportation of corn is
      prohibited, if it is ever to be prohibited, ought always to be a very high
      price.
    
      The laws concerning corn may everywhere be compared to the laws concerning
      religion. The people feel themselves so much interested in what relates
      either to their subsistence in this life, or to their happiness in a life
      to come, that government must yield to their prejudices, and, in order to
      preserve the public tranquillity, establish that system which they approve
      of. It is upon this account, perhaps, that we so seldom find a reasonable
      system established with regard to either of those two capital objects.
    
      IV. The trade of the merchant-carrier, or of the importer of foreign corn,
      in order to export it again, contributes to the plentiful supply of the
      home market. It is not, indeed, the direct purpose of his trade to sell
      his corn there; but he will generally be willing to do so, and even for a
      good deal less money than he might expect in a foreign market; because he
      saves in this manner the expense of loading and unloading, of freight and
      insurance. The inhabitants of the country which, by means of the carrying
      trade, becomes the magazine and storehouse for the supply of other
      countries, can very seldom be in want themselves. Though the carrying
      trade must thus contribute to reduce the average money price of corn in
      the home market, it would not thereby lower its real value; it would only
      raise somewhat the real value of silver.
    
      The carrying trade was in effect prohibited in Great Britain, upon all
      ordinary occasions, by the high duties upon the importation of foreign
      corn, of the greater part of which there was no drawback; and upon
      extraordinary occasions, when a scarcity made it necessary to suspend
      those duties by temporary statutes, exportation was always prohibited. By
      this system of laws, therefore, the carrying trade was in effect
      prohibited.
    
      That system of laws, therefore, which is connected with the establishment
      of the bounty, seems to deserve no part of the praise which has been
      bestowed upon it. The improvement and prosperity of Great Britain, which
      has been so often ascribed to those laws, may very easily be accounted for
      by other causes. That security which the laws in Great Britain give to
      every man, that he shall enjoy the fruits of his own labour, is alone
      sufficient to make any country flourish, notwithstanding these and twenty
      other absurd regulations of commerce; and this security was perfected by
      the Revolution, much about the same time that the bounty was established.
      The natural effort of every individual to better his own condition, when
      suffered to exert itself with freedom and security, is so powerful a
      principle, that it is alone, and without any assistance, not only capable
      of carrying on the society to wealth and prosperity, but of surmounting a
      hundred impertinent obstructions, with which the folly of human laws too
      often encumbers its operations: though the effect of those obstructions is
      always, more or less, either to encroach upon its freedom, or to diminish
      its security. In Great Britain industry is perfectly secure; and though it
      is far from being perfectly free, it is as free or freer than in any other
      part of Europe.
    
      Though the period of the greatest prosperity and improvement of Great
      Britain has been posterior to that system of laws which is connected with
      the bounty, we must not upon that account, impute it to those laws. It has
      been posterior likewise to the national debt; but the national debt has
      most assuredly not been the cause of it.
    
      Though the system of laws which is connected with the bounty, has exactly
      the same tendency with the practice of Spain and Portugal, to lower
      somewhat the value of the precious metals in the country where it takes
      place; yet Great Britain is certainly one of the richest countries in
      Europe, while Spain and Portugal are perhaps amongst the most beggarly.
      This difference of situation, however, may easily be accounted for from
      two different causes. First, the tax in Spain, the prohibition in Portugal
      of exporting gold and silver, and the vigilant police which watches over
      the execution of those laws, must, in two very poor countries, which
      between them import annually upwards of six millions sterling, operate not
      only more directly, but much more forcibly, in reducing the value of those
      metals there, than the corn laws can do in Great Britain. And, secondly,
      this bad policy is not in those countries counterbalanced by the general
      liberty and security of the people. Industry is there neither free nor
      secure; and the civil and ecclesiastical governments of both Spain and
      Portugal are such as would alone be sufficient to perpetuate their present
      state of poverty, even though their regulations of commerce were as wise
      as the greatest part of them are absurd and foolish.
    
      The 13th of the present king, c. 43, seems to have established a new
      system with regard to the corn laws, in many respects better than the
      ancient one, but in one or two respects perhaps not quite so good.
    
      By this statute, the high duties upon importation for home consumption are
      taken off, so soon as the price of middling wheat rises to 48s. the
      quarter; that of middling rye, pease, or beans, to 32s.; that of barley to
      24s.; and that of oats to 16s.; and instead of them, a small duty is
      imposed of only 6d upon the quarter of wheat, and upon that or other grain
      in proportion. With regard to all those different sorts of grain, but
      particularly with regard to wheat, the home market is thus opened to
      foreign supplies, at prices considerably lower than before.
    
      By the same statute, the old bounty of 5s. upon the exportation of wheat,
      ceases so soon as the price rises to 44s. the quarter, instead of 48s. the
      price at which it ceased before; that of 2s:6d. upon the exportation of
      barley, ceases so soon as the price rises to 22s. instead of 24s. the
      price at which it ceased before; that of 2s:6d. upon the exportation of
      oatmeal, ceases so soon as the price rises to 14s. instead of 15s. the
      price at which it ceased before. The bounty upon rye is reduced from
      3s:6d. to 3s. and it ceases so soon as the price rises to 28s. instead of
      32s. the price at which it ceased before. If bounties are as improper as I
      have endeavoured to prove them to be, the sooner they cease, and the lower
      they are, so much the better.
    
      The same statute permits, at the lowest prices, the importation of corn in
      order to be exported again, duty free, provided it is in the mean time
      lodged in a warehouse under the joint locks of the king and the importer.
      This liberty, indeed, extends to no more than twenty-five of the different
      ports of Great Britain. They are, however, the principal ones; and there
      may not, perhaps, be warehouses proper for this purpose in the greater
      part of the others.
    
      So far this law seems evidently an improvement upon the ancient system.
    
      But by the same law, a bounty of 2s. the quarter is given for the
      exportation of oats, whenever the price does not exceed fourteen
      shillings. No bounty had ever been given before for the exportation of
      this grain, no more than for that of pease or beans.
    
      By the same law, too, the exportation of wheat is prohibited so soon as
      the price rises to forty-four shillings the quarter; that of rye so soon
      as it rises to twenty-eight shillings; that of barley so soon as it rises
      to twenty-two shillings; and that of oats so soon as they rise to fourteen
      shillings. Those several prices seem all of them a good deal too low; and
      there seems to be an impropriety, besides, in prohibiting exportation
      altogether at those precise prices at which that bounty, which was given
      in order to force it, is withdrawn. The bounty ought certainly either to
      have been withdrawn at a much lower price, or exportation ought to have
      been allowed at a much higher.
    
      So far, therefore, this law seems to be inferior to the ancient system.
      With all its imperfections, however, we may perhaps say of it what was
      said of the laws of Solon, that though not the best in itself, it is the
      best which the interest, prejudices, and temper of the times, would admit
      of. It may perhaps in due time prepare the way for a better.
    


CHAPTER VI.
OF TREATIES OF COMMERCE.


    
      When a nation binds itself by treaty, either to permit the entry of
      certain goods from one foreign country which it prohibits from all others,
      or to exempt the goods of one country from duties to which it subjects
      those of all others, the country, or at least the merchants and
      manufacturers of the country, whose commerce is so favoured, must
      necessarily derive great advantage from the treaty. Those merchants and
      manufacturers enjoy a sort of monopoly in the country which is so
      indulgent to them. That country becomes a market, both more extensive and
      more advantageous for their goods: more extensive, because the goods of
      other nations being either excluded or subjected to heavier duties, it
      takes off a greater quantity of theirs; more advantageous, because the
      merchants of the favoured country, enjoying a sort of monopoly there, will
      often sell their goods for a better price than if exposed to the free
      competition of all other nations.
    
      Such treaties, however, though they may be advantageous to the merchants
      and manufacturers of the favoured, are necessarily disadvantageous to
      those of the favouring country. A monopoly is thus granted against them to
      a foreign nation; and they must frequently buy the foreign goods they have
      occasion for, dearer than if the free competition of other nations was
      admitted. That part of its own produce with which such a nation purchases
      foreign goods, must consequently be sold cheaper; because, when two things
      are exchanged for one another, the cheapness of the one is a necessary
      consequence, or rather is the same thing, with the dearness of the other.
      The exchangeable value of its annual produce, therefore, is likely to be
      diminished by every such treaty. This diminution, however, can scarce
      amount to any positive loss, but only to a lessening of the gain which it
      might otherwise make. Though it sells its goods cheaper than it otherwise
      might do, it will not probably sell them for less than they cost; nor, as
      in the case of bounties, for a price which will not replace the capital
      employed in bringing them to market, together with the ordinary profits of
      stock. The trade could not go on long if it did. Even the favouring
      country, therefore, may still gain by the trade, though less than if there
      was a free competition.
    
      Some treaties of commerce, however, have been supposed advantageous, upon
      principles very different from these; and a commercial country has
      sometimes granted a monopoly of this kind, against itself, to certain
      goods of a foreign nation, because it expected, that in the whole commerce
      between them, it would annually sell more than it would buy, and that a
      balance in gold and silver would be annually returned to it. It is upon
      this principle that the treaty of commerce between England and Portugal,
      concluded in 1703 by Mr Methuen, has been so much commended. The following
      is a literal translation of that treaty, which consists of three articles
      only.
    
      ART. I. His sacred royal majesty of Portugal promises, both in his own
      name and that of his successors, to admit for ever hereafter, into
      Portugal, the woollen cloths, and the rest of the woollen manufactures of
      the British, as was accustomed, till they were prohibited by the law;
      nevertheless upon this condition:
    
      ART. II. That is to say, that her sacred royal majesty of Great Britain
      shall, in her own name, and that of her successors, be obliged, for ever
      hereafter, to admit the wines of the growth of Portugal into Britain; so
      that at no time, whether there shall be peace or war between the kingdoms
      of Britain and France, any thing more shall be demanded for these wines by
      the name of custom or duty, or by whatsoever other title, directly or
      indirectly, whether they shall be imported into Great Britain in pipes or
      hogsheads, or other casks, than what shall be demanded for the like
      quantity or measure of French wine, deducting or abating a third part of
      the custom or duty. But if, at any time, this deduction or abatement of
      customs, which is to be made as aforesaid, shall in any manner be
      attempted and prejudiced, it shall be just and lawful for his sacred royal
      majesty of Portugal, again to prohibit the woollen cloths, and the rest of
      the British woollen manufactures.
    
      ART. III. The most excellent lords the plenipotentiaries promise and take
      upon themselves, that their above named masters shall ratify this treaty;
      and within the space of two months the ratification shall be exchanged.
    
      By this treaty, the crown of Portugal becomes bound to admit the English
      woollens upon the same footing as before the prohibition; that is, not to
      raise the duties which had been paid before that time. But it does not
      become bound to admit them upon any better terms than those of any other
      nation, of France or Holland, for example. The crown of Great Britain, on
      the contrary, becomes bound to admit the wines of Portugal, upon paying
      only two-thirds of the duty which is paid for those of France, the wines
      most likely to come into competition with them. So far this treaty,
      therefore, is evidently advantageous to Portugal, and disadvantageous to
      Great Britain.
    
      It has been celebrated, however, as a masterpiece of the commercial policy
      of England. Portugal receives annually from the Brazils a greater quantity
      of gold than can be employed in its domestic commerce, whether in the
      shape of coin or of plate. The surplus is too valuable to be allowed to
      lie idle and locked up in coffers; and as it can find no advantageous
      market at home, it must, notwithstanding; any prohibition, be sent abroad,
      and exchanged for something for which there is a more advantageous market
      at home. A large share of it comes annually to England, in return either
      for English goods, or for those of other European nations that receive
      their returns through England. Mr Barretti was informed, that the weekly
      packet-boat from Lisbon brings, one week with another, more than £50,000
      in gold to England. The sum had probably been exaggerated. It would amount
      to more than £2,600,000 a year, which is more than the Brazils are
      supposed to afford.
    
      Our merchants were, some years ago, out of humour with the crown of
      Portugal. Some privileges which had been granted them, not by treaty, but
      by the free grace of that crown, at the solicitation, indeed, it is
      probable, and in return for much greater favours, defence and protection
      from the crown of Great Britain, had been either infringed or revoked. The
      people, therefore, usually most interested in celebrating the Portugal
      trade, were then rather disposed to represent it as less advantageous than
      it had commonly been imagined. The far greater part, almost the whole,
      they pretended, of this annual importation of gold, was not on account of
      Great Britain, but of other European nations; the fruits and wines of
      Portugal annually imported into Great Britain nearly compensating the
      value of the British goods sent thither.
    
      Let us suppose, however, that the whole was on account of Great Britain,
      and that it amounted to a still greater sum than Mr Barretti seems to
      imagine; this trade would not, upon that account, be more advantageous
      than any other, in which, for the same value sent out, we received an
      equal value of consumable goods in return.
    
      It is but a very small part of this importation which, it can be supposed,
      is employed as an annual addition, either to the plate or to the coin of
      the kingdom. The rest must all be sent abroad, and exchanged for
      consumable goods of some kind or other. But if those consumable goods were
      purchased directly with the produce of English industry, it would be more
      for the advantage of England, than first to purchase with that produce the
      gold of Portugal, and afterwards to purchase with that gold those
      consumable goods. A direct foreign trade of consumption is always more
      advantageous than a round-about one; and to bring the same value of
      foreign goods to the home market requires a much smaller capital in the
      one way than in the ether. If a smaller share of its industry, therefore,
      had been employed in producing goods fit for the Portugal market, and a
      greater in producing those lit for the other markets, where those
      consumable goods for which there is a demand in Great Britain are to be
      had, it would have been more for the advantage of England. To procure both
      the gold which it wants for its own use, and the consumable goods, would,
      in this way, employ a much smaller capital than at present. There would be
      a spare capital, therefore, to be employed for other purposes, in exciting
      an additional quantity of industry, and in raising a greater annual
      produce.
    
      Though Britain were entirely excluded from the Portugal trade, it could
      find very little difficulty in procuring all the annual supplies of gold
      which it wants, either for the purposes of plate, or of coin, or of
      foreign trade. Gold, like every other commodity, is always somewhere or
      another to be got for its value by those who have that value to give for
      it. The annual surplus of gold in Portugal, besides, would still be sent
      abroad, and though not carried away by Great Britain, would be carried
      away by some other nation, which would be glad to sell it again for its
      price, in the same manner as Great Britain does at present. In buying gold
      of Portugal, indeed, we buy it at the first hand; whereas, in buying it of
      any other nation, except Spain, we should buy it at the second, and might
      pay somewhat dearer. This difference, however, would surely be too
      insignificant to deserve the public attention.
    
      Almost all our gold, it is said, comes from Portugal. With other nations,
      the balance of trade is either against as, or not much in our favour. But
      we should remember, that the more gold we import from one country, the
      less we must necessarily import from all others. The effectual demand for
      gold, like that for every other commodity, is in every country limited to
      a certain quantity. If nine-tenths of this quantity are imported from one
      country, there remains a tenth only to be imported from all others. The
      more gold, besides, that is annually imported from some particular
      countries, over and above what is requisite for plate and for coin, the
      more must necessarily be exported to some others: and the more that most
      insignificant object of modern policy, the balance of trade, appears to be
      in our favour with some particular countries, the more it must necessarily
      appear to be against us with many others.
    
      It was upon this silly notion, however, that England could not subsist
      without the Portugal trade, that, towards the end of the late war, France
      and Spain, without pretending either offence or provocation, required the
      king of Portugal to exclude all British ships from his ports, and, for the
      security of this exclusion, to receive into them French or Spanish
      garrisons. Had the king of Portugal submitted to those ignominious terms
      which his brother-in-law the king of Spain proposed to him, Britain would
      have been freed from a much greater inconveniency than the loss of the
      Portugal trade, the burden of supporting a very weak ally, so unprovided
      of every thing for his own defence, that the whole power of England, had
      it been directed to that single purpose, could scarce, perhaps, have
      defended him for another campaign. The loss of the Portugal trade would,
      no doubt, have occasioned a considerable embarrassment to the merchants at
      that time engaged in it, who might not, perhaps, have found out, for a
      year or two, any other equally advantageous method of employing their
      capitals; and in this would probably have consisted all the inconveniency
      which England could have suffered from this notable piece of commercial
      policy.
    
      The great annual importation of gold and silver is neither for the purpose
      of plate nor of coin, but of foreign trade. A round-about foreign trade of
      consumption can be carried on more advantageously by means of these metals
      than of almost any other goods. As they are the universal instruments of
      commerce, they are more readily received in return for all commodities
      than any other goods; and, on account of their small bulk and great value,
      it costs less to transport them backward and forward from one place to
      another than almost any other sort of merchandize, and they lose less of
      their value by being so transported. Of all the commodities, therefore,
      which are bought in one foreign country, for no other purpose but to be
      sold or exchanged again for some other goods in another, there are none so
      convenient as gold and silver. In facilitating all the different
      round-about foreign trades of consumption which are carried on in Great
      Britain, consists the principal advantage of the Portugal trade; and
      though it is not a capital advantage, it is, no doubt, a considerable one.
    
      That any annual addition which, it can reasonably be supposed, is made
      either to the plate or to the coin of the kingdom, could require but a
      very small annual importation of gold and silver, seems evident enough;
      and though we had no direct trade with Portugal, this small quantity could
      always, somewhere or another, be very easily got.
    
      Though the goldsmiths trade be very considerable in Great Britain, the far
      greater part of the new plate which they annually sell, is made from other
      old plate melted down; so that the addition annually made to the whole
      plate of the kingdom cannot be very great, and could require but a very
      small annual importation.
    
      It is the same case with the coin. Nobody imagines, I believe, that even
      the greater part of the annual coinage, amounting, for ten years together,
      before the late reformation of the gold coin, to upwards of £800,000
      a-year in gold, was an annual addition to the money before current in the
      kingdom. In a country where the expense of the coinage is defrayed by the
      government, the value of the coin, even when it contains its full standard
      weight of gold and silver, can never be much greater than that of an equal
      quantity of those metals uncoined, because it requires only the trouble of
      going to the mint, and the delay, perhaps, of a few weeks, to procure for
      any quantity of uncoined gold and silver an equal quantity of those metals
      in coin; but in every country the greater part of the current coin is
      almost always more or less worn, or otherwise degenerated from its
      standard. In Great Britain it was, before the late reformation, a good
      deal so, the gold being more than two per cent., and the silver more than
      eight per cent. below its standard weight. But if forty-four guineas and
      a-half, containing their full standard weight, a pound weight of gold,
      could purchase very little more than a pound weight of uncoined gold;
      forty-four guineas and a-half, wanting a part of their weight, could not
      purchase a pound weight, and something was to be added, in order to make
      up the deficiency. The current price of gold bullion at market, therefore,
      instead of being the same with the mint price, or £46:14:6, was then about
      £47:14s., and sometimes about £48. When the greater part of the coin,
      however, was in this degenerate condition, forty four guineas and a-half,
      fresh from the mint, would purchase no more goods in the market than any
      other ordinary guineas; because, when they came into the coffers of the
      merchant, being confounded with other money, they could not afterwards be
      distinguished without more trouble than the difference was worth. Like
      other guineas, they were worth no more than £46:14:6. If thrown into the
      melting pot, however, they produced, without any sensible loss, a pound
      weight of standard gold, which could be sold at any time for between
      £47:14s. and £48, either in gold or silver, as fit for all the purposes of
      coin as that which had been melted down. There was an evident profit,
      therefore, in melting down new-coined money; and it was done so
      instantaneously, that no precaution of government could prevent it. The
      operations of the mint were, upon this account, somewhat like the web of
      Penelope; the work that was done in the day was undone in the night. The
      mint was employed, not so much in making daily additions to the coin, as
      in replacing the very best part of it, which was daily melted down.
    
      Were the private people who carry their gold and silver to the mint to pay
      themselves for the coinage, it would add to the value of those metals, in
      the same manner as the fashion does to that of plate. Coined gold and
      silver would be more valuable than uncoined. The seignorage, if it was not
      exorbitant, would add to the bullion the whole value of the duty; because,
      the government having everywhere the exclusive privilege of coining, no
      coin can come to market cheaper than they think proper to afford it. If
      the duty was exorbitant, indeed, that is, if it was very much above the
      real value of the labour and expense requisite for coinage, false coiners,
      both at home and abroad, might be encouraged, by the great difference
      between the value of bullion and that of coin, to pour in so great a
      quantity of counterfeit money as might reduce the value of the government
      money. In France, however, though the seignorage is eight per cent., no
      sensible inconveniency of this kind is found to arise from it. The dangers
      to which a false coiner is everywhere exposed, if he lives in the country
      of which he counterfeits the coin, and to which his agents or
      correspondents are exposed, if he lives in a foreign country, are by far
      too great to be incurred for the sake of a profit of six or seven per
      cent.
    
      The seignorage in France raises the value of the coin higher than in
      proportion to the quantity of pure gold which it contains. Thus, by the
      edict of January 1726, the mint price of fine gold of twenty-four carats
      was fixed at seven hundred and forty livres nine sous and one denier
      one-eleventh the mark of eight Paris ounces. {See Dictionnaire des
      Monnoies, tom. ii. article Seigneurage, p. 439, par 81. Abbot de
      Bazinghen, Conseiller-Commissaire en la Cour des Monnoies à Paris.} The
      gold coin of France, making an allowance for the remedy of the mint,
      contains twenty-one carats and three-fourths of fine gold, and two carats
      one-fourth of alloy. The mark of standard gold, therefore, is worth no
      more than about six hundred and seventy-one livres ten deniers. But in
      France this mark of standard gold is coined into thirty louis d’ors of
      twenty-four livres each, or into seven hundred and twenty livres. The
      coinage, therefore, increases the value of a mark of standard gold
      bullion, by the difference between six hundred and seventy-one livres ten
      deniers and seven hundred and twenty livres, or by forty-eight livres
      nineteen sous and two deniers.
    
      A seignorage will, in many cases, take away altogether, and will in all
      cases diminish, the profit of melting down the new coin. This profit
      always arises from the difference between the quantity of bullion which
      the common currency ought to contain and that which it actually does
      contain. If this difference is less than the seignorage, there will be
      loss instead of profit. If it is equal to the seignorage, there will be
      neither profit nor loss. If it is greater than the seignorage, there will,
      indeed, be some profit, but less than if there was no seignorage. If,
      before the late reformation of the gold coin, for example, there had been
      a seignorage of five per cent. upon the coinage, there would have been a
      loss of three per cent. upon the melting down of the gold coin. If the
      seignorage had been two per cent., there would have been neither profit
      nor loss. If the seignorage had been one per cent., there would have been
      a profit but of one per cent. only, instead of two per cent. Wherever
      money is received by tale, therefore, and not by weight, a seignorage is
      the most effectual preventive of the melting down of the coin, and, for
      the same reason, of its exportation. It is the best and heaviest pieces
      that are commonly either melted down or exported, because it is upon such
      that the largest profits are made.
    
      The law for the encouragement of the coinage, by rendering it duty-free,
      was first enacted during the reign of Charles II. for a limited time, and
      afterwards continued, by different prolongations, till 1769, when it was
      rendered perpetual. The bank of England, in order to replenish their
      coffers with money, are frequently obliged to carry bullion to the mint;
      and it was more for their interest, they probably imagined, that the
      coinage should be at the expense of the government than at their own. It
      was probably out of complaisance to this great company, that the
      government agreed to render this law perpetual. Should the custom of
      weighing gold, however, come to be disused, as it is very likely to be on
      account of its inconveniency; should the gold coin of England come to be
      received by tale, as it was before the late recoinage this great company
      may, perhaps, find that they have, upon this, as upon some other
      occasions, mistaken their own interest not a little.
    
      Before the late recoinage, when the gold currency of England was two per
      cent. below its standard weight, as there was no seignorage, it was two
      per cent. below the value of that quantity of standard gold bullion which
      it ought to have contained. When this great company, therefore, bought
      gold bullion in order to have it coined, they were obliged to pay for it
      two per cent. more than it was worth after the coinage. But if there had
      been a seignorage of two per cent. upon the coinage, the common gold
      currency, though two per cent. below its standard weight, would,
      notwithstanding, have been equal in value to the quantity of standard gold
      which it ought to have contained; the value of the fashion compensating in
      this case the diminution of the weight. They would, indeed, have had the
      seignorage to pay, which being two per cent., their loss upon the whole
      transaction would have been two per cent., exactly the same, but no
      greater than it actually was.
    
      If the seignorage had been five per cent. and the gold currency only two
      per cent. below its standard weight, the bank would, in this case, have
      gained three per cent. upon the price of the bullion; but as they would
      have had a seignorage of five per cent. to pay upon the coinage, their
      loss upon the whole transaction would, in the same manner, have been
      exactly two per cent.
    
      If the seignorage had been only one per cent., and the gold currency two
      per cent. below its standard weight, the bank would, in this case, have
      lost only one per cent. upon the price of the bullion; but as they would
      likewise have had a seignorage of one per cent. to pay, their loss upon
      the whole transaction would have been exactly two per cent., in the same
      manner as in all other cases.
    
      If there was a reasonable seignorage, while at the same time the coin
      contained its full standard weight, as it has done very nearly since the
      late recoinage, whatever the bank might lose by the seignorage, they would
      gain upon the price of the bullion; and whatever they might gain upon the
      price of the bullion, they would lose by the seignorage. They would
      neither lose nor gain, therefore, upon the whole transaction, and they
      would in this, as in all the foregoing cases, be exactly in the same
      situation as if there was no seignorage.
    
      When the tax upon a commodity is so moderate as not to encourage
      smuggling, the merchant who deals in it, though he advances, does not
      properly pay the tax, as he gets it back in the price of the commodity.
      The tax is finally paid by the last purchaser or consumer. But money is a
      commodity, with regard to which every man is a merchant. Nobody buys it
      but in order to sell it again; and with regard to it there is, in ordinary
      cases, no last purchaser or consumer. When the tax upon coinage,
      therefore, is so moderate as not to encourage false coining, though every
      body advances the tax, nobody finally pays it; because every body gets it
      back in the advanced value of the coin.
    
      A moderate seignorage, therefore, would not, in any case, augment the
      expense of the bank, or of any other private persons who carry their
      bullion to the mint in order to be coined; and the want of a moderate
      seignorage does not in any case diminish it. Whether there is or is not a
      seignorage, if the currency contains its full standard weight, the coinage
      costs nothing to anybody; and if it is short of that weight, the coinage
      must always cost the difference between the quantity of bullion which
      ought to be contained in it, and that which actually is contained in it.
    
      The government, therefore, when it defrays the expense of coinage, not
      only incurs some small expense, but loses some small revenue which it
      might get by a proper duty; and neither the bank, nor any other private
      persons, are in the smallest degree benefited by this useless piece of
      public generosity.
    
      The directors of the bank, however, would probably be unwilling to agree
      to the imposition of a seignorage upon the authority of a speculation
      which promises them no gain, but only pretends to insure them from any
      loss. In the present state of the gold coin, and as long as it continues
      to be received by weight, they certainly would gain nothing by such a
      change. But if the custom of weighing the gold coin should ever go into
      disuse, as it is very likely to do, and if the gold coin should ever fall
      into the same state of degradation in which it was before the late
      recoinage, the gain, or more properly the savings, of the bank,
      in consequence of the imposition of a seignorage, would probably be very
      considerable. The bank of England is the only company which sends any
      considerable quantity of bullion to the mint, and the burden of the annual
      coinage falls entirely, or almost entirely, upon it. If this annual
      coinage had nothing to do but to repair the unavoidable losses and
      necessary wear and tear of the coin, it could seldom exceed fifty
      thousand, or at most a hundred thousand pounds. But when the coin is
      degraded below its standard weight, the annual coinage must, besides this,
      fill up the large vacuities which exportation and the melting pot are
      continually making in the current coin. It was upon this account, that
      during the ten or twelve years immediately preceding the late reformation
      of the gold coin, the annual coinage amounted, at an average, to more than
      £850,000. But if there had been a seignorage of four or five per cent.
      upon the gold coin, it would probably, even in the state in which things
      then were, have put an effectual stop to the business both of exportation
      and of the melting pot. The bank, instead of losing every year about two
      and a half per cent. upon the bullion which was to be coined into more
      than eight hundred and fifty thousand pounds, or incurring an annual loss
      of more than £21,250 pounds, would not probably have incurred the tenth
      part of that loss.
    
      The revenue allotted by parliament for defraying the expense of the
      coinage is but fourteen thousand pounds a-year; and the real expense which
      it costs the government, or the fees of the officers of the mint, do not,
      upon ordinary occasions, I am assured, exceed the half of that sum. The
      saving of so very small a sum, or even the gaining of another, which could
      not well be much larger, are objects too inconsiderable, it may be
      thought, to deserve the serious attention of government. But the saving of
      eighteen or twenty thousand pounds a-year, in case of an event which is
      not improbable, which has frequently happened before, and which is very
      likely to happen again, is surely an object which well deserves the
      serious attention, even of so great a company as the bank of England.
    
      Some of the foregoing reasonings and observations might, perhaps, have
      been more properly placed in those chapters of the first book which treat
      of the origin and use of money, and of the difference between the real and
      the nominal price of commodities. But as the law for the encouragement of
      coinage derives its origin from those vulgar prejudices which have been
      introduced by the mercantile system, I judged it more proper to reserve
      them for this chapter. Nothing could be more agreeable to the spirit of
      that system than a sort of bounty upon the production of money, the very
      thing which, it supposes, constitutes the wealth of every nation. It is
      one of its many admirable expedients for enriching the country.
    


CHAPTER VII.
OF COLONIES.


    
      PART I. Of the Motives for Establishing New Colonies.
    
      The interest which occasioned the first settlement of the different
      European colonies in America and the West Indies, was not altogether so
      plain and distinct as that which directed the establishment of those of
      ancient Greece and Rome.
    
      All the different states of ancient Greece possessed, each of them, but a
      very small territory; and when the people in anyone of them multiplied
      beyond what that territory could easily maintain, a part of them were sent
      in quest of a new habitation, in some remote and distant part of the
      world; the warlike neighbours who surrounded them on all sides, rendering
      it difficult for any of them to enlarge very much its territory at home.
      The colonies of the Dorians resorted chiefly to Italy and Sicily, which,
      in the times preceding the foundation of Rome, were inhabited by barbarous
      and uncivilized nations; those of the Ionians and Aeolians, the two other
      great tribes of the Greeks, to Asia Minor and the islands of the Aegean
      sea, of which the inhabitants sewn at that time to have been pretty much
      in the same state as those of Sicily and Italy. The mother city, though
      she considered the colony as a child, at all times entitled to great
      favour and assistance, and owing in return much gratitude and respect, yet
      considered it as an emancipated child, over whom she pretended to claim no
      direct authority or jurisdiction. The colony settled its own form of
      government, enacted its own laws, elected its own magistrates, and made
      peace or war with its neighbours, as an independent state, which had no
      occasion to wait for the approbation or consent of the mother city.
      Nothing can be more plain and distinct than the interest which directed
      every such establishment.
    
      Rome, like most of the other ancient republics, was originally founded
      upon an agrarian law, which divided the public territory, in a certain
      proportion, among the different citizens who composed the state. The
      course of human affairs, by marriage, by succession, and by alienation,
      necessarily deranged this original division, and frequently threw the
      lands which had been allotted for the maintenance of many different
      families, into the possession of a single person. To remedy this disorder,
      for such it was supposed to be, a law was made, restricting the quantity
      of land which any citizen could possess to five hundred jugera; about 350
      English acres. This law, however, though we read of its having been
      executed upon one or two occasions, was either neglected or evaded, and
      the inequality of fortunes went on continually increasing. The greater
      part of the citizens had no land; and without it the manners and customs
      of those times rendered it difficult for a freeman to maintain his
      independency. In the present times, though a poor man has no land of his
      own, if he has a little stock, he may either farm the lands of another, or
      he may carry on some little retail trade; and if he has no stock, he may
      find employment either as a country labourer, or as an artificer. But
      among the ancient Romans, the lands of the rich were all cultivated by
      slaves, who wrought under an overseer, who was likewise a slave; so that a
      poor freeman had little chance of being employed either as a farmer or as
      a labourer. All trades and manufactures, too, even the retail trade, were
      carried on by the slaves of the rich for the benefit of their masters,
      whose wealth, authority, and protection, made it difficult for a poor
      freeman to maintain the competition against them. The citizens, therefore,
      who had no land, had scarce any other means of subsistence but the
      bounties of the candidates at the annual elections. The tribunes, when
      they had a mind to animate the people against the rich and the great, put
      them in mind of the ancient divisions of lands, and represented that law
      which restricted this sort of private property as the fundamental law of
      the republic. The people became clamorous to get land, and the rich and
      the great, we may believe, were perfectly determined not to give them any
      part of theirs. To satisfy them in some measure, therefore, they
      frequently proposed to send out a new colony. But conquering Rome was,
      even upon such occasions, under no necessity of turning out her citizens
      to seek their fortune, if one may so, through the wide world, without
      knowing where they were to settle. She assigned them lands generally in
      the conquered provinces of Italy, where, being within the dominions of the
      republic, they could never form any independent state, but were at best
      but a sort of corporation, which, though it had the power of enacting
      bye-laws for its own government, was at all times subject to the
      correction, jurisdiction, and legislative authority of the mother city.
      The sending out a colony of this kind not only gave some satisfaction to
      the people, but often established a sort of garrison, too, in a newly
      conquered province, of which the obedience might otherwise have been
      doubtful. A Roman colony, therefore, whether we consider the nature of the
      establishment itself, or the motives for making it, was altogether
      different from a Greek one. The words, accordingly, which in the original
      languages denote those different establishments, have very different
      meanings. The Latin word (colonia) signifies simply a plantation. The
      Greek word (apoixia), on the contrary, signifies a separation of dwelling,
      a departure from home, a going out of the house. But though the Roman
      colonies were, in many respects, different from the Greek ones, the
      interest which prompted to establish them was equally plain and distinct.
      Both institutions derived their origin, either from irresistible
      necessity, or from clear and evident utility.
    
      The establishment of the European colonies in America and the West Indies
      arose from no necessity; and though the utility which has resulted from
      them has been very great, it is not altogether so clear and evident. It
      was not understood at their first establishment, and was not the motive,
      either of that establishment, or of the discoveries which gave occasion to
      it; and the nature, extent, and limits of that utility, are not, perhaps,
      well understood at this day.
    
      The Venetians, during the fourteenth and fifteenth centuries, carried on a
      very advantageous commerce in spiceries and other East India goods, which
      they distributed among the other nations of Europe. They purchased them
      chiefly in Egypt, at that time under the dominion of the Mamelukes, the
      enemies of the Turks, of whom the Venetians were the enemies; and this
      union of interest, assisted by the money of Venice, formed such a
      connexion as gave the Venetians almost a monopoly of the trade.
    
      The great profits of the Venetians tempted the avidity of the Portuguese.
      They had been endeavouring, during the course of the fifteenth century, to
      find out by sea a way to the countries from which the Moors brought them
      ivory and gold dust across the desert. They discovered the Madeiras, the
      Canaries, the Azores, the Cape de Verd islands, the coast of Guinea, that
      of Loango, Congo, Angola, and Benguela, and, finally, the Cape of Good
      Hope. They had long wished to share in the profitable traffic of the
      Venetians, and this last discovery opened to them a probable prospect of
      doing so. In 1497, Vasco de Gamo sailed from the port of Lisbon with a
      fleet of four ships, and, after a navigation of eleven months, arrived
      upon the coast of Indostan; and thus completed a course of discoveries
      which had been pursued with great steadiness, and with very little
      interruption, for near a century together.
    
      Some years before this, while the expectations of Europe were in suspense
      about the projects of the Portuguese, of which the success appeared yet to
      be doubtful, a Genoese pilot formed the yet more daring project of sailing
      to the East Indies by the west. The situation of those countries was at
      that time very imperfectly known in Europe. The few European travellers
      who had been there, had magnified the distance, perhaps through simplicity
      and ignorance; what was really very great, appearing almost infinite to
      those who could not measure it; or, perhaps, in order to increase somewhat
      more the marvellous of their own adventures in visiting regions so
      immensely remote from Europe. The longer the way was by the east, Columbus
      very justly concluded, the shorter it would be by the west. He proposed,
      therefore, to take that way, as both the shortest and the surest, and he
      had the good fortune to convince Isabella of Castile of the probability of
      his project. He sailed from the port of Palos in August 1492, near five
      years before the expedition of Vasco de Gamo set out from Portugal; and,
      after a voyage of between two and three months, discovered first some of
      the small Bahama or Lucyan islands, and afterwards the great island of St.
      Domingo.
    
      But the countries which Columbus discovered, either in this or in any of
      his subsequent voyages, had no resemblance to those which he had gone in
      quest of. Instead of the wealth, cultivation, and populousness of China
      and Indostan, he found, in St. Domingo, and in all the other parts of the
      new world which he ever visited, nothing but a country quite covered with
      wood, uncultivated, and inhabited only by some tribes of naked and
      miserable savages. He was not very willing, however, to believe that they
      were not the same with some of the countries described by Marco Polo, the
      first European who had visited, or at least had left behind him any
      description of China or the East Indies; and a very slight resemblance,
      such as that which he found between the name of Cibao, a mountain in St.
      Domingo, and that of Cipange, mentioned by Marco Polo, was frequently
      sufficient to make him return to this favourite prepossession, though
      contrary to the clearest evidence. In his letters to Ferdinand and
      Isabella, he called the countries which he had discovered the Indies. He
      entertained no doubt but that they were the extremity of those which had
      been described by Marco Polo, and that they were not very distant from the
      Ganges, or from the countries which had been conquered by Alexander. Even
      when at last convinced that they were different, he still flattered
      himself that those rich countries were at no great distance; and in a
      subsequent voyage, accordingly, went in quest of them along the coast of
      Terra Firma, and towards the Isthmus of Darien.
    
      In consequence of this mistake of Columbus, the name of the Indies has
      stuck to those unfortunate countries ever since; and when it was at last
      clearly discovered that the new were altogether different from the old
      Indies, the former were called the West, in contradistinction to the
      latter, which were called the East Indies.
    
      It was of importance to Columbus, however, that the countries which he had
      discovered, whatever they were, should be represented to the court of
      Spain as of very great consequence; and, in what constitutes the real
      riches of every country, the animal and vegetable productions of the soil,
      there was at that time nothing which could well justify such a
      representation of them.
    
      The cori, something between a rat and a rabbit, and supposed by Mr Buffon
      to be the same with the aperea of Brazil, was the largest viviparous
      quadruped in St. Domingo. This species seems never to have been very
      numerous; and the dogs and cats of the Spaniards are said to have long ago
      almost entirely extirpated it, as well as some other tribes of a still
      smaller size. These, however, together with a pretty large lizard, called
      the ivana or iguana, constituted the principal part of the animal food
      which the land afforded.
    
      The vegetable food of the inhabitants, though, from their want of
      industry, not very abundant, was not altogether so scanty. It consisted in
      Indian corn, yams, potatoes, bananas, etc., plants which were then
      altogether unknown in Europe, and which have never since been very much
      esteemed in it, or supposed to yield a sustenance equal to what is drawn
      from the common sorts of grain and pulse, which have been cultivated in
      this part of the world time out of mind.
    
      The cotton plant, indeed, afforded the material of a very important
      manufacture, and was at that time, to Europeans, undoubtedly the most
      valuable of all the vegetable productions of those islands. But though, in
      the end of the fifteenth century, the muslins and other cotton goods of
      the East Indies were much esteemed in every part of Europe, the cotton
      manufacture itself was not cultivated in any part of it. Even this
      production, therefore, could not at that time appear in the eyes of
      Europeans to be of very great consequence.
    
      Finding nothing, either in the animals or vegetables of the newly
      discovered countries which could justify a very advantageous
      representation of them, Columbus turned his view towards their minerals;
      and in the richness of their productions of this third kingdom, he
      flattered himself he had found a full compensation for the insignificancy
      of those of the other two. The little bits of gold with which the
      inhabitants ornamented their dress, and which, he was informed, they
      frequently found in the rivulets and torrents which fell from the
      mountains, were sufficient to satisfy him that those mountains abounded
      with the richest gold mines. St. Domingo, therefore, was represented as a
      country abounding with gold, and upon that account (according to the
      prejudices not only of the present times, but of those times), an
      inexhaustible source of real wealth to the crown and kingdom of Spain.
      When Columbus, upon his return from his first voyage, was introduced with
      a sort of triumphal honours to the sovereigns of Castile and Arragon, the
      principal productions of the countries which he had discovered were
      carried in solemn procession before him. The only valuable part of them
      consisted in some little fillets, bracelets, and other ornaments of gold,
      and in some bales of cotton. The rest were mere objects of vulgar wonder
      and curiosity; some reeds of an extraordinary size, some birds of a very
      beautiful plumage, and some stuffed skins of the huge alligator and
      manati; all of which were preceded by six or seven of the wretched
      natives, whose singular colour and appearance added greatly to the novelty
      of the show.
    
      In consequence of the representations of Columbus, the council of Castile
      determined to take possession of the countries of which the inhabitants
      were plainly incapable of defending themselves. The pious purpose of
      converting them to Christianity sanctified the injustice of the project.
      But the hope of finding treasures of gold there was the sole motive which
      prompted to undertake it; and to give this motive the greater weight, it
      was proposed by Columbus, that the half of all the gold and silver that
      should be found there, should belong to the crown. This proposal was
      approved of by the council.
    
      As long as the whole, or the greater part of the gold which the first
      adventurers imported into Europe was got by so very easy a method as the
      plundering of the defenceless natives, it was not perhaps very difficult
      to pay even this heavy tax; but when the natives were once fairly stript
      of all that they had, which, in St. Domingo, and in all the other
      countries discovered by Columbus, was done completely in six or eight
      years, and when, in order to find more, it had become necessary to dig for
      it in the mines, there was no longer any possibility of paying this tax.
      The rigorous exaction of it, accordingly, first occasioned, it is said,
      the total abandoning of the mines of St. Domingo, which have never been
      wrought since. It was soon reduced, therefore, to a third; then to a
      fifth; afterwards to a tenth; and at last to a twentieth part of the gross
      produce of the gold mines. The tax upon silver continued for a long time
      to be a fifth of the gross produce. It was reduced to a tenth only in the
      course of the present century. But the first adventurers do not appear to
      have been much interested about silver. Nothing less precious than gold
      seemed worthy of their attention.
    
      All the other enterprizes of the Spaniards in the New World, subsequent to
      those of Columbus, seem to have been prompted by the same motive. It was
      the sacred thirst of gold that carried Ovieda, Nicuessa, and Vasco Nugnes
      de Balboa, to the Isthmus of Darien; that carried Cortes to Mexico,
      Almagro and Pizarro to Chili and Peru. When those adventurers arrived upon
      any unknown coast, their first inquiry was always if there was any gold to
      be found there; and according to the information which they received
      concerning this particular, they determined either to quit the country or
      to settle in it.
    
      Of all those expensive and uncertain projects, however, which bring
      bankruptcy upon the greater part of the people who engage in them, there
      is none, perhaps, more perfectly ruinous than the search after new silver
      and gold mines. It is, perhaps, the most disadvantageous lottery in the
      world, or the one in which the gain of those who draw the prizes bears the
      least proportion to the loss of those who draw the blanks; for though the
      prizes are few, and the blanks many, the common price of a ticket is the
      whole fortune of a very rich man. Projects of mining, instead of replacing
      the capital employed in them, together with the ordinary profits of stock,
      commonly absorb both capital and profit. They are the projects, therefore,
      to which, of all others, a prudent lawgiver, who desired to increase the
      capital of his nation, would least choose to give any extraordinary
      encouragement, or to turn towards them a greater share of that capital
      than what would go to them of its own accord. Such, in reality, is the
      absurd confidence which almost all men have in their own good fortune,
      that wherever there is the least probability of success, too great a share
      of it is apt to go to them of its own accord.
    
      But though the judgment of sober reason and experience concerning such
      projects has always been extremely unfavourable, that of human avidity has
      commonly been quite otherwise. The same passion which has suggested to so
      many people the absurd idea of the philosopher’s stone, has suggested to
      others the equally absurd one of immense rich mines of gold and silver.
      They did not consider that the value of those metals has, in all ages and
      nations, arisen chiefly from their scarcity, and that their scarcity has
      arisen from the very small quantities of them which nature has anywhere
      deposited in one place, from the hard and intractable substances with
      which she has almost everywhere surrounded those small quantities, and
      consequently from the labour and expense which are everywhere necessary in
      order to penetrate, and get at them. They flattered themselves that veins
      of those metals might in many places be found, as large and as abundant as
      those which are commonly found of lead, or copper, or tin, or iron. The
      dream of Sir Waiter Raleigh, concerning the golden city and country of El
      Dorado, may satisfy us, that even wise men are not always exempt from such
      strange delusions. More than a hundred years after the death of that great
      man, the Jesuit Gumila was still convinced of the reality of that
      wonderful country, and expressed, with great warmth, and, I dare say, with
      great sincerity, how happy he should be to carry the light of the gospel
      to a people who could so well reward the pious labours of their
      missionary.
    
      In the countries first discovered by the Spaniards, no gold and silver
      mines are at present known which are supposed to be worth the working. The
      quantities of those metals which the first adventurers are said to have
      found there, had probably been very much magnified, as well as the
      fertility of the mines which were wrought immediately after the first
      discovery. What those adventurers were reported to have found, however,
      was sufficient to inflame the avidity of all their countrymen. Every
      Spaniard who sailed to America expected to find an El Dorado. Fortune,
      too, did upon this what she has done upon very few other occasions. She
      realized in some measure the extravagant hopes of her votaries; and in the
      discovery and conquest of Mexico and Peru (of which the one happened about
      thirty, and the other about forty, years after the first expedition of
      Columbus), she presented them with something not very unlike that
      profusion of the precious metals which they sought for.
    
      A project of commerce to the East Indies, therefore, gave occasion to the
      first discovery of the West. A project of conquest gave occasion to all
      the establishments of the Spaniards in those newly discovered countries.
      The motive which excited them to this conquest was a project of gold and
      silver mines; and a course of accidents which no human wisdom could
      foresee, rendered this project much more successful than the undertakers
      had any reasonable grounds for expecting.
    
      The first adventurers of all the other nations of Europe who attempted to
      make settlements in America, were animated by the like chimerical views;
      but they were not equally successful. It was more than a hundred years
      after the first settlement of the Brazils, before any silver, gold, or
      diamond mines, were discovered there. In the English, French, Dutch, and
      Danish colonies, none have ever yet been discovered, at least none that
      are at present supposed to be worth the working. The first English
      settlers in North America, however, offered a fifth of all the gold and
      silver which should be found there to the king, as a motive for granting
      them their patents. In the patents of Sir Waiter Raleigh, to the London
      and Plymouth companies, to the council of Plymouth, etc. this fifth was
      accordingly reserved to the crown. To the expectation of finding gold and
      silver mines, those first settlers, too, joined that of discovering a
      north-west passage to the East Indies. They have hitherto been
      disappointed in both.
    


    
      PART II. Causes of the Prosperity of New Colonies.
    
      The colony of a civilized nation which takes possession either of a waste
      country, or of one so thinly inhabited that the natives easily give place
      to the new settlers, advances more rapidly to wealth and greatness than
      any other human society.
    
      The colonies carry out with them a knowledge of agriculture and of other
      useful arts, superior to what can grow up of its own accord, in the course
      of many centuries, among savage and barbarous nations. They carry out with
      them, too, the habit of subordination, some notion of the regular
      government which takes place in their own country, of the system of laws
      which support it, and of a regular administration of justice; and they
      naturally establish something of the same kind in the new settlement. But
      among savage and barbarous nations, the natural progress of law and
      government is still slower than the natural progress of arts, after law
      and government have been so far established as is necessary for their
      protection. Every colonist gets more land than he can possibly cultivate.
      He has no rent, and scarce any taxes, to pay. No landlord shares with him
      in its produce, and, the share of the sovereign is commonly but a trifle.
      He has every motive to render as great as possible a produce which is thus
      to be almost entirely his own. But his land is commonly so extensive,
      that, with all his own industry, and with all the industry of other people
      whom he can get to employ, he can seldom make it produce the tenth part of
      what it is capable of producing. He is eager, therefore, to collect
      labourers from all quarters, and to reward them with the most liberal
      wages. But those liberal wages, joined to the plenty and cheapness of
      land, soon make those labourers leave him, in order to become landlords
      themselves, and to reward with equal liberality other labourers, who soon
      leave them for the same reason that they left their first master. The
      liberal reward of labour encourages marriage. The children, during the
      tender years of infancy, are well fed and properly taken care of; and when
      they are grown up, the value of their labour greatly overpays their
      maintenance. When arrived at maturity, the high price of labour, and the
      low price of land, enable them to establish themselves in the same manner
      as their fathers did before them.
    
      In other countries, rent and profit eat up wages, and the two superior
      orders of people oppress the inferior one; but in new colonies, the
      interest of the two superior orders obliges them to treat the inferior one
      with more generosity and humanity, at least where that inferior one is not
      in a state of slavery. Waste lands, of the greatest natural fertility, are
      to be had for a trifle. The increase of revenue which the proprietor, who
      is always the undertaker, expects from their improvement, constitutes his
      profit, which, in these circumstances, is commonly very great; but this
      great profit cannot be made, without employing the labour of other people
      in clearing and cultivating the land; and the disproportion between the
      great extent of the land and the small number of the people, which
      commonly takes place in new colonies, makes it difficult for him to get
      this labour. He does not, therefore, dispute about wages, but is willing
      to employ labour at any price. The high wages of labour encourage
      population. The cheapness and plenty of good land encourage improvement,
      and enable the proprietor to pay those high wages. In those wages consists
      almost the whole price of the land; and though they are high, considered
      as the wages of labour, they are low, considered as the price of what is
      so very valuable. What encourages the progress of population and
      improvement, encourages that of real wealth and greatness.
    
      The progress of many of the ancient Greek colonies towards wealth and
      greatness seems accordingly to have been very rapid. In the course of a
      century or two, several of them appear to have rivalled, and even to have
      surpassed, their mother cities. Syracuse and Agrigentum in Sicily,
      Tarentum and Locri in Italy, Ephesus and Miletus in Lesser Asia, appear,
      by all accounts, to have been at least equal to any of the cities of
      ancient Greece. Though posterior in their establishment, yet all the arts
      of refinement, philosophy, poetry, and eloquence, seem to have been
      cultivated as early, and to have been improved as highly in them as in any
      part of the mother country. The schools of the two oldest Greek
      philosophers, those of Thales and Pythagoras, were established, it is
      remarkable, not in ancient Greece, but the one in an Asiatic, the other in
      an Italian colony. All those colonies had established themselves in
      countries inhabited by savage and barbarous nations, who easily gave place
      to the new settlers. They had plenty of good land; and as they were
      altogether independent of the mother city, they were at liberty to manage
      their own affairs in the way that they judged was most suitable to their
      own interest.
    
      The history of the Roman colonies is by no means so brilliant. Some of
      them, indeed, such as Florence, have, in the course of many ages, and
      after the fall of the mother city, grown up to be considerable states. But
      the progress of no one of them seems ever to have been very rapid. They
      were all established in conquered provinces, which in most cases had been
      fully inhabited before. The quantity of land assigned to each colonist was
      seldom very considerable, and, as the colony was not independent, they
      were not always at liberty to manage their own affairs in the way that
      they judged was most suitable to their own interest.
    
      In the plenty of good land, the European colonies established in America
      and the West Indies resemble, and even greatly surpass, those of ancient
      Greece. In their dependency upon the mother state, they resemble those of
      ancient Rome; but their great distance from Europe has in all of them
      alleviated more or less the effects of this dependency. Their situation
      has placed them less in the view, and less in the power of their mother
      country. In pursuing their interest their own way, their conduct has upon
      many occasions been overlooked, either because not known or not understood
      in Europe; and upon some occasions it has been fairly suffered and
      submitted to, because their distance rendered it difficult to restrain it.
      Even the violent and arbitrary government of Spain has, upon many
      occasions, been obliged to recall or soften the orders which had been
      given for the government of her colonies, for fear of a general
      insurrection. The progress of all the European colonies in wealth,
      population, and improvement, has accordingly been very great.
    
      The crown of Spain, by its share of the gold and silver, derived some
      revenue from its colonies from the moment of their first establishment. It
      was a revenue, too, of a nature to excite in human avidity the most
      extravagant expectation of still greater riches. The Spanish colonies,
      therefore, from the moment of their first establishment, attracted very
      much the attention of their mother country; while those of the other
      European nations were for a long time in a great measure neglected. The
      former did not, perhaps, thrive the better in consequence of this
      attention, nor the latter the worse in consequence of this neglect. In
      proportion to the extent of the country which they in some measure
      possess, the Spanish colonies are considered as less populous and thriving
      than those of almost any other European nation. The progress even of the
      Spanish colonies, however, in population and improvement, has certainly
      been very rapid and very great. The city of Lima, founded since the
      conquest, is represented by Ulloa as containing fifty thousand inhabitants
      near thirty years ago. Quito, which had been but a miserable hamlet of
      Indians, is represented by the same author as in his time equally
      populous. Gemel i Carreri, a pretended traveller, it is said, indeed, but
      who seems everywhere to have written upon extreme good information,
      represents the city of Mexico as containing a hundred thousand
      inhabitants; a number which, in spite of all the exaggerations of the
      Spanish writers, is probably more than five times greater than what it
      contained in the time of Montezuma. These numbers exceed greatly those of
      Boston, New York, and Philadelphia, the three greatest cities of the
      English colonies. Before the conquest of the Spaniards, there were no
      cattle fit for draught, either in Mexico or Peru. The lama was their only
      beast of burden, and its strength seems to have been a good deal inferior
      to that of a common ass. The plough was unknown among them. They were
      ignorant of the use of iron. They had no coined money, nor any established
      instrument of commerce of any kind. Their commerce was carried on by
      barter. A sort of wooden spade was their principal instrument of
      agriculture. Sharp stones served them for knives and hatchets to cut with;
      fish bones, and the hard sinews of certain animals, served them with
      needles to sew with; and these seem to have been their principal
      instruments of trade. In this state of things, it seems impossible that
      either of those empires could have been so much improved or so well
      cultivated as at present, when they are plentifully furnished with all
      sorts of European cattle, and when the use of iron, of the plough, and of
      many of the arts of Europe, have been introduced among them. But the
      populousness of every country must be in proportion to the degree of its
      improvement and cultivation. In spite of the cruel destruction of the
      natives which followed the conquest, these two great empires are probably
      more populous now than they ever were before; and the people are surely
      very different; for we must acknowledge, I apprehend, that the Spanish
      creoles are in many respects superior to the ancient Indians.
    
      After the settlements of the Spaniards, that of the Portuguese in Brazil
      is the oldest of any European nation in America. But as for a long time
      after the first discovery neither gold nor silver mines were found in it,
      and as it afforded upon that account little or no revenue to the crown, it
      was for a long time in a great measure neglected; and during this state of
      neglect, it grew up to be a great and powerful colony. While Portugal was
      under the dominion of Spain, Brazil was attacked by the Dutch, who got
      possession of seven of the fourteen provinces into which it is divided.
      They expected soon to conquer the other seven, when Portugal recovered its
      independency by the elevation of the family of Braganza to the throne. The
      Dutch, then, as enemies to the Spaniards, became friends to the
      Portuguese, who were likewise the enemies of the Spaniards. They agreed,
      therefore, to leave that part of Brazil which they had not conquered to
      the king of Portugal, who agreed to leave that part which they had
      conquered to them, as a matter not worth disputing about, with such good
      allies. But the Dutch government soon began to oppress the Portuguese
      colonists, who, instead of amusing themselves with complaints, took arms
      against their new masters, and by their own valour and resolution, with
      the connivance, indeed, but without any avowed assistance from the mother
      country, drove them out of Brazil. The Dutch, therefore, finding it
      impossible to keep any part of the country to themselves, were contented
      that it should be entirely restored to the crown of Portugal. In this
      colony there are said to be more than six hundred thousand people, either
      Portuguese or descended from Portuguese, creoles, mulattoes, and a mixed
      race between Portuguese and Brazilians. No one colony in America is
      supposed to contain so great a number of people of European extraction.
    
      Towards the end of the fifteenth, and during the greater part of the
      sixteenth century, Spain and Portugal were the two great naval powers upon
      the ocean; for though the commerce of Venice extended to every part of
      Europe, its fleet had scarce ever sailed beyond the Mediterranean. The
      Spaniards, in virtue of the first discovery, claimed all America as their
      own; and though they could not hinder so great a naval power as that of
      Portugal from settling in Brazil, such was at that time the terror of
      their name, that the greater part of the other nations of Europe were
      afraid to establish themselves in any other part of that great continent.
      The French, who attempted to settle in Florida, were all murdered by the
      Spaniards. But the declension of the naval power of this latter nation, in
      consequence of the defeat or miscarriage of what they called their
      invincible armada, which happened towards the end of the sixteenth
      century, put it out of their power to obstruct any longer the settlements
      of the other European nations. In the course of the seventeenth century,
      therefore, the English, French, Dutch, Danes, and Swedes, all the great
      nations who had any ports upon the ocean, attempted to make some
      settlements in the new world.
    
      The Swedes established themselves in New Jersey; and the number of Swedish
      families still to be found there sufficiently demonstrates, that this
      colony was very likely to prosper, had it been protected by the mother
      country. But being neglected by Sweden, it was soon swallowed up by the
      Dutch colony of New York, which again, in 1674, fell under the dominion of
      the English.
    
      The small islands of St. Thomas and Santa Cruz, are the only countries in
      the new world that have ever been possessed by the Danes. These little
      settlements, too, were under the government of an exclusive company, which
      had the sole right, both of purchasing the surplus produce of the
      colonies, and of supplying them with such goods of other countries as they
      wanted, and which, therefore, both in its purchases and sales, had not
      only the power of oppressing them, but the greatest temptation to do so.
      The government of an exclusive company of merchants is, perhaps, the worst
      of all governments for any country whatever. It was not, however, able to
      stop altogether the progress of these colonies, though it rendered it more
      slow and languid. The late king of Denmark dissolved this company, and
      since that time the prosperity of these colonies has been very great.
    
      The Dutch settlements in the West, as well as those in the East Indies,
      were originally put under the government of an exclusive company. The
      progress of some of them, therefore, though it has been considerable in
      comparison with that of almost any country that has been long peopled and
      established, has been languid and slow in comparison with that of the
      greater part of new colonies. The colony of Surinam, though very
      considerable, is still inferior to the greater part of the sugar colonies
      of the other European nations. The colony of Nova Belgia, now divided into
      the two provinces of New York and New Jersey, would probably have soon
      become considerable too, even though it had remained under the government
      of the Dutch. The plenty and cheapness of good land are such powerful
      causes of prosperity, that the very worst government is scarce capable of
      checking altogether the efficacy of their operation. The great distance,
      too, from the mother country, would enable the colonists to evade more or
      less, by smuggling, the monopoly which the company enjoyed against them.
      At present, the company allows all Dutch ships to trade to Surinam, upon
      paying two and a-half per cent. upon the value of their cargo for a
      license; and only reserves to itself exclusively, the direct trade from
      Africa to America, which consists almost entirely in the slave trade. This
      relaxation in the exclusive privileges of the company, is probably the
      principal cause of that degree of prosperity which that colony at present
      enjoys. Curacoa and Eustatia, the two principal islands belonging to the
      Dutch, are free ports, open to the ships of all nations; and this freedom,
      in the midst of better colonies, whose ports are open to those of one
      nation only, has been the great cause of the prosperity of those two
      barren islands.
    
      The French colony of Canada was, during the greater part of the last
      century, and some part of the present, under the government of an
      exclusive company. Under so unfavourable an administration, its progress
      was necessarily very slow, in comparison with that of other new colonies;
      but it became much more rapid when this company was dissolved, after the
      fall of what is called the Mississippi scheme. When the English got
      possession of this country, they found in it near double the number of
      inhabitants which father Charlevoix had assigned to it between twenty and
      thirty years before. That jesuit had travelled over the whole country, and
      had no inclination to represent it as less inconsiderable than it really
      was.
    
      The French colony of St. Domingo was established by pirates and
      freebooters, who, for a long time, neither required the protection, nor
      acknowledged the authority of France; and when that race of banditti
      became so far citizens as to acknowledge this authority, it was for a long
      time necessary to exercise it with very great gentleness. During this
      period, the population and improvement of this colony increased very fast.
      Even the oppression of the exclusive company, to which it was for some
      time subjected with all the other colonies of France, though it no doubt
      retarded, had not been able to stop its progress altogether. The course of
      its prosperity returned as soon as it was relieved from that oppression.
      It is now the most important of the sugar colonies of the West Indies, and
      its produce is said to be greater than that of all the English sugar
      colonies put together. The other sugar colonies of France are in general
      all very thriving.
    
      But there are no colonies of which the progress has been more rapid than
      that of the English in North America.
    
      Plenty of good land, and liberty to manage their own affairs their own
      way, seem to be the two great causes of the prosperity of all new
      colonies.
    
      In the plenty of good land, the English colonies of North America, though
      no doubt very abundantly provided, are, however, inferior to those of the
      Spaniards and Portuguese, and not superior to some of those possessed by
      the French before the late war. But the political institutions of the
      English colonies have been more favourable to the improvement and
      cultivation of this land, than those of the other three nations.
    
      First, The engrossing of uncultivated land, though it has by no means been
      prevented altogether, has been more restrained in the English colonies
      than in any other. The colony law, which imposes upon every proprietor the
      obligation of improving and cultivating, within a limited time, a certain
      proportion of his lands, and which, in case of failure, declares those
      neglected lands grantable to any other person; though it has not perhaps
      been very strictly executed, has, however, had some effect.
    
      Secondly, In Pennsylvania there is no right of primogeniture, and lands,
      like moveables, are divided equally among all the children of the family.
      In three of the provinces of New England, the oldest has only a double
      share, as in the Mosaical law. Though in those provinces, therefore, too
      great a quantity of land should sometimes be engrossed by a particular
      individual, it is likely, in the course of a generation or two, to be
      sufficiently divided again. In the other English colonies, indeed, the
      right of primogeniture takes place, as in the law of England: But in all
      the English colonies, the tenure of the lands, which are all held by free
      soccage, facilitates alienation; and the grantee of an extensive tract of
      land generally finds it for his interest to alienate, as fast as he can,
      the greater part of it, reserving only a small quit-rent. In the Spanish
      and Portuguese colonies, what is called the right of majorazzo takes place
      in the succession of all those great estates to which any title of honour
      is annexed. Such estates go all to one person, and are in effect entailed
      and unalienable. The French colonies, indeed, are subject to the custom of
      Paris, which, in the inheritance of land, is much more favourable to the
      younger children than the law of England. But, in the French colonies, if
      any part of an estate, held by the noble tenure of chivalry and homage, is
      alienated, it is, for a limited time, subject to the right of redemption,
      either by the heir of the superior, or by the heir of the family; and all
      the largest estates of the country are held by such noble tenures, which
      necessarily embarrass alienation. But, in a new colony, a great
      uncultivated estate is likely to be much more speedily divided by
      alienation than by succession. The plenty and cheapness of good land, it
      has already been observed, are the principal causes of the rapid
      prosperity of new colonies. The engrossing of land, in effect, destroys
      this plenty and cheapness. The engrossing of uncultivated land, besides,
      is the greatest obstruction to its improvement; but the labour that is
      employed in the improvement and cultivation of land affords the greatest
      and most valuable produce to the society. The produce of labour, in this
      case, pays not only its own wages and the profit of the stock which
      employs it, but the rent of the land too upon which it is employed. The
      labour of the English colonies, therefore, being more employed in the
      improvement and cultivation of land, is likely to afford a greater and
      more valuable produce than that of any of the other three nations, which,
      by the engrossing of land, is more or less diverted towards other
      employments.
    
      Thirdly, The labour of the English colonists is not only likely to afford
      a greater and more valuable produce, but, in consequence of the moderation
      of their taxes, a greater proportion of this produce belongs to
      themselves, which they may store up and employ in putting into motion a
      still greater quantity of labour. The English colonists have never yet
      contributed any thing towards the defence of the mother country, or
      towards the support of its civil government. They themselves, on the
      contrary, have hitherto been defended almost entirely at the expense of
      the mother country; but the expense of fleets and armies is out of all
      proportion greater than the necessary expense of civil government. The
      expense of their own civil government has always been very moderate. It
      has generally been confined to what was necessary for paying competent
      salaries to the governor, to the judges, and to some other officers of
      police, and for maintaining a few of the most useful public works. The
      expense of the civil establishment of Massachusetts Bay, before the
      commencement of the present disturbances, used to be but about £18;000
      a-year; that of New Hampshire and Rhode Island, £3500 each; that of
      Connecticut, £4000; that of New York and Pennsylvania, £4500 each; that of
      New Jersey, £1200; that of Virginia and South Carolina, £8000 each. The
      civil establishments of Nova Scotia and Georgia are partly supported by an
      annual grant of parliament; but Nova Scotia pays, besides, about £7000
      a-year towards the public expenses of the colony, and Georgia about £2500
      a-year. All the different civil establishments in North America, in short,
      exclusive of those of Maryland and North Carolina, of which no exact
      account has been got, did not, before the commencement of the present
      disturbances, cost the inhabitants above £64,700 a-year; an ever memorable
      example, at how small an expense three millions of people may not only be
      governed but well governed. The most important part of the expense of
      government, indeed, that of defence and protection, has constantly fallen
      upon the mother country. The ceremonial, too, of the civil government in
      the colonies, upon the reception of a new governor, upon the opening of a
      new assembly, etc. though sufficiently decent, is not accompanied with any
      expensive pomp or parade. Their ecclesiastical government is conducted
      upon a plan equally frugal. Tithes are unknown among them; and their
      clergy, who are far from being numerous, are maintained either by moderate
      stipends, or by the voluntary contributions of the people. The power of
      Spain and Portugal, on the contrary, derives some support from the taxes
      levied upon their colonies. France, indeed, has never drawn any
      considerable revenue from its colonies, the taxes which it levies upon
      them being generally spent among them. But the colony government of all
      these three nations is conducted upon a much more extensive plan, and is
      accompanied with a much more expensive ceremonial. The sums spent upon the
      reception of a new viceroy of Peru, for example, have frequently been
      enormous. Such ceremonials are not only real taxes paid by the rich
      colonists upon those particular occasions, but they serve to introduce
      among them the habit of vanity and expense upon all other occasions. They
      are not only very grievous occasional taxes, but they contribute to
      establish perpetual taxes, of the same kind, still more grievous; the
      ruinous taxes of private luxury and extravagance. In the colonies of all
      those three nations, too, the ecclesiastical government is extremely
      oppressive. Tithes take place in all of them, and are levied with the
      utmost rigour in those of Spain and Portugal. All of them, besides, are
      oppressed with a numerous race of mendicant friars, whose beggary being
      not only licensed but consecrated by religion, is a most grievous tax upon
      the poor people, who are most carefully taught that it is a duty to give,
      and a very great sin to refuse them their charity. Over and above all
      this, the clergy are, in all of them, the greatest engrossers of land.
    
      Fourthly, In the disposal of their surplus produce, or of what is over and
      above their own consumption, the English colonies have been more favoured,
      and have been allowed a more extensive market, than those of any other
      European nation. Every European nation has endeavoured, more or less, to
      monopolize to itself the commerce of its colonies, and, upon that account,
      has prohibited the ships of foreign nations from trading to them, and has
      prohibited them from importing European goods from any foreign nation. But
      the manner in which this monopoly has been exercised in different nations,
      has been very different.
    
      Some nations have given up the whole commerce of their colonies to an
      exclusive company, of whom the colonists were obliged to buy all such
      European goods as they wanted, and to whom they were obliged to sell the
      whole of their surplus produce. It was the interest of the company,
      therefore, not only to sell the former as dear, and to buy the latter as
      cheap as possible, but to buy no more of the latter, even at this low
      price, than what they could dispose of for a very high price in Europe. It
      was their interest not only to degrade in all cases the value of the
      surplus produce of the colony, but in many cases to discourage and keep
      down the natural increase of its quantity. Of all the expedients that can
      well be contrived to stunt the natural growth of a new colony, that of an
      exclusive company is undoubtedly the most effectual. This, however, has
      been the policy of Holland, though their company, in the course of the
      present century, has given up in many respects the exertion of their
      exclusive privilege. This, too, was the policy of Denmark, till the reign
      of the late king. It has occasionally been the policy of France; and of
      late, since 1755, after it had been abandoned by all other nations on
      account of its absurdity, it has become the policy of Portugal, with
      regard at least to two of the principal provinces of Brazil, Pernambucco,
      and Marannon.
    
      Other nations, without establishing an exclusive company, have confined
      the whole commerce of their colonies to a particular port of the mother
      country, from whence no ship was allowed to sail, but either in a fleet
      and at a particular season, or, if single, in consequence of a particular
      license, which in most cases was very well paid for. This policy opened,
      indeed, the trade of the colonies to all the natives of the mother
      country, provided they traded from the proper port, at the proper season,
      and in the proper vessels. But as all the different merchants, who joined
      their stocks in order to fit out those licensed vessels, would find it for
      their interest to act in concert, the trade which was carried on in this
      manner would necessarily be conducted very nearly upon the same principles
      as that of an exclusive company. The profit of those merchants would be
      almost equally exorbitant and oppressive. The colonies would be ill
      supplied, and would be obliged both to buy very dear, and to sell very
      cheap. This, however, till within these few years, had always been the
      policy of Spain; and the price of all European goods, accordingly, is said
      to have been enormous in the Spanish West Indies. At Quito, we are told by
      Ulloa, a pound of iron sold for about 4s:6d., and a pound of steel for
      about 6s:9d. sterling. But it is chiefly in order to purchase European
      goods that the colonies part with their own produce. The more, therefore,
      they pay for the one, the less they really get for the other, and the
      dearness of the one is the same thing with the cheapness of the other. The
      policy of Portugal is, in this respect, the same as the ancient policy of
      Spain, with regard to all its colonies, except Pernambucco and Marannon;
      and with regard to these it has lately adopted a still worse.
    
      Other nations leave the trade of their colonies free to all their
      subjects, who may carry it on from all the different ports of the mother
      country, and who have occasion for no other license than the common
      despatches of the custom-house. In this case the number and dispersed
      situation of the different traders renders it impossible for them to enter
      into any general combination, and their competition is sufficient to
      hinder them from making very exorbitant profits. Under so liberal a
      policy, the colonies are enabled both to sell their own produce, and to
      buy the goods of Europe at a reasonable price; but since the dissolution
      of the Plymouth company, when our colonies were but in their infancy, this
      has always been the policy of England. It has generally, too, been that of
      France, and has been uniformly so since the dissolution of what in England
      is commonly called their Mississippi company. The profits of the trade,
      therefore, which France and England carry on with their colonies, though
      no doubt somewhat higher than if the competition were free to all other
      nations, are, however, by no means exorbitant; and the price of European
      goods, accordingly, is not extravagantly high in the greater past of the
      colonies of either of those nations.
    
      In the exportation of their own surplus produce, too, it is only with
      regard to certain commodities that the colonies of Great Britain are
      confined to the market of the mother country. These commodities having
      been enumerated in the act of navigation, and in some other subsequent
      acts, have upon that account been called enumerated commodities. The rest
      are called non-enumerated, and may be exported directly to other
      countries, provided it is in British or plantation ships, of which the
      owners and three fourths of the mariners are British subjects.
    
      Among the non-enumerated commodities are some of the most important
      productions of America and the West Indies, grain of all sorts, lumber,
      salt provisions, fish, sugar, and rum.
    
      Grain is naturally the first and principal object of the culture of all
      new colonies. By allowing them a very extensive market for it, the law
      encourages them to extend this culture much beyond the consumption of a
      thinly inhabited country, and thus to provide beforehand an ample
      subsistence for a continually increasing population.
    
      In a country quite covered with wood, where timber consequently is of
      little or no value, the expense of clearing the ground is the principal
      obstacle to improvement. By allowing the colonies a very extensive market
      for their lumber, the law endeavours to facilitate improvement by raising
      the price of a commodity which would otherwise be of little value, and
      thereby enabling them to make some profit of what would otherwise be mere
      expense.
    
      In a country neither half peopled nor half cultivated, cattle naturally
      multiply beyond the consumption of the inhabitants, and are often, upon
      that account, of little or no value. But it is necessary, it has already
      been shown, that the price of cattle should bear a certain proportion to
      that of corn, before the greater part of the lands of any country can be
      improved. By allowing to American cattle, in all shapes, dead and alive, a
      very extensive market, the law endeavours to raise the value of a
      commodity, of which the high price is so very essential to improvement.
      The good effects of this liberty, however, must be somewhat diminished by
      the 4th of Geo. III. c. 15, which puts hides and skins among the
      enumerated commodities, and thereby tends to reduce the value of American
      cattle.
    
      To increase the shipping and naval power of Great Britain by the extension
      of the fisheries of our colonies, is an object which the legislature seems
      to have had almost constantly in view. Those fisheries, upon this account,
      have had all the encouragement which freedom can give them, and they have
      flourished accordingly. The New England fishery, in particular, was,
      before the late disturbances, one of the most important, perhaps, in the
      world. The whale fishery which, notwithstanding an extravagant bounty, is
      in Great Britain carried on to so little purpose, that in the opinion of
      many people ( which I do not, however, pretend to warrant), the whole
      produce does not much exceed the value of the bounties which are annually
      paid for it, is in New England carried on, without any bounty, to a very
      great extent. Fish is one of the principal articles with which the North
      Americans trade to Spain, Portugal, and the Mediterranean.
    
      Sugar was originally an enumerated commodity, which could only be exported
      to Great Britain; but in 1751, upon a representation of the
      sugar-planters, its exportation was permitted to all parts of the world.
      The restrictions, however, with which this liberty was granted, joined to
      the high price of sugar in Great Britain, have rendered it in a great
      measure ineffectual. Great Britain and her colonies still continue to be
      almost the sole market for all sugar produced in the British plantations.
      Their consumption increases so fast, that, though in consequence of the
      increasing improvement of Jamaica, as well as of the ceded islands, the
      importation of sugar has increased very greatly within these twenty years,
      the exportation to foreign countries is said to be not much greater than
      before.
    
      Rum is a very important article in the trade which the Americans carry on
      to the coast of Africa, from which they bring back negro slaves in return.
    
      If the whole surplus produce of America, in grain of all sorts, in salt
      provisions, and in fish, had been put into the enumeration, and thereby
      forced into the market of Great Britain, it would have interfered too much
      with the produce of the industry of our own people. It was probably not so
      much from any regard to the interest of America, as from a jealousy of
      this interference, that those important commodities have not only been
      kept out of the enumeration, but that the importation into Great Britain
      of all grain, except rice, and of all salt provisions, has, in the
      ordinary state of the law, been prohibited.
    
      The non-enumerated commodities could originally be exported to all parts
      of the world. Lumber and rice having been once put into the enumeration,
      when they were afterwards taken out of it, were confined, as to the
      European market, to the countries that lie south of Cape Finisterre. By
      the 6th of George III. c. 52, all non-enumerated commodities were
      subjected to the like restriction. The parts of Europe which lie south of
      Cape Finisterre are not manufacturing countries, and we are less jealous
      of the colony ships carrying home from them any manufactures which could
      interfere with our own.
    
      The enumerated commodities are of two sorts; first, such as are either the
      peculiar produce of America, or as cannot be produced, or at least are not
      produced in the mother country. Of this kind are molasses, coffee,
      cocoa-nuts, tobacco, pimento, ginger, whalefins, raw silk, cotton, wool,
      beaver, and other peltry of America, indigo, fustick, and other dyeing
      woods; secondly, such as are not the peculiar produce of America, but
      which are, and may be produced in the mother country, though not in such
      quantities as to supply the greater part of her demand, which is
      principally supplied from foreign countries. Of this kind are all naval
      stores, masts, yards, and bowsprits, tar, pitch, and turpentine, pig and
      bar iron, copper ore, hides and skins, pot and pearl ashes. The largest
      importation of commodities of the first kind could not discourage the
      growth, or interfere with the sale, of any part of the produce of the
      mother country. By confining them to the home market, our merchants, it
      was expected, would not only be enabled to buy them cheaper in the
      plantations, and consequently to sell them with a better profit at home,
      but to establish between the plantations and foreign countries an
      advantageous carrying trade, of which Great Britain was necessarily to be
      the centre or emporium, as the European country into which those
      commodities were first to be imported. The importation of commodities of
      the second kind might be so managed too, it was supposed, as to interfere,
      not with the sale of those of the same kind which were produced at home,
      but with that of those which were imported from foreign countries;
      because, by means of proper duties, they might be rendered always somewhat
      dearer than the former, and yet a good deal cheaper than the latter. By
      confining such commodities to the home market, therefore, it was proposed
      to discourage the produce, not of Great Britain, but of some foreign
      countries with which the balance of trade was believed to be unfavourable
      to Great Britain.
    
      The prohibition of exporting from the colonies to any other country but
      Great Britain, masts, yards, and bowsprits, tar, pitch, and turpentine,
      naturally tended to lower the price of timber in the colonies, and
      consequently to increase the expense of clearing their lands, the
      principal obstacle to their improvement. But about the beginning of the
      present century, in 1703, the pitch and tar company of Sweden endeavoured
      to raise the price of their commodities to Great Britain, by prohibiting
      their exportation, except in their own ships, at their own price, and in
      such quantities as they thought proper. In order to counteract this
      notable piece of mercantile policy, and to render herself as much as
      possible independent, not only of Sweden, but of all the other northern
      powers, Great Britain gave a bounty upon the importation of naval stores
      from America; and the effect of this bounty was to raise the price of
      timber in America much more than the confinement to the home market could
      lower it; and as both regulations were enacted at the same time, their
      joint effect was rather to encourage than to discourage the clearing of
      land in America.
    
      Though pig and bar iron, too, have been put among the enumerated
      commodities, yet as, when imported from America, they are exempted from
      considerable duties to which they are subject when imported front any
      other country, the one part of the regulation contributes more to
      encourage the erection of furnaces in America than the other to discourage
      it. There is no manufacture which occasions so great a consumption of wood
      as a furnace, or which can contribute so much to the clearing of a country
      overgrown with it.
    
      The tendency of some of these regulations to raise the value of timber in
      America, and thereby to facilitate the clearing of the land, was neither,
      perhaps, intended nor understood by the legislature. Though their
      beneficial effects, however, have been in this respect accidental, they
      have not upon that account been less real.
    
      The most perfect freedom of trade is permitted between the British
      colonies of America and the West Indies, both in the enumerated and in the
      non-enumerated commodities Those colonies are now become so populous and
      thriving, that each of them finds in some of the others a great and
      extensive market for every part of its produce. All of them taken
      together, they make a great internal market for the produce of one
      another.
    
      The liberality of England, however, towards the trade of her colonies, has
      been confined chiefly to what concerns the market for their produce,
      either in its rude state, or in what may be called the very first stage of
      manufacture. The more advanced or more refined manufactures, even of the
      colony produce, the merchants and manufacturers of Great Britain chuse to
      reserve to themselves, and have prevailed upon the legislature to prevent
      their establishment in the colonies, sometimes by high duties, and
      sometimes by absolute prohibitions.
    
      While, for example, Muscovado sugars from the British plantations pay,
      upon importation, only 6s:4d. the hundred weight, white sugars pay £1:1:1;
      and refined, either double or single, in loaves, £4:2:5 8/20ths. When
      those high duties were imposed, Great Britain was the sole, and she still
      continues to be, the principal market, to which the sugars of the British
      colonies could be exported. They amounted, therefore, to a prohibition, at
      first of claying or refining sugar for any foreign market, and at present
      of claying or refining it for the market which takes off, perhaps, more
      than nine-tenths of the whole produce. The manufacture of claying or
      refining sugar, accordingly, though it has flourished in all the sugar
      colonies of France, has been little cultivated in any of those of England,
      except for the market of the colonies themselves. While Grenada was in the
      hands of the French, there was a refinery of sugar, by claying, at least
      upon almost every plantation. Since it fell into those of the English,
      almost all works of this kind have been given up; and there are at present
      (October 1773), I am assured, not above two or three remaining in the
      island. At present, however, by an indulgence of the custom-house, clayed
      or refined sugar, if reduced from loaves into powder, is commonly imported
      as Muscovado.
    
      While Great Britain encourages in America the manufacturing of pig and bar
      iron, by exempting them from duties to which the like commodities are
      subject when imported from any other country, she imposes an absolute
      prohibition upon the erection of steel furnaces and slit-mills in any of
      her American plantations. She will not suffer her colonies to work in
      those more refined manufactures, even for their own consumption; but
      insists upon their purchasing of her merchants and manufacturers all goods
      of this kind which they have occasion for.
    
      She prohibits the exportation from one province to another by water, and
      even the carriage by land upon horseback, or in a cart, of hats, of wools,
      and woollen goods, of the produce of America; a regulation which
      effectually prevents the establishment of any manufacture of such
      commodities for distant sale, and confines the industry of her colonists
      in this way to such coarse and household manufactures as a private family
      commonly makes for its own use, or for that of some of its neighbours in
      the same province.
    
      To prohibit a great people, however, from making all that they can of
      every part of their own produce, or from employing their stock and
      industry in the way that they judge most advantageous to themselves, is a
      manifest violation of the most sacred rights of mankind. Unjust, however,
      as such prohibitions may be, they have not hitherto been very hurtful to
      the colonies. Land is still so cheap, and, consequently, labour so dear
      among them, that they can import from the mother country almost all the
      more refined or more advanced manufactures cheaper than they could make
      them for themselves. Though they had not, therefore, been prohibited from
      establishing such manufactures, yet, in their present state of
      improvement, a regard to their own interest would probably have prevented
      them from doing so. In their present state of improvement, those
      prohibitions, perhaps, without cramping their industry, or restraining it
      from any employment to which it would have gone of its own accord, are
      only impertinent badges of slavery imposed upon them, without any
      sufficient reason, by the groundless jealousy of the merchants and
      manufacturers of the mother country. In a more advanced state, they might
      be really oppressive and insupportable.
    
      Great Britain, too, as she confines to her own market some of the most
      important productions of the colonies, so, in compensation, she gives to
      some of them an advantage in that market, sometimes by imposing higher
      duties upon the like productions when imported from other countries, and
      sometimes by giving bounties upon their importation from the colonies. In
      the first way, she gives an advantage in the home market to the sugar,
      tobacco, and iron of her own colonies; and, in the second, to their raw
      silk, to their hemp and flax, to their indigo, to their naval stores, and
      to their building timber. This second way of encouraging the colony
      produce, by bounties upon importation, is, so far as I have been able to
      learn, peculiar to Great Britain: the first is not. Portugal does not
      content herself with imposing higher duties upon the importation of
      tobacco from any other country, but prohibits it under the severest
      penalties.
    
      With regard to the importation of goods from Europe, England has likewise
      dealt more liberally with her colonies than any other nation.
    
      Great Britain allows a part, almost always the half, generally a larger
      portion, and sometimes the whole, of the duty which is paid upon the
      importation of foreign goods, to be drawn back upon their exportation to
      any foreign country. No independent foreign country, it was easy to
      foresee, would receive them, if they came to it loaded with the heavy
      duties to which almost all foreign goods are subjected on their
      importation into Great Britain. Unless, therefore, some part of those
      duties was drawn back upon exportation, there was an end of the carrying
      trade; a trade so much favoured by the mercantile system.
    
      Our colonies, however, are by no means independent foreign countries; and
      Great Britain having assumed to herself the exclusive right of supplying
      them with all goods from Europe, might have forced them (in the same
      manner as other countries have done their colonies) to receive such goods
      loaded with all the same duties which they paid in the mother country.
      But, on the contrary, till 1763, the same drawbacks were paid upon the
      exportation of the greater part of foreign goods to our colonies, as to
      any independent foreign country. In 1763, indeed, by the 4th of Geo. III.
      c. 15, this indulgence was a good deal abated, and it was enacted, “That
      no part of the duty called the old subsidy should be drawn back for any
      goods of the growth, production, or manufacture of Europe or the East
      Indies, which should be exported from this kingdom to any British colony
      or plantation in America; wines, white calicoes, and muslins, excepted.”
      Before this law, many different sorts of foreign goods might have been
      bought cheaper in the plantations than in the mother country, and some may
      still.
    
      Of the greater part of the regulations concerning the colony trade, the
      merchants who carry it on, it must be observed, have been the principal
      advisers. We must not wonder, therefore, if, in a great part of them,
      their interest has been more considered than either that of the colonies
      or that of the mother country. In their exclusive privilege of supplying
      the colonies with all the goods which they wanted from Europe, and of
      purchasing all such parts of their surplus produce as could not interfere
      with any of the trades which they themselves carried on at home, the
      interest of the colonies was sacrificed to the interest of those
      merchants. In allowing the same drawbacks upon the re-exportation of the
      greater part of European and East India goods to the colonies, as upon
      their re-exportation to any independent country, the interest of the
      mother country was sacrificed to it, even according to the mercantile
      ideas of that interest. It was for the interest of the merchants to pay as
      little as possible for the foreign goods which they sent to the colonies,
      and, consequently, to get back as much as possible of the duties which
      they advanced upon their importation into Great Britain. They might
      thereby be enabled to sell in the colonies, either the same quantity of
      goods with a greater profit, or a greater quantity with the same profit,
      and, consequently, to gain something either in the one way or the other.
      It was likewise for the interest of the colonies to get all such goods as
      cheap, and in as great abundance as possible. But this might not always be
      for the interest of the mother country. She might frequently suffer, both
      in her revenue, by giving back a great part of the duties which had been
      paid upon the importation of such goods; and in her manufactures, by being
      undersold in the colony market, in consequence of the easy terms upon
      which foreign manufactures could be carried thither by means of those
      drawbacks. The progress of the linen manufacture of Great Britain, it is
      commonly said, has been a good deal retarded by the drawbacks upon the
      re-exportation of German linen to the American colonies.
    
      But though the policy of Great Britain, with regard to the trade of her
      colonies, has been dictated by the same mercantile spirit as that of other
      nations, it has, however, upon the whole, been less illiberal and
      oppressive than that of any of them.
    
      In every thing except their foreign trade, the liberty of the English
      colonists to manage their own affairs their own way, is complete. It is in
      every respect equal to that of their fellow-citizens at home, and is
      secured in the same manner, by an assembly of the representatives of the
      people, who claim the sole right of imposing taxes for the support of the
      colony government. The authority of this assembly overawes the executive
      power; and neither the meanest nor the most obnoxious colonist, as long as
      he obeys the law, has any thing to fear from the resentment, either of the
      governor, or of any other civil or military officer in the province. The
      colony assemblies, though, like the house of commons in England, they are
      not always a very equal representation of the people, yet they approach
      more nearly to that character; and as the executive power either has not
      the means to corrupt them, or, on account of the support which it receives
      from the mother country, is not under the necessity of doing so, they are,
      perhaps, in general more influenced by the inclinations of their
      constituents. The councils, which, in the colony legislatures, correspond
      to the house of lords in Great Britain, are not composed of a hereditary
      nobility. In some of the colonies, as in three of the governments of New
      England, those councils are not appointed by the king, but chosen by the
      representatives of the people. In none of the English colonies is there
      any hereditary nobility. In all of them, indeed, as in all other free
      countries, the descendant of an old colony family is more respected than
      an upstart of equal merit and fortune; but he is only more respected, and
      he has no privileges by which he can be troublesome to his neighbours.
      Before the commencement of the present disturbances, the colony assemblies
      had not only the legislative, but a part of the executive power. In
      Connecticut and Rhode Island, they elected the governor. In the other
      colonies, they appointed the revenue officers, who collected the taxes
      imposed by those respective assemblies, to whom those officers were
      immediately responsible. There is more equality, therefore, among the
      English colonists than among the inhabitants of the mother country. Their
      manners are more re publican; and their governments, those of three of the
      provinces of New England in particular, have hitherto been more republican
      too.
    
      The absolute governments of Spain, Portugal, and France, on the contrary,
      take place in their colonies; and the discretionary powers which such
      governments commonly delegate to all their inferior officers are, on
      account of the great distance, naturally exercised there with more than
      ordinary violence. Under all absolute governments, there is more liberty
      in the capital than in any other part of the country. The sovereign
      himself can never have either interest or inclination to pervert the order
      of justice, or to oppress the great body of the people. In the capital,
      his presence overawes, more or less, all his inferior officers, who, in
      the remoter provinces, from whence the complaints of the people are less
      likely to reach him, can exercise their tyranny with much more safety. But
      the European colonies in America are more remote than the most distant
      provinces of the greatest empires which had ever been known before. The
      government of the English colonies is, perhaps, the only one which, since
      the world began, could give perfect security to the inhabitants of so very
      distant a province. The administration of the French colonies, however,
      has always been conducted with much more gentleness and moderation than
      that of the Spanish and Portuguese. This superiority of conduct is
      suitable both to the character of the French nation, and to what forms the
      character of every nation, the nature of their government, which, though
      arbitrary and violent in comparison with that of Great Britain, is legal
      and free in comparison with those of Spain and Portugal.
    
      It is in the progress of the North American colonies, however, that the
      superiority of the English policy chiefly appears. The progress of the
      sugar colonies of France has been at least equal, perhaps superior, to
      that of the greater part of those of England; and yet the sugar colonies
      of England enjoy a free government, nearly of the same kind with that
      which takes place in her colonies of North America. But the sugar colonies
      of France are not discouraged, like those of England, from refining their
      own sugar; and what is still of greater importance, the genius of their
      government naturally introduces a better management of their negro slaves.
    
      In all European colonies, the culture of the sugar-cane is carried on by
      negro slaves. The constitution of those who have been born in the
      temperate climate of Europe could not, it is supposed, support the labour
      of digging the ground under the burning sun of the West Indies; and the
      culture of the sugar-cane, as it is managed at present, is all hand
      labour; though, in the opinion of many, the drill plough might be
      introduced into it with great advantage. But, as the profit and success of
      the cultivation which is carried on by means of cattle, depend very much
      upon the good management of those cattle; so the profit and success of
      that which is carried on by slaves must depend equally upon the good
      management of those slaves; and in the good management of their slaves the
      French planters, I think it is generally allowed, are superior to the
      English. The law, so far as it gives some weak protection to the slave
      against the violence of his master, is likely to be better executed in a
      colony where the government is in a great measure arbitrary, than in one
      where it is altogether free. In every country where the unfortunate law
      of slavery is established, the magistrate, when he protects the slave,
      intermeddles in some measure in the management of the private property of
      the master; and, in a free country, where the master is, perhaps, either a
      member of the colony assembly, or an elector of such a member, he dares
      not do this but with the greatest caution and circumspection. The respect
      which he is obliged to pay to the master, renders it more difficult for
      him to protect the slave. But in a country where the government is in a
      great measure arbitrary, where it is usual for the magistrate to
      intermeddle even in the management of the private property of individuals,
      and to send them, perhaps, a lettre de cachet, if they do not manage it
      according to his liking, it is much easier for him to give some protection
      to the slave; and common humanity naturally disposes him to do so. The
      protection of the magistrate renders the slave less contemptible in the
      eyes of his master, who is thereby induced to consider him with more
      regard, and to treat him with more gentleness. Gentle usage renders the
      slave not only more faithful, but more intelligent, and, therefore, upon a
      double account, more useful. He approaches more to the condition of a free
      servant, and may possess some degree of integrity and attachment to his
      master’s interest; virtues which frequently belong to free servants, but
      which never can belong to a slave, who is treated as slaves commonly are
      in countries where the master is perfectly free and secure.
    
      That the condition of a slave is better under an arbitrary than under a
      free government, is, I believe, supported by the history of all ages and
      nations. In the Roman history, the first time we read of the magistrate
      interposing to protect the slave from the violence of his master, is under
      the emperors. When Vidius Pollio, in the presence of Augustus, ordered one
      of his slaves, who had committed a slight fault, to be cut into pieces and
      thrown into his fish-pond, in order to feed his fishes, the emperor
      commanded him, with indignation, to emancipate immediately, not only that
      slave, but all the others that belonged to him. Under the republic no
      magistrate could have had authority enough to protect the slave, much less
      to punish the master.
    
      The stock, it is to be observed, which has improved the sugar colonies of
      France, particularly the great colony of St Domingo, has been raised
      almost entirely from the gradual improvement and cultivation of those
      colonies. It has been almost altogether the produce of the soil and of the
      industry of the colonists, or, what comes to the same thing, the price of
      that produce, gradually accumulated by good management, and employed in
      raising a still greater produce. But the stock which has improved and
      cultivated the sugar colonies of England, has, a great part of it, been
      sent out from England, and has by no means been altogether the produce of
      the soil and industry of the colonists. The prosperity of the English
      sugar colonies has been in a great measure owing to the great riches of
      England, of which a part has overflowed, if one may say so, upon these
      colonies. But the prosperity of the sugar colonies of France has been
      entirely owing to the good conduct of the colonists, which must therefore
      have had some superiority over that of the English; and this superiority
      has been remarked in nothing so much as in the good management of their
      slaves.
    
      Such have been the general outlines of the policy of the different
      European nations with regard to their colonies.
    
      The policy of Europe, therefore, has very little to boast of, either in
      the original establishment, or, so far as concerns their internal
      government, in the subsequent prosperity of the colonies of America.
    
      Folly and injustice seem to have been the principles which presided over
      and directed the first project of establishing those colonies; the folly
      of hunting after gold and silver mines, and the injustice of coveting the
      possession of a country whose harmless natives, far from having ever
      injured the people of Europe, had received the first adventurers with
      every mark of kindness and hospitality.
    
      The adventurers, indeed, who formed some of the latter establishments,
      joined to the chimerical project of finding gold and silver mines, other
      motives more reasonable and more laudable; but even these motives do very
      little honour to the policy of Europe.
    
      The English puritans, restrained at home, fled for freedom to America, and
      established there the four governments of New England. The English
      catholics, treated with much greater injustice, established that of
      Maryland; the quakers, that of Pennsylvania. The Portuguese Jews,
      persecuted by the inquisition, stript of their fortunes, and banished to
      Brazil, introduced, by their example, some sort of order and industry
      among the transported felons and strumpets by whom that colony was
      originally peopled, and taught them the culture of the sugar-cane. Upon
      all these different occasions, it was not the wisdom and policy, but the
      disorder and injustice of the European governments, which peopled and
      cultivated America.
    
      In effectuation some of the most important of these establishments, the
      different governments of Europe had as little merit as in projecting them.
      The conquest of Mexico was the project, not of the council of Spain, but
      of a governor of Cuba; and it was effectuated by the spirit of the bold
      adventurer to whom it was entrusted, in spite of every thing which that
      governor, who soon repented of having trusted such a person, could do to
      thwart it. The conquerors of Chili and Peru, and of almost all the other
      Spanish settlements upon the continent of America, carried out with them
      no other public encouragement, but a general permission to make
      settlements and conquests in the name of the king of Spain. Those
      adventures were all at the private risk and expense of the adventurers.
      The government of Spain contributed scarce any thing to any of them. That
      of England contributed as little towards effectuating the establishment of
      some of its most important colonies in North America.
    
      When those establishments were effectuated, and had become so considerable
      as to attract the attention of the mother country, the first regulations
      which she made with regard to them, had always in view to secure to
      herself the monopoly of their commerce; to confine their market, and to
      enlarge her own at their expense, and, consequently, rather to damp and
      discourage, than to quicken and forward the course of their prosperity. In
      the different ways in which this monopoly has been exercised, consists one
      of the most essential differences in the policy of the different European
      nations with regard to their colonies. The best of them all, that of
      England, is only somewhat less illiberal and oppressive than that of any
      of the rest.
    
      In what way, therefore, has the policy of Europe contributed either to the
      first establishment, or to the present grandeur of the colonies of
      America? In one way, and in one way only, it has contributed a good deal.
      Magna virum mater! It bred and formed the men who were capable of
      achieving such great actions, and of laying the foundation of so great an
      empire; and there is no other quarter of the world; of which the policy is
      capable of forming, or has ever actually, and in fact, formed such men.
      The colonies owe to the policy of Europe the education and great views of
      their active and enterprizing founders; and some of the greatest and most
      important of them, so far as concerns their internal government, owe to it
      scarce anything else.
    


    
      PART III. Of the Advantages which Europe has derived From the Discovery of
      America, and from that of a Passage to the East Indies by the Cape of Good
      Hope.
    
      Such are the advantages which the colonies of America have derived from
      the policy of Europe.
    
      What are those which Europe has derived from the discovery and
      colonization of America?
    
      Those advantages may be divided, first, into the general advantages which
      Europe, considered as one great country, has derived from those great
      events; and, secondly, into the particular advantages which each
      colonizing country has derived from the colonies which particularly belong
      to it, in consequence of the authority or dominion which it exercises over
      them.
    
      The general advantages which Europe, considered as one great country, has
      derived from the discovery and colonization of America, consist, first, in
      the increase of its enjoyments; and, secondly, in the augmentation of its
      industry.
    
      The surplus produce of America imported into Europe, furnishes the
      inhabitants of this great continent with a variety of commodities which
      they could not otherwise have possessed; some for conveniency and use,
      some for pleasure, and some for ornament; and thereby contributes to
      increase their enjoyments.
    
      The discovery and colonization of America, it will readily be allowed,
      have contributed to augment the industry, first, of all the countries
      which trade to it directly, such as Spain, Portugal, France, and England;
      and, secondly, of all those which, without trading to it directly, send,
      through the medium of other countries, goods to it of their own produce,
      such as Austrian Flanders, and some provinces of Germany, which, through
      the medium of the countries before mentioned, send to it a considerable
      quantity of linen and other goods. All such countries have evidently
      gained a more extensive market for their surplus produce, and must
      consequently have been encouraged to increase its quantity.
    
      But that those great events should likewise have contributed to encourage
      the industry of countries such as Hungary and Poland, which may never,
      perhaps, have sent a single commodity of their own produce to America, is
      not, perhaps, altogether so evident. That those events have done so,
      however, cannot be doubted. Some part of the produce of America is
      consumed in Hungary and Poland, and there is some demand there for the
      sugar, chocolate, and tobacco, of that new quarter of the world. But those
      commodities must be purchased with something which is either the produce
      of the industry of Hungary and Poland, or with something which had been
      purchased with some part of that produce. Those commodities of America are
      new values, new equivalents, introduced into Hungary and Poland, to be
      exchanged there for the surplus produce of these countries. By being
      carried thither, they create a new and more extensive market for that
      surplus produce. They raise its value, and thereby contribute to encourage
      its increase. Though no part of it may ever be carried to America, it may
      be carried to other countries, which purchase it with a part of their
      share of the surplus produce of America, and it may find a market by means
      of the circulation of that trade which was originally put into motion by
      the surplus produce of America.
    
      Those great events may even have contributed to increase the enjoyments,
      and to augment the industry, of countries which not only never sent any
      commodities to America, but never received any from it. Even such
      countries may have received a greater abundance of other commodities from
      countries, of which the surplus produce had been augmented by means of the
      American trade. This greater abundance, as it must necessarily have
      increased their enjoyments, so it must likewise have augmented their
      industry. A greater number of new equivalents, of some kind or other, must
      have been presented to them to be exchanged for the surplus produce of
      that industry. A more extensive market must have been created for that
      surplus produce, so as to raise its value, and thereby encourage its
      increase. The mass of commodities annually thrown into the great circle of
      European commerce, and by its various revolutions annually distributed
      among all the different nations comprehended within it, must have been
      augmented by the whole surplus produce of America. A greater share of this
      greater mass, therefore, is likely to have fallen to each of those
      nations, to have increased their enjoyments, and augmented their industry.
    
      The exclusive trade of the mother countries tends to diminish, or at least
      to keep down below what they would otherwise rise to, both the enjoyments
      and industry of all those nations in general, and of the American colonies
      in particular. It is a dead weight upon the action of one of the great
      springs which puts into motion a great part of the business of mankind. By
      rendering the colony produce dearer in all other countries, it lessens its
      consumption, and thereby cramps the industry of the colonies, and both the
      enjoyments and the industry of all other countries, which both enjoy less
      when they pay more for what they enjoy, and produce less when they get
      less for what they produce. By rendering the produce of all other
      countries dearer in the colonies, it cramps in the same manner the
      industry of all other colonies, and both the enjoyments and the industry
      of the colonies. It is a clog which, for the supposed benefit of some
      particular countries, embarrasses the pleasures and encumbers the industry
      of all other countries, but of the colonies more than of any other. It not
      only excludes as much as possible all other countries from one particular
      market, but it confines as much as possible the colonies to one particular
      market; and the difference is very great between being excluded from one
      particular market when all others are open, and being confined to one
      particular market when all others are shut up. The surplus produce of the
      colonies, however, is the original source of all that increase of
      enjoyments and industry which Europe derives from the discovery and
      colonization of America, and the exclusive trade of the mother countries
      tends to render this source much less abundant than it otherwise would be.
    
      The particular advantages which each colonizing country derives from the
      colonies which particularly belong to it, are of two different kinds;
      first, those common advantages which every empire derives from the
      provinces subject to its dominion; and, secondly, those peculiar
      advantages which are supposed to result from provinces of so very peculiar
      a nature as the European colonies of America.
    
      The common advantages which every empire derives from the provinces
      subject to its dominion consist, first, in the military force which they
      furnish for its defence; and, secondly, in the revenue which they furnish
      for the support of its civil government. The Roman colonies furnished
      occasionally both the one and the other. The Greek colonies sometimes
      furnished a military force, but seldom any revenue. They seldom
      acknowledged themselves subject to the dominion of the mother city. They
      were generally her allies in war, but very seldom her subjects in peace.
    
      The European colonies of America have never yet furnished any military
      force for the defence of the mother country. The military force has never
      yet been sufficient for their own defence; and in the different wars in
      which the mother countries have been engaged, the defence of their
      colonies has generally occasioned a very considerable distraction of the
      military force of those countries. In this respect, therefore, all the
      European colonies have, without exception, been a cause rather of weakness
      than of strength to their respective mother countries.
    
      The colonies of Spain and Portugal only have contributed any revenue
      towards the defence of the mother country, or the support of her civil
      government. The taxes which have been levied upon those of other European
      nations, upon those of England in particular, have seldom been equal to
      the expense laid out upon them in time of peace, and never sufficient to
      defray that which they occasioned in time of war. Such colonies,
      therefore, have been a source of expense, and not of revenue, to their
      respective mother countries.
    
      The advantages of such colonies to their respective mother countries,
      consist altogether in those peculiar advantages which are supposed to
      result from provinces of so very peculiar a nature as the European
      colonies of America; and the exclusive trade, it is acknowledged, is the
      sole source of all those peculiar advantages.
    
      In consequence of this exclusive trade, all that part of the surplus
      produce of the English colonies, for example, which consists in what are
      called enumerated commodities, can be sent to no other country but
      England. Other countries must afterwards buy it of her. It must be
      cheaper, therefore, in England than it can be in any other country, and
      must contribute more to increase the enjoyments of England than those of
      any other country. It must likewise contribute more to encourage her
      industry. For all those parts of her own surplus produce which England
      exchanges for those enumerated commodities, she must get a better price
      than any other countries can get for the like parts of theirs, when they
      exchange them for the same commodities. The manufactures of England, for
      example, will purchase a greater quantity of the sugar and tobacco of her
      own colonies than the like manufactures of other countries can purchase of
      that sugar and tobacco. So far, therefore, as the manufactures of England
      and those of other countries are both to be exchanged for the sugar and
      tobacco of the English colonies, this superiority of price gives an
      encouragement to the former beyond what the latter can, in these
      circumstances, enjoy. The exclusive trade of the colonies, therefore, as
      it diminishes, or at least keeps down below what they would otherwise rise
      to, both the enjoyments and the industry of the countries which do not
      possess it, so it gives an evident advantage to the countries which do
      possess it over those other countries.
    
      This advantage, however, will, perhaps, be found to be rather what may be
      called a relative than an absolute advantage, and to give a superiority to
      the country which enjoys it, rather by depressing the industry and produce
      of other countries, than by raising those of that particular country above
      what they would naturally rise to in the case of a free trade.
    
      The tobacco of Maryland and Virginia, for example, by means of the
      monopoly which England enjoys of it, certainly comes cheaper to England
      than it can do to France to whom England commonly sells a considerable
      part of it. But had France and all other European countries been at all
      times allowed a free trade to Maryland and Virginia, the tobacco of those
      colonies might by this time have come cheaper than it actually does, not
      only to all those other countries, but likewise to England. The produce of
      tobacco, in consequence of a market so much more extensive than any which
      it has hitherto enjoyed, might, and probably would, by this time have been
      so much increased as to reduce the profits of a tobacco plantation to
      their natural level with those of a corn plantation, which it is supposed
      they are still somewhat above. The price of tobacco might, and probably
      would, by this time have fallen somewhat lower than it is at present. An
      equal quantity of the commodities, either of England or of those other
      countries, might have purchased in Maryland and Virginia a greater
      quantity of tobacco than it can do at present, and consequently have been
      sold there for so much a better price. So far as that weed, therefore,
      can, by its cheapness and abundance, increase the enjoyments, or augment
      the industry, either of England or of any other country, it would
      probably, in the case of a free trade, have produced both these effects in
      somewhat a greater degree than it can do at present. England, indeed,
      would not, in this case, have had any advantage over other countries. She
      might have bought the tobacco of her colonies somewhat cheaper, and
      consequently have sold some of her own commodities somewhat dearer, than
      she actually does; but she could neither have bought the one cheaper, nor
      sold the other dearer, than any other country might have done. She might,
      perhaps, have gained an absolute, but she would certainly have lost a
      relative advantage.
    
      In order, however, to obtain this relative advantage in the colony trade,
      in order to execute the invidious and malignant project of excluding, as
      much as possible, other nations from any share in it, England, there are
      very probable reasons for believing, has not only sacrificed a part of the
      absolute advantage which she, as well as every other nation, might have
      derived from that trade, but has subjected herself both to an absolute and
      to a relative disadvantage in almost every other branch of trade.
    
      When, by the act of navigation, England assumed to herself the monopoly of
      the colony trade, the foreign capitals which had before been employed in
      it, were necessarily withdrawn from it. The English capital, which had
      before carried on but a part of it, was now to carry on the whole. The
      capital which had before supplied the colonies with but a part of the
      goods which they wanted from Europe, was now all that was employed to
      supply them with the whole. But it could not supply them with the whole;
      and the goods with which it did supply them were necessarily sold very
      dear. The capital which had before bought but a part of the surplus
      produce of the colonies, was now all that was employed to buy the whole.
      But it could not buy the whole at any thing near the old price; and
      therefore, whatever it did buy, it necessarily bought very cheap. But in
      an employment of capital, in which the merchant sold very dear, and bought
      very cheap, the profit must have been very great, and much above the
      ordinary level of profit in other branches of trade. This superiority of
      profit in the colony trade could not fail to draw from other branches of
      trade a part of the capital which had before been employed in them. But
      this revulsion of capital, as it must have gradually increased the
      competition of capitals in the colony trade, so it must have gradually
      diminished that competition in all those other branches of trade; as it
      must have gradually lowered the profits of the one, so it must have
      gradually raised those of the other, till the profits of all came to a new
      level, different from, and somewhat higher, than that at which they had
      been before.
    
      This double effect of drawing capital from all other trades, and of
      raising the rate of profit somewhat higher than it otherwise would have
      been in all trades, was not only produced by this monopoly upon its first
      establishment, but has continued to be produced by it ever since.
    
      First, This monopoly has been continually drawing capital from all other
      trades, to be employed in that of the colonies.
    
      Though the wealth of Great Britain has increased very much since the
      establishment of the act of navigation, it certainly has not increased in
      the same proportion as that or the colonies. But the foreign trade of
      every country naturally increases in proportion to its wealth, its surplus
      produce in proportion to its whole produce; and Great Britain having
      engrossed to herself almost the whole of what may be called the foreign
      trade of the colonies, and her capital not having increased in the same
      proportion as the extent of that trade, she could not carry it on without
      continually withdrawing from other branches of trade some part of the
      capital which had before been employed in them, as well as withholding
      from them a great deal more which would otherwise have gone to them. Since
      the establishment of the act of navigation, accordingly, the colony trade
      has been continually increasing, while many other branches of foreign
      trade, particularly of that to other parts of Europe, have been
      continually decaying. Our manufactures for foreign sale, instead of being
      suited, as before the act of navigation, to the neighbouring market of
      Europe, or to the more distant one of the countries which lie round the
      Mediterranean sea, have the greater part of them, been accommodated to the
      still more distant one of the colonies; to the market in which they have
      the monopoly, rather than to that in which they have many competitors. The
      causes of decay in other branches of foreign trade, which, by Sir Matthew
      Decker and other writers, have been sought for in the excess and improper
      mode of taxation, in the high price of labour, in the increase of luxury,
      etc. may all be found in the overgrowth of the colony trade. The
      mercantile capital of Great Britain, though very great, yet not being
      infinite, and though greatly increased since the act of navigation, yet
      not being increased in the same proportion as the colony trade, that trade
      could not possibly be carried on without withdrawing some part of that
      capital from other branches of trade, nor consequently without some decay
      of those other branches.
    
      England, it must be observed, was a great trading country, her mercantile
      capital was very great, and likely to become still greater and greater
      every day, not only before the act of navigation had established the
      monopoly of the corn trade, but before that trade was very considerable.
      In the Dutch war, during the government of Cromwell, her navy was superior
      to that of Holland; and in that which broke out in the beginning of the
      reign of Charles II., it was at least equal, perhaps superior to the
      united navies of France and Holland. Its superiority, perhaps, would
      scarce appear greater in the present times, at least if the Dutch navy
      were to bear the same proportion to the Dutch commerce now which it did
      then. But this great naval power could not, in either of those wars, be
      owing to the act of navigation. During the first of them, the plan of that
      act had been but just formed; and though, before the breaking out of the
      second, it had been fully enacted by legal authority, yet no part of it
      could have had time to produce any considerable effect, and least of all
      that part which established the exclusive trade to the colonies. Both the
      colonies and their trade were inconsiderable then, in comparison of what
      they are how. The island of Jamaica was an unwholesome desert, little
      inhabited, and less cultivated. New York and New Jersey were in the
      possession of the Dutch, the half of St. Christopher’s in that of the
      French. The island of Antigua, the two Carolinas, Pennsylvania, Georgia,
      and Nova Scotia, were not planted. Virginia, Maryland, and New England
      were planted; and though they were very thriving colonies, yet there was
      not perhaps at that time, either in Europe or America, a single person who
      foresaw, or even suspected, the rapid progress which they have since made
      in wealth, population, and improvement. The island of Barbadoes, in short,
      was the only British colony of any consequence, of which the condition at
      that time bore any resemblance to what it is at present. The trade of the
      colonies, of which England, even for some time after the act of
      navigation, enjoyed but a part (for the act of navigation was not very
      strictly executed till several years after it was enacted), could not at
      that time be the cause of the great trade of England, nor of the great
      naval power which was supported by that trade. The trade which at that
      time supported that great naval power was the trade of Europe, and of the
      countries which lie round the Mediterranean sea. But the share which Great
      Britain at present enjoys of that trade could not support any such great
      naval power. Had the growing trade of the colonies been left free to all
      nations, whatever share of it might have fallen to Great Britain, and a
      very considerable share would probably have fallen to her, must have been
      all an addition to this great trade of which she was before in possession.
      In consequence of the monopoly, the increase of the colony trade has not
      so much occasioned an addition to the trade which Great Britain had
      before, as a total change in its direction.
    
      Secondly, This monopoly has necessarily contributed to keep up the rate of
      profit, in all the different branches of British trade, higher than it
      naturally would have been, had all nations been allowed a free trade to
      the British colonies.
    
      The monopoly of the colony trade, as it necessarily drew towards that
      trade a greater proportion of the capital of Great Britain than what would
      have gone to it of its own accord, so, by the expulsion of all foreign
      capitals, it necessarily reduced the whole quantity of capital employed in
      that trade below what it naturally would have been in the case of a free
      trade. But, by lessening the competition of capitals in that branch of
      trade, it necessarily raised the rate of profit in that branch. By
      lessening, too, the competition of British capitals in all other branches
      of trade, it necessarily raised the rate of British profit in all those
      other branches. Whatever may have been, at any particular period since the
      establishment of the act of navigation, the state or extent of the
      mercantile capital of Great Britain, the monopoly of the colony trade
      must, during the continuance of that state, have raised the ordinary rate
      of British profit higher than it otherwise would have been, both in that
      and in all the other branches of British trade. If, since the
      establishment of the act of navigation, the ordinary rate of British
      profit has fallen considerably, as it certainly has, it must have fallen
      still lower, had not the monopoly established by that act contributed to
      keep it up.
    
      But whatever raises, in any country, the ordinary rate of profit higher
      than it otherwise would be, necessarily subjects that country both to an
      absolute, and to a relative disadvantage in every branch of trade of which
      she has not the monopoly.
    
      It subjects her to an absolute disadvantage; because, in such branches of
      trade, her merchants cannot get this greater profit without selling dearer
      than they otherwise would do, both the goods of foreign countries which
      they import into their own, and the goods of their own country which they
      export to foreign countries. Their own country must both buy dearer and
      sell dearer; must both buy less, and sell less; must both enjoy less and
      produce less, than she otherwise would do.
    
      It subjects her to a relative disadvantage; because, in such branches of
      trade, it sets other countries, which are not subject to the same absolute
      disadvantage, either more above her or less below her, than they otherwise
      would be. It enables them both to enjoy more and to produce more, in
      proportion to what she enjoys and produces. It renders their superiority
      greater, or their inferiority less, than it otherwise would be. By raising
      the price of her produce above what it otherwise would be, it enables the
      merchants of other countries to undersell her in foreign markets, and
      thereby to justle her out of almost all those branches of trade, of which
      she has not the monopoly.
    
      Our merchants frequently complain of the high wages of British labour, as
      the cause of their manufactures being undersold in foreign markets; but
      they are silent about the high profits of stock. They complain of the
      extravagant gain of other people; but they say nothing of their own. The
      high profits of British stock, however, may contribute towards raising the
      price of British manufactures, in many cases, as much, and in some perhaps
      more, than the high wages of British labour.
    
      It is in this manner that the capital of Great Britain, one may justly
      say, has partly been drawn and partly been driven from the greater part of
      the different branches of trade of which she has not the monopoly; from
      the trade of Europe, in particular, and from that of the countries which
      lie round the Mediterranean sea.
    
      It has partly been drawn from those branches of trade, by the attraction
      of superior profit in the colony trade, in consequence of the continual
      increase of that trade, and of the continual insufficiency of the capital
      which had carried it on one year to carry it on the next.
    
      It has partly been driven from them, by the advantage which the high rate
      of profit established in Great Britain gives to other countries, in all
      the different branches of trade of which Great Britain has not the
      monopoly.
    
      As the monopoly of the colony trade has drawn from those other branches a
      part of the British capital, which would otherwise have been employed in
      them, so it has forced into them many foreign capitals which would never
      have gone to them, had they not been expelled from the colony trade. In
      those other branches of trade, it has diminished the competition of
      British capitals, and thereby raised the rate of British profit higher
      than it otherwise would have been. On the contrary, it has increased the
      competition of foreign capitals, and thereby sunk the rate of foreign
      profit lower than it otherwise would have been. Both in the one way and in
      the other, it must evidently have subjected Great Britain to a relative
      disadvantage in all those other branches of trade.
    
      The colony trade, however, it may perhaps be said, is more advantageous to
      Great Britain than any other; and the monopoly, by forcing into that trade
      a greater proportion of the capital of Great Britain than what would
      otherwise have gone to it, has turned that capital into an employment,
      more advantageous to the country than any other which it could have found.
    
      The most advantageous employment of any capital to the country to which it
      belongs, is that which maintains there the greatest quantity of productive
      labour, and increases the most the annual produce of the land and labour
      of that country. But the quantity of productive labour which any capital
      employed in the foreign trade of consumption can maintain, is exactly in
      proportion, it has been shown in the second book, to the frequency of its
      returns. A capital of a thousand pounds, for example, employed in a
      foreign trade of consumption, of which the returns are made regularly once
      in the year, can keep in constant employment, in the country to which it
      belongs, a quantity of productive labour, equal to what a thousand pounds
      can maintain there for a year. If the returns are made twice or thrice in
      the year, it can keep in constant employment a quantity of productive
      labour, equal to what two or three thousand pounds can maintain there for
      a year. A foreign trade of consumption carried on with a neighbouring, is,
      upon that account, in general, more advantageous than one carried on with
      a distant country; and, for the same reason, a direct foreign trade of
      consumption, as it has likewise been shown in the second book, is in
      general more advantageous than a round-about one.
    
      But the monopoly of the colony trade, so far as it has operated upon the
      employment of the capital of Great Britain, has, in all cases, forced some
      part of it from a foreign trade of consumption carried on with a
      neighbouring, to one carried on with a more distant country, and in many
      cases from a direct foreign trade of consumption to a round-about one.
    
      First, The monopoly of the colony trade has, in all cases, forced some
      part of the capital of Great Britain from a foreign trade of consumption
      carried on with a neighbouring, to one carried on with a more distant
      country.
    
      It has, in all cases, forced some part of that capital from the trade with
      Europe, and with the countries which lie round the Mediterranean sea, to
      that with the more distant regions of America and the West Indies; from
      which the returns are necessarily less frequent, not only on account of
      the greater distance, but on account of the peculiar circumstances of
      those countries. New colonies, it has already been observed, are always
      understocked. Their capital is always much less than what they could
      employ with great profit and advantage in the improvement and cultivation
      of their land. They have a constant demand, therefore, for more capital
      than they have of their own; and, in order to supply the deficiency of
      their own, they endeavour to borrow as much as they can of the mother
      country, to whom they are, therefore, always in debt. The most common way
      in which the colonies contract this debt, is not by borrowing upon bond of
      the rich people of the mother country, though they sometimes do this too,
      but by running as much in arrear to their correspondents, who supply them
      with goods from Europe, as those correspondents will allow them. Their
      annual returns frequently do not amount to more than a third, and
      sometimes not to so great a proportion of what they owe. The whole
      capital, therefore, which their correspondents advance to them, is seldom
      returned to Britain in less than three, and sometimes not in less than
      four or five years. But a British capital of a thousand pounds, for
      example, which is returned to Great Britain only once in five years, can
      keep in constant employment only one-fifth part of the British industry
      which it could maintain, if the whole was returned once in the year; and,
      instead of the quantity of industry which a thousand pounds could maintain
      for a year, can keep in constant employment the quantity only which two
      hundred pounds can maintain for a year. The planter, no doubt, by the high
      price which he pays for the goods from Europe, by the interest upon the
      bills which he grants at distant dates, and by the commission upon the
      renewal of those which he grants at near dates, makes up, and probably
      more than makes up, all the loss which his correspondent can sustain by
      this delay. But, though he make up the loss of his correspondent, he
      cannot make up that of Great Britain. In a trade of which the returns are
      very distant, the profit of the merchant may be as great or greater than
      in one in which they are very frequent and near; but the advantage of the
      country in which he resides, the quantity of productive labour constantly
      maintained there, the annual produce of the land and labour, must always
      be much less. That the returns of the trade to America, and still more
      those of that to the West Indies, are, in general, not only more distant,
      but more irregular and more uncertain, too, than those of the trade to any
      part of Europe, or even of the countries which lie round the Mediterranean
      sea, will readily be allowed, I imagine, by everybody who has any
      experience of those different branches of trade.
    
      Secondly, The monopoly of the colony trade, has, in many cases, forced
      some part of the capital of Great Britain from a direct foreign trade of
      consumption, into a round-about one.
    
      Among the enumerated commodities which can be sent to no other market but
      Great Britain, there are several of which the quantity exceeds very much
      the consumption of Great Britain, and of which, a part, therefore, must be
      exported to other countries. But this cannot be done without forcing some
      part of the capital of Great Britain into a round-about foreign trade of
      consumption. Maryland, and Virginia, for example, send annually to Great
      Britain upwards of ninety-six thousand hogsheads of tobacco, and the
      consumption of Great Britain is said not to exceed fourteen thousand.
      Upwards of eighty-two thousand hogsheads, therefore, must be exported to
      other countries, to France, to Holland, and, to the countries which lie
      round the Baltic and Mediterranean seas. But that part of the capital of
      Great Britain which brings those eighty-two thousand hogsheads to Great
      Britain, which re-exports them from thence to those other countries, and
      which brings back from those other countries to Great Britain either goods
      or money in return, is employed in a round-about foreign trade of
      consumption; and is necessarily forced into this employment, in order to
      dispose of this great surplus. If we would compute in how many years the
      whole of this capital is likely to come back to Great Britain, we must add
      to the distance of the American returns that of the returns from those
      other countries. If, in the direct foreign trade of consumption which we
      carry on with America, the whole capital employed frequently does not come
      back in less than three or four years, the whole capital employed in this
      round-about one is not likely to come back in less than four or five. If
      the one can keep in constant employment but a third or a fourth part of
      the domestic industry which could be maintained by a capital returned once
      in the year, the other can keep in constant employment but a fourth or a
      fifth part of that industry. At some of the outports a credit is commonly
      given to those foreign correspondents to whom they export them tobacco. At
      the port of London, indeed, it is commonly sold for ready money: the rule
      is Weigh and pay. At the port of London, therefore, the final returns of
      the whole round-about trade are more distant than the returns from
      America, by the time only which the goods may lie unsold in the warehouse;
      where, however, they may sometimes lie long enough. But, had not the
      colonies been confined to the market of Great Britain for the sale of
      their tobacco, very little more of it would probably have come to us than
      what was necessary for the home consumption. The goods which Great Britain
      purchases at present for her own consumption with the great surplus of
      tobacco which she exports to other countries, she would, in this case,
      probably have purchased with the immediate produce of her own industry, or
      with some part of her own manufactures. That produce, those manufactures,
      instead of being almost entirely suited to one great market, as at
      present, would probably have been fitted to a great number of smaller
      markets. Instead of one great round-about foreign trade of consumption,
      Great Britain would probably have carried on a great number of small
      direct foreign trades of the same kind. On account of the frequency of the
      returns, a part, and probably but a small part, perhaps not above a third
      or a fourth of the capital which at present carries on this great
      round-about trade, might have been sufficient to carry on all those small
      direct ones; might have kept in constant employment an equal quantity of
      British industry; and have equally supported the annual produce of the
      land and labour of Great Britain. All the purposes of this trade being, in
      this manner, answered by a much smaller capital, there would have been a
      large spare capital to apply to other purposes; to improve the lands, to
      increase the manufactures, and to extend the commerce of Great Britain; to
      come into competition at least with the other British capitals employed in
      all those different ways, to reduce the rate of profit in them all, and
      thereby to give to Great Britain, in all of them, a superiority over other
      countries, still greater than what she at present enjoys.
    
      The monopoly of the colony trade, too, has forced some part of the capital
      of Great Britain from all foreign trade of consumption to a carrying
      trade; and, consequently from supporting more or less the industry of
      Great Britain, to be employed altogether in supporting partly that of the
      colonies, and partly that of some other countries.
    
      The goods, for example, which are annually purchased with the great
      surplus of eighty-two thousand hogsheads of tobacco annually re-exported
      from Great Britain, are not all consumed in Great Britain. Part of them,
      linen from Germany and Holland, for example, is returned to the colonies
      for their particular consumption. But that part of the capital of Great
      Britain which buys the tobacco with which this linen is afterwards bought,
      is necessarily withdrawn from supporting the industry of Great Britain, to
      be employed altogether in supporting, partly that of the colonies, and
      partly that of the particular countries who pay for this tobacco with the
      produce of their own industry.
    
      The monopoly of the colony trade, besides, by forcing towards it a much
      greater proportion of the capital of Great Britain than what would
      naturally have gone to it, seems to have broken altogether that natural
      balance which would otherwise have taken place among all the different
      branches of British industry. The industry of Great Britain, instead of
      being accommodated to a great number of small markets, has been
      principally suited to one great market. Her commerce, instead of running
      in a great number of small channels, has been taught to run principally in
      one great channel. But the whole system of her industry and commerce has
      thereby been rendered less secure; the whole state of her body politic
      less healthful than it otherwise would have been. In her present
      condition, Great Britain resembles one of those unwholesome bodies in
      which some of the vital parts are overgrown, and which, upon that account,
      are liable to many dangerous disorders, scarce incident to those in which
      all the parts are more properly proportioned. A small stop in that great
      blood-vessel, which has been artificially swelled beyond its natural
      dimensions, and through which an unnatural proportion of the industry and
      commerce of the country has been forced to circulate, is very likely to
      bring on the most dangerous disorders upon the whole body politic. The
      expectation of a rupture with the colonies, accordingly, has struck the
      people of Great Britain with more terror than they ever felt for a Spanish
      armada, or a French invasion. It was this terror, whether well or ill
      grounded, which rendered the repeal of the stamp act, among the merchants
      at least, a popular measure. In the total exclusion from the colony
      market, was it to last only for a few years, the greater part of our
      merchants used to fancy that they foresaw an entire stop to their trade;
      the greater part of our master manufacturers, the entire ruin of their
      business; and the greater part of our workmen, an end of their employment.
      A rupture with any of our neighbours upon the continent, though likely,
      too, to occasion some stop or interruption in the employments of some of
      all these different orders of people, is foreseen, however, without any
      such general emotion. The blood, of which the circulation is stopt in some
      of the smaller vessels, easily disgorges itself into the greater, without
      occasioning any dangerous disorder; but, when it is stopt in any of the
      greater vessels, convulsions, apoplexy, or death, are the immediate and
      unavoidable consequences. If but one of those overgrown manufactures,
      which, by means either of bounties or of the monopoly of the home and
      colony markets, have been artificially raised up to any unnatural height,
      finds some small stop or interruption in its employment, it frequently
      occasions a mutiny and disorder alarming to government, and embarrassing
      even to the deliberations of the legislature. How great, therefore, would
      be the disorder and confusion, it was thought, which must necessarily be
      occasioned by a sudden and entire stop in the employment of so great a
      proportion of our principal manufacturers?
    
      Some moderate and gradual relaxation of the laws which give to Great
      Britain the exclusive trade to the colonies, till it is rendered in a
      great measure free, seems to be the only expedient which can, in all
      future times, deliver her from this danger; which can enable her, or even
      force her, to withdraw some part of her capital from this overgrown
      employment, and to turn it, though with less profit, towards other
      employments; and which, by gradually diminishing one branch of her
      industry, and gradually increasing all the rest, can, by degrees, restore
      all the different branches of it to that natural, healthful, and proper
      proportion, which perfect liberty necessarily establishes, and which
      perfect liberty can alone preserve. To open the colony trade all at once
      to all nations, might not only occasion some transitory inconveniency, but
      a great permanent loss, to the greater part of those whose industry or
      capital is at present engaged in it. The sudden loss of the employment,
      even of the ships which import the eighty-two thousand hogsheads of
      tobacco, which are over and above the consumption of Great Britain, might
      alone be felt very sensibly. Such are the unfortunate effects of all the
      regulations of the mercantile system. They not only introduce very
      dangerous disorders into the state of the body politic, but disorders
      which it is often difficult to remedy, without occasioning, for a time at
      least, still greater disorders. In what manner, therefore, the colony
      trade ought gradually to be opened; what are the restraints which ought
      first, and what are those which ought last, to be taken away; or in what
      manner the natural system of perfect liberty and justice ought gradually
      to be restored, we must leave to the wisdom of future statesmen and
      legislators to determine.
    
      Five different events, unforeseen and unthought of, have very fortunately
      concurred to hinder Great Britain from feeling, so sensibly as it was
      generally expected she would, the total exclusion which has now taken
      place for more than a year (from the first of December 1774) from a very
      important branch of the colony trade, that of the twelve associated
      provinces of North America. First, those colonies, in preparing themselves
      for their non-importation agreement, drained Great Britain completely of
      all the commodities which were fit for their market; secondly, the extra
      ordinary demand of the Spanish flota has, this year, drained Germany and
      the north of many commodities, linen in particular, which used to come
      into competition, even in the British market, with the manufactures of
      Great Britain; thirdly, the peace between Russia and Turkey has occasioned
      an extraordinary demand from the Turkey market, which, during the distress
      of the country, and while a Russian fleet was cruizing in the Archipelago,
      had been very poorly supplied; fourthly, the demand of the north of Europe
      for the manufactures of Great Britain has been increasing from year to
      year, for some time past; and, fifthly, the late partition, and
      consequential pacification of Poland, by opening the market of that great
      country, have, this year, added an extraordinary demand from thence to the
      increasing demand of the north. These events are all, except the fourth,
      in their nature transitory and accidental; and the exclusion from so
      important a branch of the colony trade, if unfortunately it should
      continue much longer, may still occasion some degree of distress. This
      distress, however, as it will come on gradually, will be felt much less
      severely than if it had come on all at once; and, in the mean time, the
      industry and capital of the country may find a new employment and
      direction, so as to prevent this distress from ever rising to any
      considerable height.
    
      The monopoly of the colony trade, therefore, so far as it has turned
      towards that trade a greater proportion of the capital of Great Britain
      than what would otherwise have gone to it, has in all cases turned it,
      from a foreign trade of consumption with a neighbouring, into one with a
      more distant country; in many cases from a direct foreign trade of
      consumption into a round-about one; and, in some cases, from all foreign
      trade of consumption into a carrying trade. It has, in all cases,
      therefore, turned it from a direction in which it would have maintained a
      greater quantity of productive labour, into one in which it can maintain a
      much smaller quantity. By suiting, besides, to one particular market only,
      so great a part of the industry and commerce of Great Britain, it has
      rendered the whole state of that industry and commerce more precarious and
      less secure, than if their produce had been accommodated to a greater
      variety of markets.
    
      We must carefully distinguish between the effects of the colony trade and
      those of the monopoly of that trade. The former are always and necessarily
      beneficial; the latter always and necessarily hurtful. But the former are
      so beneficial, that the colony trade, though subject to a monopoly, and,
      notwithstanding the hurtful effects of that monopoly, is still, upon the
      whole, beneficial, and greatly beneficial, though a good deal less so than
      it otherwise would be.
    
      The effect of the colony trade, in its natural and free state, is to open
      a great though distant market, for such parts of the produce of British
      industry as may exceed the demand of the markets nearer home, of those of
      Europe, and of the countries which lie round the Mediterranean sea. In its
      natural and free state, the colony trade, without drawing from those
      markets any part of the produce which had ever been sent to them,
      encourages Great Britain to increase the surplus continually, by
      continually presenting new equivalents to be exchanged for it. In its
      natural and free state, the colony trade tends to increase the quantity of
      productive labour in Great Britain, but without altering in any respect
      the direction of that which had been employed there before. In the natural
      and free state of the colony trade, the competition of all other nations
      would hinder the rate of profit from rising above the common level, either
      in the new market, or in the new employment. The new market, without
      drawing any thing from the old one, would create, if one may say so, a new
      produce for its own supply; and that new produce would constitute a new
      capital for carrying on the new employment, which, in the same manner,
      would draw nothing from the old one.
    
      The monopoly of the colony trade, on the contrary, by excluding the
      competition of other nations, and thereby raising the rate of profit, both
      in the new market and in the new employment, draws produce from the old
      market, and capital from the old employment. To augment our share of the
      colony trade beyond what it otherwise would be, is the avowed purpose of
      the monopoly. If our share of that trade were to be no greater with, than
      it would have been without the monopoly, there could have been no reason
      for establishing the monopoly. But whatever forces into a branch of trade,
      of which the returns are slower and more distant than those of the greater
      part of other trades, a greater proportion of the capital of any country,
      than what of its own accord would go to that branch, necessarily renders
      the whole quantity of productive labour annually maintained there, the
      whole annual produce of the land and labour of that country, less than
      they otherwise would be. It keeps down the revenue of the inhabitants of
      that country below what it would naturally rise to, and thereby diminishes
      their power of accumulation. It not only hinders, at all times, their
      capital from maintaining so great a quantity of productive labour as it
      would otherwise maintain, but it hinders it from increasing so fast as it
      would otherwise increase, and, consequently, from maintaining a still
      greater quantity of productive labour.
    
      The natural good effects of the colony trade, however, more than
      counterbalance to Great Britain the bad effects of the monopoly; so that,
      monopoly and altogether, that trade, even as it is carried on at present,
      is not only advantageous, but greatly advantageous. The new market and the
      new employment which are opened by the colony trade, are of much greater
      extent than that portion of the old market and of the old employment which
      is lost by the monopoly. The new produce and the new capital which has
      been created, if one may say so, by the colony trade, maintain in Great
      Britain a greater quantity of productive labour than what can have been
      thrown out of employment by the revulsion of capital from other trades of
      which the returns are more frequent. If the colony trade, however, even as
      it is carried on at present, is advantageous to Great Britain, it is not
      by means of the monopoly, but in spite of the monopoly.
    
      It is rather for the manufactured than for the rude produce of Europe,
      that the colony trade opens a new market. Agriculture is the proper
      business of all new colonies; a business which the cheapness of land
      renders more advantageous than any other. They abound, therefore, in the
      rude produce of land; and instead of importing it from other countries,
      they have generally a large surplus to export. In new colonies,
      agriculture either draws hands from all other employments, or keeps them
      from going to any other employment. There are few hands to spare for the
      necessary, and none for the ornamental manufactures. The greater part of
      the manufactures of both kinds they find it cheaper to purchase of other
      countries than to make for themselves. It is chiefly by encouraging the
      manufactures of Europe, that the colony trade indirectly encourages its
      agriculture. The manufacturers of Europe, to whom that trade gives
      employment, constitute a new market for the produce of the land, and the
      most advantageous of all markets; the home market for the corn and cattle,
      for the bread and butcher’s meat of Europe, is thus greatly extended by
      means of the trade to America.
    
      But that the monopoly of the trade of populous and thriving colonies is
      not alone sufficient to establish, or even to maintain, manufactures in
      any country, the examples of Spain and Portugal sufficiently demonstrate.
      Spain and Portugal were manufacturing countries before they had any
      considerable colonies. Since they had the richest and most fertile in the
      world, they have both ceased to be so.
    
      In Spain and Portugal, the bad effects of the monopoly, aggravated by
      other causes, have, perhaps, nearly overbalanced the natural good effects
      of the colony trade. These causes seem to be other monopolies of different
      kinds: the degradation of the value of gold and silver below what it is in
      most other countries; the exclusion from foreign markets by improper taxes
      upon exportation, and the narrowing of the home market, by still more
      improper taxes upon the transportation of goods from one part of the
      country to another; but above all, that irregular and partial
      administration of justice which often protects the rich and powerful
      debtor from the pursuit of his injured creditor, and which makes the
      industrious part of the nation afraid to prepare goods for the consumption
      of those haughty and great men, to whom they dare not refuse to sell upon
      credit, and from whom they are altogether uncertain of repayment.
    
      In England, on the contrary, the natural good effects of the colony trade,
      assisted by other causes, have in a great measure conquered the bad
      effects of the monopoly. These causes seem to be, the general liberty of
      trade, which, notwithstanding some restraints, is at least equal, perhaps
      superior, to what it is in any other country; the liberty of exporting,
      duty free, almost all sorts of goods which are the produce of domestic
      industry, to almost any foreign country; and what, perhaps, is of still
      greater importance, the unbounded liberty of transporting them from one
      part of our own country to any other, without being obliged to give any
      account to any public office, without being liable to question or
      examination of any kind; but, above all, that equal and impartial
      administration of justice, which renders the rights of the meanest British
      subject respectable to the greatest, and which, by securing to every man
      the fruits of his own industry, gives the greatest and most effectual
      encouragement to every sort of industry.
    
      If the manufactures of Great Britain, however, have been advanced, as they
      certainly have, by the colony trade, it has not been by means of the
      monopoly of that trade, but in spite of the monopoly. The effect of the
      monopoly has been, not to augment the quantity, but to alter the quality
      and shape of a part of the manufactures of Great Britain, and to
      accommodate to a market, from which the returns are slow and distant, what
      would otherwise have been accommodated to one from which the returns are
      frequent and near. Its effect has consequently been, to turn a part of the
      capital of Great Britain from an employment in which it would have
      maintained a greater quantity of manufacturing industry, to one in which
      it maintains a much smaller, and thereby to diminish, instead of
      increasing, the whole quantity of manufacturing industry maintained in
      Great Britain.
    
      The monopoly of the colony trade, therefore, like all the other mean and
      malignant expedients of the mercantile system, depresses the industry of
      all other countries, but chiefly that of the colonies, without in the
      least increasing, but on the contrary diminishing, that of the country in
      whose favour it is established.
    
      The monopoly hinders the capital of that country, whatever may, at any
      particular time, be the extent of that capital, from maintaining so great
      a quantity of productive labour as it would otherwise maintain, and from
      affording so great a revenue to the industrious inhabitants as it would
      otherwise afford. But as capital can be increased only by savings from
      revenue, the monopoly, by hindering it from affording so great a revenue
      as it would otherwise afford, necessarily hinders it from increasing so
      fast as it would otherwise increase, and consequently from maintaining a
      still greater quantity of productive labour, and affording a still greater
      revenue to the industrious inhabitants of that country. One great original
      source of revenue, therefore, the wages of labour, the monopoly must
      necessarily have rendered, at all times, less abundant than it otherwise
      would have been.
    
      By raising the rate of mercantile profit, the monopoly discourages the
      improvement of land. The profit of improvement depends upon the difference
      between what the land actually produces, and what, by the application of a
      certain capital, it can be made to produce. If this difference affords a
      greater profit than what can be drawn from an equal capital in any
      mercantile employment, the improvement of land will draw capital from all
      mercantile employments. If the profit is less, mercantile employments will
      draw capital from the improvement of land. Whatever, therefore, raises the
      rate of mercantile profit, either lessens the superiority, or increases
      the inferiority of the profit of improvement: and, in the one case,
      hinders capital from going to improvement, and in the other draws capital
      from it; but by discouraging improvement, the monopoly necessarily retards
      the natural increase of another great original source of revenue, the rent
      of land. By raising the rate of profit, too, the monopoly necessarily
      keeps up the market rate of interest higher than it otherwise would be.
      But the price of land, in proportion to the rent which it affords, the
      number of years purchase which is commonly paid for it, necessarily falls
      as the rate of interest rises, and rises as the rate of interest falls.
      The monopoly, therefore, hurts the interest of the landlord two different
      ways, by retarding the natural increase, first, of his rent, and,
      secondly, of the price which he would get for his land, in proportion to
      the rent which it affords.
    
      The monopoly, indeed, raises the rate of mercantile profit and thereby
      augments somewhat the gain of our merchants. But as it obstructs the
      natural increase of capital, it tends rather to diminish than to increase
      the sum total of the revenue which the inhabitants of the country derive
      from the profits of stock; a small profit upon a great capital generally
      affording a greater revenue than a great profit upon a small one. The
      monopoly raises the rate of profit, but it hinders the sum of profit from
      rising so high as it otherwise would do.
    
      All the original sources of revenue, the wages of labour, the rent of
      land, and the profits of stock, the monopoly renders much less abundant
      than they otherwise would be. To promote the little interest of one little
      order of men in one country, it hurts the interest of all other orders of
      men in that country, and of all the men in all other countries.
    
      It is solely by raising the ordinary rate of profit, that the monopoly
      either has proved, or could prove, advantageous to any one particular
      order of men. But besides all the bad effects to the country in general,
      which have already been mentioned as necessarily resulting from a higher
      rate of profit, there is one more fatal, perhaps, than all these put
      together, but which, if we may judge from experience, is inseparably
      connected with it. The high rate of profit seems everywhere to destroy
      that parsimony which, in other circumstances, is natural to the character
      of the merchant. When profits are high, that sober virtue seems to be
      superfluous, and expensive luxury to suit better the affluence of his
      situation. But the owners of the great mercantile capitals are necessarily
      the leaders and conductors of the whole industry of every nation; and
      their example has a much greater influence upon the manners of the whole
      industrious part of it than that of any other order of men. If his
      employer is attentive and parsimonious, the workman is very likely to be
      so too; but if the master is dissolute and disorderly, the servant, who
      shapes his work according to the pattern which his master prescribes to
      him, will shape his life, too, according to the example which he sets him.
      Accumulation is thus prevented in the hands of all those who are naturally
      the most disposed to accumulate; and the funds destined for the
      maintenance of productive labour, receive no augmentation from the revenue
      of those who ought naturally to augment them the most. The capital of the
      country, instead of increasing, gradually dwindles away, and the quantity
      of productive labour maintained in it grows every day less and less. Have
      the exorbitant profits of the merchants of Cadiz and Lisbon augmented the
      capital of Spain and Portugal? Have they alleviated the poverty, have they
      promoted the industry, of those two beggarly countries? Such has been the
      tone of mercantile expense in those two trading cities, that those
      exorbitant profits, far from augmenting the general capital of the
      country, seem scarce to have been sufficient to keep up the capitals upon
      which they were made. Foreign capitals are every day intruding themselves,
      if I may say so, more and more into the trade of Cadiz and Lisbon. It is
      to expel those foreign capitals from a trade which their own grows every
      day more and more insufficient for carrying on, that the Spaniards and
      Portuguese endeavour every day to straiten more and more the galling bands
      of their absurd monopoly. Compare the mercantile manners of Cadiz and
      Lisbon with those of Amsterdam, and you will be sensible how differently
      the conduct and character of merchants are affected by the high and by the
      low profits of stock. The merchants of London, indeed, have not yet
      generally become such magnificent lords as those of Cadiz and Lisbon; but
      neither are they in general such attetitive and parsimonious burghers as
      those of Amsterdam. They are supposed, however, many of them, to be a good
      deal richer than the greater part of the former, and not quire so rich as
      many of the latter: but the rate of their profit is commonly much lower
      than that of the former, and a good deal higher than that of the latter.
      Light come, light go, says the proverb; and the ordinary tone of expense
      seems everywhere to be regulated, not so much according to the real
      ability of spending, as to the supposed facility of getting money to
      spend.
    
      It is thus that the single advantage which the monopoly procures to a
      single order of men, is in many different ways hurtful to the general
      interest of the country.
    
      To found a great empire for the sole purpose of raising up a people of
      customers, may at first sight, appear a project fit only for a nation of
      shopkeepers. It is, however, a project altogether unfit for a nation of
      shopkeepers, but extremely fit for a nation whose government is influenced
      by shopkeepers. Such statesmen, and such statesmen only, are capable of
      fancying that they will find some advantage in employing the blood and
      treasure of their fellow-citizens, to found and maintain such an empire.
      Say to a shopkeeper, Buy me a good estate, and I shall always buy my
      clothes at your shop, even though I should pay somewhat dearer than what I
      can have them for at other shops; and you will not find him very forward
      to embrace your proposal. But should any other person buy you such an
      estate, the shopkeeper will be much obliged to your benefactor if he would
      enjoin you to buy all your clothes at his shop. England purchased for some
      of her subjects, who found themselves uneasy at home, a great estate in a
      distant country. The price, indeed, was very small, and instead of thirty
      years purchase, the ordinary price of land in the present times, it
      amounted to little more than the expense of the different equipments which
      made the first discovery, reconnoitered the coast, and took a fictitious
      possession of the country. The land was good, and of great extent; and the
      cultivators having plenty of good ground to work upon, and being for some
      time at liberty to sell their produce where they pleased, became, in the
      course of little more than thirty or forty years (between 1620 and 1660),
      so numerous and thriving a people, that the shopkeepers and other traders
      of England wished to secure to themselves the monopoly of their custom.
      Without pretending, therefore, that they had paid any part, either of the
      original purchase money, or of the subsequent expense of improvement, they
      petitioned the parliament, that the cultivators of America might for the
      future be confined to their shop; first, for buying all the goods which
      they wanted from Europe; and, secondly, for selling all such parts of
      their own produce as those traders might find it convenient to buy. For
      they did not find it convenient to buy every part of it. Some parts of it
      imported into England, might have interfered with some of the trades which
      they themselves carried on at home. Those particular parts of it,
      therefore, they were willing that the colonists should sell where they
      could; the farther off the better; and upon that account proposed that
      their market should be confined to the countries south of Cape Finisterre.
      A clause in the famous act of navigation established this truly shopkeeper
      proposal into a law.
    
      The maintenance of this monopoly has hitherto been the principal, or more
      properly, perhaps, the sole end and purpose of the dominion which Great
      Britain assumes over her colonies. In the exclusive trade, it is supposed,
      consists the great advantage of provinces, which have never yet afforded
      either revenue or military force for the support of the civil government,
      or the defence of the mother country. The monopoly is the principal badge
      of their dependency, and it is the sole fruit which has hitherto been
      gathered from that dependency. Whatever expense Great Britain has hitherto
      laid out in maintaining this dependency, has really been laid out in order
      to support this monopoly. The expense of the ordinary peace establishment
      of the colonies amounted, before the commencement of the present
      disturbances to the pay of twenty regiments of foot; to the expense of the
      artillery, stores, and extraordinary provisions, with which it was
      necessary to supply them; and to the expense of a very considerable naval
      force, which was constantly kept up, in order to guard from the smuggling
      vessels of other nations, the immense coast of North America, and that of
      our West Indian islands. The whole expense of this peace establishment was
      a charge upon the revenue of Great Britain, and was, at the same time, the
      smallest part of what the dominion of the colonies has cost the mother
      country. If we would know the amount of the whole, we must add to the
      annual expense of this peace establishment, the interest of the sums
      which, in consequence of their considering her colonies as provinces
      subject to her dominion, Great Britain has, upon different occasions, laid
      out upon their defence. We must add to it, in particular, the whole
      expense of the late war, and a great part of that of the war which
      preceded it. The late war was altogether a colony quarrel; and the whole
      expense of it, in whatever part of the world it might have been laid out,
      whether in Germany or the East Indies, ought justly to be stated to the
      account of the colonies. It amounted to more than ninety millions
      sterling, including not only the new debt which was contracted, but the
      two shillings in the pound additional land tax, and the sums which were
      every year borrowed from the sinking fund. The Spanish war which began in
      1739 was principally a colony quarrel. Its principal object was to prevent
      the search of the colony ships, which carried on a contraband trade with
      the Spanish Main. This whole expense is, in reality, a bounty which has
      been given in order to support a monopoly. The pretended purpose of it was
      to encourage the manufactures, and to increase the commerce of Great
      Britain. But its real effect has been to raise the rate of mercantile
      profit, and to enable our merchants to turn into a branch of trade, of
      which the returns are more slow and distant than those of the greater part
      of other trades, a greater proportion of their capital than they otherwise
      would have done; two events which, if a bounty could have prevented, it
      might perhaps have been very well worth while to give such a bounty.
    
      Under the present system of management, therefore, Great Britain derives
      nothing but loss from the dominion which she assumes over her colonies.
    
      To propose that Great Britain should voluntarily give up all authority
      over her colonies, and leave them to elect their own magistrates, to enact
      their own laws, and to make peace and war, as they might think proper,
      would be to propose such a measure as never was, and never will be,
      adopted by any nation in the world. No nation ever voluntarily gave up the
      dominion of any province, how troublesome soever it might be to govern it,
      and how small soever the revenue which it afforded might be in proportion
      to the expense which it occasioned. Such sacrifices, though they might
      frequently be agreeable to the interest, are always mortifying to the
      pride of every nation; and, what is perhaps of still greater consequence,
      they are always contrary to the private interest of the governing part of
      it, who would thereby be deprived of the disposal of many places of trust
      and profit, of many opportunities of acquiring wealth and distinction,
      which the possession of the most turbulent, and, to the great body of the
      people, the most unprofitable province, seldom fails to afford. The most
      visionary enthusiasts would scarce be capable of proposing such a measure,
      with any serious hopes at least of its ever being adopted. If it was
      adopted, however, Great Britain would not only be immediately freed from
      the whole annual expense of the peace establishment of the colonies, but
      might settle with them such a treaty of commerce as would effectually
      secure to her a free trade, more advantageous to the great body of the
      people, though less so to the merchants, than the monopoly which she at
      present enjoys. By thus parting good friends, the natural affection of the
      colonies to the mother country, which, perhaps, our late dissensions have
      well nigh extinguished, would quickly revive. It might dispose them not
      only to respect, for whole centuries together, that treaty of commerce
      which they had concluded with us at parting, but to favour us in war as
      well as in trade, and instead of turbulent and factious subjects, to
      become our most faithful, affectionate, and generous allies; and the same
      sort of parental affection on the one side, and filial respect on the
      other, might revive between Great Britain and her colonies, which used to
      subsist between those of ancient Greece and the mother city from which
      they descended.
    
      In order to render any province advantageous to the empire to which it
      belongs, it ought to afford, in time of peace, a revenue to the public,
      sufficient not only for defraying the whole expense of its own peace
      establishment, but for contributing its proportion to the support of the
      general government of the empire. Every province necessarily contributes,
      more or less, to increase the expense of that general government. If any
      particular province, therefore, does not contribute its share towards
      defraying this expense, an unequal burden must be thrown upon some other
      part of the empire. The extraordinary revenue, too, which every province
      affords to the public in time of war, ought, from parity of reason, to
      bear the same proportion to the extraordinary revenue of the whole empire,
      which its ordinary revenue does in time of peace. That neither the
      ordinary nor extraordinary revenue which Great Britain derives from her
      colonies, bears this proportion to the whole revenue of the British
      empire, will readily be allowed. The monopoly, it has been supposed,
      indeed, by increasing the private revenue of the people of Great Britain,
      and thereby enabling them to pay greater taxes, compensates the deficiency
      of the public revenue of the colonies. But this monopoly, I have
      endeavoured to show, though a very grievous tax upon the colonies, and
      though it may increase the revenue of a particular order of men in Great
      Britain, diminishes, instead of increasing, that of the great body of the
      people, and consequently diminishes, instead of increasing, the ability of
      the great body of the people to pay taxes. The men, too, whose revenue the
      monopoly increases, constitute a particular order, which it is both
      absolutely impossible to tax beyond the proportion of other orders, and
      extremely impolitic even to attempt to tax beyond that proportion, as I
      shall endeavour to show in the following book. No particular resource,
      therefore, can be drawn from this particular order.
    
      The colonies may be taxed either by their own assemblies, or by the
      parliament of Great Britain.
    
      That the colony assemblies can never be so managed as to levy upon their
      constituents a public revenue, sufficient, not only to maintain at all
      times their own civil and military establishment, but to pay their proper
      proportion of the expense of the general government of the British empire,
      seems not very probable. It was a long time before even the parliament of
      England, though placed immediately under the eye of the sovereign, could
      be brought under such a system of management, or could be rendered
      sufficiently liberal in their grants for supporting the civil and military
      establishments even of their own country. It was only by distributing
      among the particular members of parliament a great part either of the
      offices, or of the disposal of the offices arising from this civil and
      military establishment, that such a system of management could be
      established, even with regard to the parliament of England. But the
      distance of the colony assemblies from the eye of the sovereign, their
      number, their dispersed situation, and their various constitutions, would
      render it very difficult to manage them in the same manner, even though
      the sovereign had the same means of doing it; and those means are wanting.
      It would be absolutely impossible to distribute among all the leading
      members of all the colony assemblies such a share, either of the offices,
      or of the disposal of the offices, arising from the general government of
      the British empire, as to dispose them to give up their popularity at
      home, and to tax their constituents for the support of that general
      government, of which almost the whole emoluments were to be divided among
      people who were strangers to them. The unavoidable ignorance of
      administration, besides, concerning the relative importance of the
      different members of those different assemblies, the offences which must
      frequently be given, the blunders which must constantly be committed, in
      attempting to manage them in this manner, seems to render such a system of
      management altogether impracticable with regard to them.
    
      The colony assemblies, besides, cannot be supposed the proper judges of
      what is necessary for the defence and support of the whole empire. The
      care of that defence and support is not entrusted to them. It is not their
      business, and they have no regular means of information concerning it. The
      assembly of a province, like the vestry of a parish, may judge very
      properly concerning the affairs of its own particular district, but can
      have no proper means of judging concerning those of the whole empire. It
      cannot even judge properly concerning the proportion which its own
      province bears to the whole empire, or concerning the relative degree of
      its wealth and importance, compared with the other provinces; because
      those other provinces are not under the inspection and superintendency of
      the assembly of a particular province. What is necessary for the defence
      and support of the whole empire, and in what proportion each part ought to
      contribute, can be judged of only by that assembly which inspects and
      super-intends the affairs of the whole empire.
    
      It has been proposed, accordingly, that the colonies should be taxed by
      requisition, the parliament of Great Britain determining the sum which
      each colony ought to pay, and the provincial assembly assessing and
      levying it in the way that suited best the circumstances of the province.
      What concerned the whole empire would in this way be determined by the
      assembly which inspects and superintends the affairs of the whole empire;
      and the provincial affairs of each colony might still be regulated by its
      own assembly. Though the colonies should, in this case, have no
      representatives in the British parliament, yet, if we may judge by
      experience, there is no probability that the parliamentary requisition
      would be unreasonable. The parliament of England has not, upon any
      occasion, shewn the smallest disposition to overburden those parts of the
      empire which are not represented in parliament. The islands of Guernsey
      and Jersey, without any means of resisting the authority of parliament,
      are more lightly taxed than any part of Great Britain. Parliament, in
      attempting to exercise its supposed right, whether well or ill grounded,
      of taxing the colonies, has never hitherto demanded of them anything which
      even approached to a just proportion to what was paid by their fellow
      subjects at home. If the contribution of the colonies, besides, was to
      rise or fall in proportion to the rise or fall of the land-tax, parliament
      could not tax them without taxing, at the same time, its own constituents,
      and the colonies might, in this case, be considered as virtually
      represented in parliament.
    
      Examples are not wanting of empires in which all the different provinces
      are not taxed, if I may be allowed the expression, in one mass; but in
      which the sovereign regulates the sum which each province ought to pay,
      and in some provinces assesses and levies it as he thinks proper; while in
      others he leaves it to be assessed and levied as the respective states of
      each province shall determine. In some provinces of France, the king not
      only imposes what taxes he thinks proper, but assesses and levies them in
      the way he thinks proper. From others he demands a certain sum, but leaves
      it to the states of each province to assess and levy that sum as they
      think proper. According to the scheme of taxing by requisition, the
      parliament of Great Britain would stand nearly in the same situation
      towards the colony assemblies, as the king of France does towards the
      states of those provinces which still enjoy the privilege of having states
      of their own, the provinces of France which are supposed to be the best
      governed.
    
      But though, according to this scheme, the colonies could have no just
      reason to fear that their share of the public burdens should ever exceed
      the proper proportion to that of their fellow-citizens at home, Great
      Britain might have just reason to fear that it never would amount to that
      proper proportion. The parliament of Great Britain has not, for some time
      past, had the same established authority in the colonies, which the French
      king has in those provinces of France which still enjoy the privilege of
      having states of their own. The colony assemblies, if they were not very
      favourably disposed (and unless more skilfully managed than they ever have
      been hitherto, they are not very likely to be so), might still find many
      pretences for evading or rejecting the most reasonable requisitions of
      parliament. A French war breaks out, we shall suppose; ten millions must
      immediately be raised, in order to defend the seat of the empire. This sum
      must be borrowed upon the credit of some parliamentary fund mortgaged for
      paying the interest. Part of this fund parliament proposes to raise by a
      tax to be levied in Great Britain; and part of it by a requisition to all
      the different colony assemblies of America and the West Indies. Would
      people readily advance their money upon the credit of a fund which partly
      depended upon the good humour of all those assemblies, far distant from
      the seat of the war, and sometimes, perhaps, thinking themselves not much
      concerned in the event of it? Upon such a fund, no more money would
      probably be advanced than what the tax to be levied in Great Britain might
      be supposed to answer for. The whole burden of the debt contracted on
      account of the war would in this manner fall, as it always has done
      hitherto, upon Great Britain; upon a part of the empire, and not upon the
      whole empire. Great Britain is, perhaps, since the world began, the only
      state which, as it has extended its empire, has only increased its
      expense, without once augmenting its resources. Other states have
      generally disburdened themselves, upon their subject and subordinate
      provinces, of the most considerable part of the expense of defending the
      empire. Great Britain has hitherto suffered her subject and subordinate
      provinces to disburden themselves upon her of almost this whole expense.
      In order to put Great Britain upon a footing of equality with her own
      colonies, which the law has hitherto supposed to be subject and
      subordinate, it seems necessary, upon the scheme of taxing them by
      parliamentary requisition, that parliament should have some means of
      rendering its requisitions immediately effectual, in case the colony
      assemblies should attempt to evade or reject them; and what those means
      are, it is not very easy to conceive, and it has not yet been explained.
    
      Should the parliament of Great Britain, at the same time, be ever fully
      established in the right of taxing the colonies, even independent of the
      consent of their own assemblies, the importance of those assemblies would,
      from that moment, be at an end, and with it, that of all the leading men
      of British America. Men desire to have some share in the management of
      public affairs, chiefly on account of the importance which it gives them.
      Upon the power which the greater part of the leading men, the natural
      aristocracy of every country, have of preserving or defending their
      respective importance, depends the stability and duration of every system
      of free government. In the attacks which those leading men are continually
      making upon the importance of one another, and in the defence of their
      own, consists the whole play of domestic faction and ambition. The leading
      men of America, like those of all other countries, desire to preserve
      their own importance. They feel, or imagine, that if their assemblies,
      which they are fond of calling parliaments, and of considering as equal in
      authority to the parliament of Great Britain, should be so far degraded as
      to become the humble ministers and executive officers of that parliament,
      the greater part of their own importance would be at an end. They have
      rejected, therefore, the proposal of being taxed by parliamentary
      requisition, and, like other ambitious and high-spirited men, have rather
      chosen to draw the sword in defence of their own importance.
    
      Towards the declension of the Roman republic, the allies of Rome, who had
      borne the principal burden of defending the state and extending the
      empire, demanded to be admitted to all the privileges of Roman citizens.
      Upon being refused, the social war broke out. During the course of that
      war, Rome granted those privileges to the greater part of them, one by
      one, and in proportion as they detached themselves from the general
      confederacy. The parliament of Great Britain insists upon taxing the
      colonies; and they refuse to be taxed by a parliament in which they are
      not represented. If to each colony which should detach itself from the
      general confederacy, Great Britain should allow such a number of
      representatives as suited the proportion of what it contributed to the
      public revenue of the empire, in consequence of its being subjected to the
      same taxes, and in compensation admitted to the same freedom of trade with
      its fellow-subjects at home; the number of its representatives to be
      augmented as the proportion of its contribution might afterwards augment;
      a new method of acquiring importance, a new and more dazzling object of
      ambition, would be presented to the leading men of each colony. Instead of
      piddling for the little prizes which are to be found in what may be called
      the paltry raffle of colony faction, they might then hope, from the
      presumption which men naturally have in their own ability and good
      fortune, to draw some of the great prizes which sometimes come from the
      wheel of the great state lottery of British politics. Unless this or some
      other method is fallen upon, and there seems to be none more obvious than
      this, of preserving the importance and of gratifying the ambition of the
      leading men of America, it is not very probable that they will ever
      voluntarily submit to us; and we ought to consider, that the blood which
      must be shed in forcing them to do so, is, every drop of it, the blood
      either of those who are, or of those whom we wish to have for our fellow
      citizens. They are very weak who flatter themselves that, in the state to
      which things have come, our colonies will be easily conquered by force
      alone. The persons who now govern the resolutions of what they call their
      continental congress, feel in themselves at this moment a degree of
      importance which, perhaps, the greatest subjects in Europe scarce feel.
      From shopkeepers, trades men, and attorneys, they are become statesmen and
      legislators, and are employed in contriving a new form of government for
      an extensive empire, which, they flatter themselves, will become, and
      which, indeed, seems very likely to become, one of the greatest and most
      formidable that ever was in the world. Five hundred different people,
      perhaps, who, in different ways, act immediately under the continental
      congress, and five hundred thousand, perhaps, who act under those five
      hundred, all feel, in the same manner, a proportionable rise in their own
      importance. Almost every individual of the governing party in America
      fills, at present, in his own fancy, a station superior, not only to what
      he had ever filled before, but to what he had ever expected to fill; and
      unless some new object of ambition is presented either to him or to his
      leaders, if he has the ordinary spirit of a man, he will die in defence of
      that station.
    
      It is a remark of the President Heynaut, that we now read with pleasure
      the account of many little transactions of the Ligue, which, when they
      happened, were not, perhaps, considered as very important pieces of news.
      But everyman then, says he, fancied himself of some importance; and the
      innumerable memoirs which have come down to us from those times, were the
      greater part of them written by people who took pleasure in recording and
      magnifying events, in which they flattered themselves they had been
      considerable actors. How obstinately the city of Paris, upon that
      occasion, defended itself, what a dreadful famine it supported, rather
      than submit to the best, and afterwards the most beloved of all the French
      kings, is well known. The greater part of the citizens, or those who
      governed the greater part of them, fought in defence of their own
      importance, which, they foresaw, was to be at an end whenever the ancient
      government should be re-established. Our colonies, unless they can be
      induced to consent to a union, are very likely to defend themselves,
      against the best of all mother countries, as obstinately as the city of
      Paris did against one of the best of kings.
    
      The idea of representation was unknown in ancient times. When the people
      of one state were admitted to the right of citizenship in another, they
      had no other means of exercising that right, but by coming in a body to
      vote and deliberate with the people of that other state. The admission of
      the greater part of the inhabitants of Italy to the privileges of Roman
      citizens, completely ruined the Roman republic. It was no longer possible
      to distinguish between who was, and who was not, a Roman citizen. No tribe
      could know its own members. A rabble of any kind could be introduced into
      the assemblies of the people, could drive out the real citizens, and
      decide upon the affairs of the republic, as if they themselves had been
      such. But though America were to send fifty or sixty new representatives
      to parliament, the door-keeper of the house of commons could not find any
      great difficulty in distinguishing between who was and who was not a
      member. Though the Roman constitution, therefore, was necessarily ruined
      by the union of Rome with the allied states of Italy, there is not the
      least probability that the British constitution would be hurt by the union
      of Great Britain with her colonies. That constitution, on the contrary,
      would be completed by it, and seems to be imperfect without it. The
      assembly which deliberates and decides concerning the affairs of every
      part of the empire, in order to be properly informed, ought certainly to
      have representatives from every part of it. That this union, however,
      could be easily effectuated, or that difficulties, and great difficulties,
      might not occur in the execution, I do not pretend. I have yet heard of
      none, however, which appear insurmountable. The principal, perhaps, arise,
      not from the nature of things, but from the prejudices and opinions of the
      people, both on this and on the other side of the Atlantic.
    
      We on this side the water are afraid lest the multitude of American
      representatives should overturn the balance of the constitution, and
      increase too much either the influence of the crown on the one hand, or
      the force of the democracy on the other. But if the number of American
      representatives were to be in proportion to the produce of American
      taxation, the number of people to be managed would increase exactly in
      proportion to the means of managing them, and the means of managing to the
      number of people to be managed. The monarchical and democratical parts of
      the constitution would, after the union, stand exactly in the same degree
      of relative force with regard to one another as they had done before.
    
      The people on the other side of the water are afraid lest their distance
      from the seat of government might expose them to many oppressions; but
      their representatives in parliament, of which the number ought from the
      first to be considerable, would easily be able to protect them from all
      oppression. The distance could not much weaken the dependency of the
      representative upon the constituent, and the former would still feel that
      he owed his seat in parliament, and all the consequence which he derived
      from it, to the good-will of the latter. It would be the interest of the
      former, therefore, to cultivate that good-will, by complaining, with all
      the authority of a member of the legislature, of every outrage which any
      civil or military officer might be guilty of in those remote parts of the
      empire. The distance of America from the seat of government, besides, the
      natives of that country might flatter themselves, with some appearance of
      reason too, would not be of very long continuance. Such has hitherto been
      the rapid progress of that country in wealth, population, and improvement,
      that in the course of little more than a century, perhaps, the produce of
      the American might exceed that of the British taxation. The seat of the
      empire would then naturally remove itself to that part of the empire which
      contributed most to the general defence and support of the whole.
    
      The discovery of America, and that of a passage to the East Indies by the
      Cape of Good Hope, are the two greatest and most important events recorded
      in the history of mankind. Their consequences have already been great;
      but, in the short period of between two and three centuries which has
      elapsed since these discoveries were made, it is impossible that the whole
      extent of their consequences can have been seen. What benefits or what
      misfortunes to mankind may hereafter result from those great events, no
      human wisdom can foresee. By uniting in some measure the most distant
      parts of the world, by enabling them to relieve one another’s wants, to
      increase one another’s enjoyments, and to encourage one another’s
      industry, their general tendency would seem to be beneficial. To the
      natives, however, both of the East and West Indies, all the commercial
      benefits which can have resulted from those events have been sunk and lost
      in the dreadful misfortunes which they have occasioned. These misfortunes,
      however, seem to have arisen rather from accident than from any thing in
      the nature of those events themselves. At the particular time when these
      discoveries were made, the superiority of force happened to be so great on
      the side of the Europeans, that they were enabled to commit with impunity
      every sort of injustice in those remote countries. Hereafter, perhaps, the
      natives of those countries may grow stronger, or those of Europe may grow
      weaker; and the inhabitants of all the different quarters of the world may
      arrive at that equality of courage and force which, by inspiring mutual
      fear, can alone overawe the injustice of independent nations into some
      sort of respect for the rights of one another. But nothing seems more
      likely to establish this equality of force, than that mutual communication
      of knowledge, and of all sorts of improvements, which an extensive
      commerce from all countries to all countries naturally, or rather
      necessarily, carries along with it.
    
      In the mean time, one of the principal effects of those discoveries has
      been, to raise the mercantile system to a degree of splendour and glory
      which it could never otherwise have attained to. It is the object of that
      system to enrich a great nation, rather by trade and manufactures than by
      the improvement and cultivation of land, rather by the industry of the
      towns than by that of the country. But in consequence of those
      discoveries, the commercial towns of Europe, instead of being the
      manufacturers and carriers for but a very small part of the world (that
      part of Europe which is washed by the Atlantic ocean, and the countries
      which lie round the Baltic and Mediterranean seas), have now become the
      manufacturers for the numerous and thriving cultivators of America, and
      the carriers, and in some respects the manufacturers too, for almost all
      the different nations of Asia, Africa, and America. Two new worlds have
      been opened to their industry, each of them much greater and more
      extensive than the old one, and the market of one of them growing still
      greater and greater every day.
    
      The countries which possess the colonies of America, and which trade
      directly to the East Indies, enjoy indeed the whole show and splendour of
      this great commerce. Other countries, however, notwithstanding all the
      invidious restraints by which it is meant to exclude them, frequently
      enjoy a greater share of the real benefit of it. The colonies of Spain and
      Portugal, for example, give more real encouragement to the industry of
      other countries than to that of Spain and Portugal. In the single article
      of linen alone, the consumption of those colonies amounts, it is said (but
      I do not pretend to warrant the quantity ), to more than three millions
      sterling a-year. But this great consumption is almost entirely supplied by
      France, Flanders, Holland, and Germany. Spain and Portugal furnish but a
      small part of it. The capital which supplies the colonies with this great
      quantity of linen, is annually distributed among, and furnishes a revenue
      to, the inhabitants of those other countries. The profits of it only are
      spent in Spain and Portugal, where they help to support the sumptuous
      profusion of the merchants of Cadiz and Lisbon.
    
      Even the regulations by which each nation endeavours to secure to itself
      the exclusive trade of its own colonies, are frequently more hurtful to
      the countries in favour of which they are established, than to those
      against which they are established. The unjust oppression of the industry
      of other countries falls back, if I may say so, upon the heads of the
      oppressors, and crushes their industry more than it does that of those
      other countries. By those regulations, for example, the merchant of
      Hamburg must send the linen which he destines for the American market to
      London, and he must bring back from thence the tobacco which he destines
      for the German market; because he can neither send the one directly to
      America, nor bring the other directly from thence. By this restraint he is
      probably obliged to sell the one somewhat cheaper, and to buy the other
      somewhat dearer, than he otherwise might have done; and his profits are
      probably somewhat abridged by means of it. In this trade, however, between
      Hamburg and London, he certainly receives the returns of his capital much
      more quickly than he could possibly have done in the direct trade to
      America, even though we should suppose, what is by no means the case, that
      the payments of America were as punctual as those of London. In the trade,
      therefore, to which those regulations confine the merchant of Hamburg, his
      capital can keep in constant employment a much greater quantity of German
      industry than he possibly could have done in the trade from which he is
      excluded. Though the one employment, therefore, may to him perhaps be less
      profitable than the other, it cannot be less advantageous to his country.
      It is quite otherwise with the employment into which the monopoly
      naturally attracts, if I may say so, the capital of the London merchant.
      That employment may, perhaps, be more profitable to him than the greater
      part of other employments; but on account of the slowness of the returns,
      it cannot be more advantageous to his country.
    
      After all the unjust attempts, therefore, of every country in Europe to
      engross to itself the whole advantage of the trade of its own colonies, no
      country has yet been able to engross to itself any thing but the expense
      of supporting in time of peace, and of defending in time of war, the
      oppressive authority which it assumes over them. The inconveniencies
      resulting from the possession of its colonies, every country has engrossed
      to itself completely. The advantages resulting from their trade, it has
      been obliged to share with many other countries.
    
      At first sight, no doubt, the monopoly of the great commerce of America
      naturally seems to be an acquisition of the highest value. To the
      undiscerning eye of giddy ambition it naturally presents itself, amidst
      the confused scramble of politics and war, as a very dazzling object to
      fight for. The dazzling splendour of the object, however, the immense
      greatness of the commerce, is the very quality which renders the monopoly
      of it hurtful, or which makes one employment, in its own nature
      necessarily less advantageous to the country than the greater part of
      other employments, absorb a much greater proportion of the capital of the
      country than what would otherwise have gone to it.
    
      The mercantile stock of every country, it has been shown in the second
      book, naturally seeks, if one may say so, the employment most advantageous
      to that country. If it is employed in the carrying trade, the country to
      which it belongs becomes the emporium of the goods of all the countries
      whose trade that stock carries on. But the owner of that stock necessarily
      wishes to dispose of as great a part of those goods as he can at home. He
      thereby saves himself the trouble, risk, and expense of exportation; and
      he will upon that account be glad to sell them at home, not only for a
      much smaller price, but with somewhat a smaller profit, than he might
      expect to make by sending them abroad. He naturally, therefore, endeavours
      as much as he can to turn his carrying trade into a foreign trade of
      consumption, If his stock, again, is employed in a foreign trade of
      consumption, he will, for the same reason, be glad to dispose of, at home,
      as great a part as he can of the home goods which he collects in order to
      export to some foreign market, and he will thus endeavour, as much as he
      can, to turn his foreign trade of consumption into a home trade. The
      mercantile stock of every country naturally courts in this manner the
      near, and shuns the distant employment: naturally courts the employment in
      which the returns are frequent, and shuns that in which they are distant
      and slow; naturally courts the employment in which it can maintain the
      greatest quantity of productive labour in the country to which it belongs,
      or in which its owner resides, and shuns that in which it can maintain
      there the smallest quantity. It naturally courts the employment which in
      ordinary cases is most advantageous, and shuns that which in ordinary
      cases is least advantageous to that country.
    
      But if, in any one of those distant employments, which in ordinary cases
      are less advantageous to the country, the profit should happen to rise
      somewhat higher than what is sufficient to balance the natural preference
      which is given to nearer employments, this superiority of profit will draw
      stock from those nearer employments, till the profits of all return to
      their proper level. This superiority of profit, however, is a proof that,
      in the actual circumstances of the society, those distant employments are
      somewhat understocked in proportion to other employments, and that the
      stock of the society is not distributed in the properest manner among all
      the different employments carried on in it. It is a proof that something
      is either bought cheaper or sold dearer than it ought to be, and that some
      particular class of citizens is more or less oppressed, either by paying
      more, or by getting less than what is suitable to that equality which
      ought to take place, and which naturally does take place, among all the
      different classes of them. Though the same capital never will maintain the
      same quantity of productive labour in a distant as in a near employment,
      yet a distant employment maybe as necessary for the welfare of the society
      as a near one; the goods which the distant employment deals in being
      necessary, perhaps, for carrying on many of the nearer employments. But if
      the profits of those who deal in such goods are above their proper level,
      those goods will be sold dearer than they ought to be, or somewhat above
      their natural price, and all those engaged in the nearer employments will
      be more or less oppressed by this high price. Their interest, therefore,
      in this case, requires, that some stock should be withdrawn from those
      nearer employments, and turned towards that distant one, in order to
      reduce its profits to their proper level, and the price of the goods which
      it deals in to their natural price. In this extraordinary case, the public
      interest requires that some stock should be withdrawn from those
      employments which, in ordinary cases, are more advantageous, and turned
      towards one which, in ordinary cases, is less advantageous to the public;
      and, in this extraordinary case, the natural interests and inclinations of
      men coincide as exactly with the public interests as in all other ordinary
      cases, and lead them to withdraw stock from the near, and to turn it
      towards the distant employments.
    
      It is thus that the private interests and passions of individuals
      naturally dispose them to turn their stock towards the employments which
      in ordinary cases, are most advantageous to the society. But if from this
      natural preference they should turn too much of it towards those
      employments, the fall of profit in them, and the rise of it in all others,
      immediately dispose them to alter this faulty distribution. Without any
      intervention of law, therefore, the private interests and passions of men
      naturally lead them to divide and distribute the stock of every society
      among all the different employments carried on in it; as nearly as
      possible in the proportion which is most agreeable to the interest of the
      whole society.
    
      All the different regulations of the mercantile system necessarily derange
      more or less this natural and most advantageous distribution of stock. But
      those which concern the trade to America and the East Indies derange it,
      perhaps, more than any other; because the trade to those two great
      continents absorbs a greater quantity of stock than any two other branches
      of trade. The regulations, however, by which this derangement is effected
      in those two different branches of trade, are not altogether the same.
      Monopoly is the great engine of both; but it is a different sort of
      monopoly. Monopoly of one kind or another, indeed, seems to be the sole
      engine of the mercantile system.
    
      In the trade to America, every nation endeavours to engross as much as
      possible the whole market of its own colonies, by fairly excluding all
      other nations from any direct trade to them. During the greater part of
      the sixteenth century, the Portuguese endeavoured to manage the trade to
      the East Indies in the same manner, by claiming the sole right of sailing
      in the Indian seas, on account of the merit of having first found out the
      road to them. The Dutch still continue to exclude all other European
      nations from any direct trade to their spice islands. Monopolies of this
      kind are evidently established against all other European nations, who are
      thereby not only excluded from a trade to which it might be convenient for
      them to turn some part of their stock, but are obliged to buy the goods
      which that trade deals in, somewhat dearer than if they could import them
      themselves directly from the countries which produced them.
    
      But since the fall of the power of Portugal, no European nation has
      claimed the exclusive right of sailing in the Indian seas, of which the
      principal ports are now open to the ships of all European nations. Except
      in Portugal, however, and within these few years in France, the trade to
      the East Indies has, in every European country, been subjected to an
      exclusive company. Monopolies of this kind are properly established
      against the very nation which erects them. The greater part of that nation
      are thereby not only excluded from a trade to which it might be convenient
      for them to turn some part of their stock, but are obliged to buy the
      goods which that trade deals in somewhat dearer than if it was open and
      free to all their countrymen. Since the establishment of the English East
      India company, for example, the other inhabitants of England, over and
      above being excluded from the trade, must have paid, in the price of the
      East India goods which they have consumed, not only for all the
      extraordinary profits which the company may have made upon those goods in
      consequence of their monopoly, but for all the extraordinary waste which
      the fraud and abuse inseparable from the management of the affairs of so
      great a company must necessarily have occasioned. The absurdity of this
      second kind of monopoly, therefore, is much more manifest than that of the
      first.
    
      Both these kinds of monopolies derange more or less the natural
      distribution of the stock of the society; but they do not always derange
      it in the same way.
    
      Monopolies of the first kind always attract to the particular trade in
      which they are established a greater proportion of the stock of the
      society than what would go to that trade of its own accord.
    
      Monopolies of the second kind may sometimes attract stock towards the
      particular trade in which they are established, and sometimes repel it
      from that trade, according to different circumstances. In poor countries,
      they naturally attract towards that trade more stock than would otherwise
      go to it. In rich countries, they naturally repel from it a good deal of
      stock which would otherwise go to it.
    
      Such poor countries as Sweden and Denmark, for example, would probably
      have never sent a single ship to the East Indies, had not the trade been
      subjected to an exclusive company. The establishment of such a company
      necessarily encourages adventurers. Their monopoly secures them against
      all competitors in the home market, and they have the same chance for
      foreign markets with the traders of other nations. Their monopoly shows
      them the certainty of a great profit upon a considerable quantity of
      goods, and the chance of a considerable profit upon a great quantity.
      Without such extraordinary encouragement, the poor traders of such poor
      countries would probably never have thought of hazarding their small
      capitals in so very distant and uncertain an adventure as the trade to the
      East Indies must naturally have appeared to them.
    
      Such a rich country as Holland, on the contrary, would probably, in the
      case of a free trade, send many more ships to the East Indies than it
      actually does. The limited stock of the Dutch East India company probably
      repels from that trade many great mercantile capitals which would
      otherwise go to it. The mercantile capital of Holland is so great, that it
      is, as it were, continually overflowing, sometimes into the public funds
      of foreign countries, sometimes into loans to private traders and
      adventurers of foreign countries, sometimes into the most round-about
      foreign trades of consumption, and sometimes into the carrying trade. All
      near employments being completely filled up, all the capital which can be
      placed in them with any tolerable profit being already placed in them, the
      capital of Holland necessarily flows towards the most distant employments.
      The trade to the East Indies, if it were altogether free, would probably
      absorb the greater part of this redundant capital. The East Indies offer a
      market both for the manufactures of Europe, and for the gold and silver,
      as well as for the several other productions of America, greater and more
      extensive than both Europe and America put together.
    
      Every derangement of the natural distribution of stock is necessarily
      hurtful to the society in which it takes place; whether it be by repelling
      from a particular trade the stock which would otherwise go to it, or by
      attracting towards a particular trade that which would not otherwise come
      to it. If, without any exclusive company, the trade of Holland to the East
      Indies would be greater than it actually is, that country must suffer a
      considerable loss, by part of its capital being excluded from the
      employment most convenient for that port. And, in the same manner, if,
      without an exclusive company, the trade of Sweden and Denmark to the East
      Indies would be less than it actually is, or, what perhaps is more
      probable, would not exist at all, those two countries must likewise suffer
      a considerable loss, by part of their capital being drawn into an
      employment which must be more or less unsuitable to their present
      circumstances. Better for them, perhaps, in the present circumstances, to
      buy East India goods of other nations, even though they should pay
      somewhat dearer, than to turn so great a part of their small capital to so
      very distant a trade, in which the returns are so very slow, in which that
      capital can maintain so small a quantity of productive labour at home,
      where productive labour is so much wanted, where so little is done, and
      where so much is to do.
    
      Though without an exclusive company, therefore, a particular country
      should not be able to carry on any direct trade to the East Indies, it
      will not from thence follow, that such a company ought to be established
      there, but only that such a country ought not, in these circumstances, to
      trade directly to the East Indies. That such companies are not in general
      necessary for carrying on the East India trade, is sufficiently
      demonstrated by the experience of the Portuguese, who enjoyed almost the
      whole of it for more than a century together, without any exclusive
      company.
    
      No private merchant, it has been said, could well have capital sufficient
      to maintain factors and agents in the different ports of the East Indies,
      in order to provide goods for the ships which he might occasionally send
      thither; and yet, unless he was able to do this, the difficulty of finding
      a cargo might frequently make his ships lose the season for returning; and
      the expense of so long a delay would not only eat up the whole profit of
      the adventure, but frequently occasion a very considerable loss. This
      argument, however, if it proved any thing at all, would prove that no one
      great branch of trade could be carried on without an exclusive company,
      which is contrary to the experience of all nations. There is no great
      branch of trade, in which the capital of any one private merchant is
      sufficient for carrying on all the subordinate branches which must be
      carried on, in order to carry on the principal one. But when a nation is
      ripe for any great branch of trade, some merchants naturally turn their
      capitals towards the principal, and some towards the subordinate branches
      of it; and though all the different branches of it are in this manner
      carried on, yet it very seldom happens that they are all carried on by the
      capital of one private merchant. If a nation, therefore, is ripe for the
      East India trade, a certain portion of its capital will naturally divide
      itself among all the different branches of that trade. Some of its
      merchants will find it for their interest to reside in the East Indies,
      and to employ their capitals there in providing goods for the ships which
      are to be sent out by other merchants who reside in Europe. The
      settlements which different European nations have obtained in the East
      Indies, if they were taken from the exclusive companies to which they at
      present belong, and put under the immediate protection of the sovereign,
      would render this residence both safe and easy, at least to the merchants
      of the particular nations to whom those settlements belong. If, at any
      particular time, that part of the capital of any country which of its own
      accord tended and inclined, if I may say so, towards the East India trade,
      was not sufficient for carrying on all those different branches of it, it
      would be a proof that, at that particular time, that country was not ripe
      for that trade, and that it would do better to buy for some time, even at
      a higher price, from other European nations, the East India goods it had
      occasion for, than to import them itself directly from the East Indies.
      What it might lose by the high price of those goods, could seldom be equal
      to the loss which it would sustain by the distraction of a large portion
      of its capital from other employments more necessary, or more useful, or
      more suitable to its circumstances and situation, than a direct trade to
      the East Indies.
    
      Though the Europeans possess many considerable settlements both upon the
      coast of Africa and in the East Indies, they have not yet established, in
      either of those countries, such numerous and thriving colonies as those in
      the islands and continent of America. Africa, however, as well as several
      of the countries comprehended under the general name of the East Indies,
      is inhabited by barbarous nations. But those nations were by no means so
      weak and defenceless as the miserable and helpless Americans; and in
      proportion to the natural fertility of the countries which they inhabited,
      they were, besides, much more populous. The most barbarous nations either
      of Africa or of the East Indies, were shepherds; even the Hottentots were
      so. But the natives of every part of America, except Mexico and Peru, were
      only hunters and the difference is very great between the number of
      shepherds and that of hunters whom the same extent of equally fertile
      territory can maintain. In Africa and the East Indies, therefore, it was
      more difficult to displace the natives, and to extend the European
      plantations over the greater part of the lands of the original
      inhabitants. The genius of exclusive companies, besides, is unfavourable,
      it has already been observed, to the growth of new colonies, and has
      probably been the principal cause of the little progress which they have
      made in the East Indies. The Portuguese carried on the trade both to
      Africa and the East Indies, without any exclusive companies; and their
      settlements at Congo, Angola, and Benguela, on the coast of Africa, and at
      Goa in the East Indies though much depressed by superstition and every
      sort of bad government, yet bear some resemblance to the colonies of
      America, and are partly inhabited by Portuguese who have been established
      there for several generations. The Dutch settlements at the Cape of Good
      Hope and at Batavia, are at present the most considerable colonies which
      the Europeans have established, either in Africa or in the East Indies;
      and both those settlements are peculiarly fortunate in their situation. The
      Cape of Good Hope was inhabited by a race of people almost as barbarous,
      and quite as incapable of defending themselves, as the natives of America.
      It is, besides, the half-way house, if one may say so, between Europe and
      the East Indies, at which almost every European ship makes some stay, both
      in going and returning. The supplying of those ships with every sort of
      fresh provisions, with fruit, and sometimes with wine, affords alone a
      very extensive market for the surplus produce of the colonies. What the
      Cape of Good Hope is between Europe and every part of the East Indies,
      Batavia is between the principal countries of the East Indies. It lies
      upon the most frequented road from Indostan to China and Japan, and is
      nearly about mid-way upon that road. Almost all the ships too, that sail
      between Europe and China, touch at Batavia; and it is, over and above all
      this, the centre and principal mart of what is called the country trade of
      the East Indies; not only of that part of it which is carried on by
      Europeans, but of that which is carried on by the native Indians; and
      vessels navigated by the inhabitants of China and Japan, of Tonquin,
      Malacca, Cochin-China, and the island of Celebes, are frequently to be
      seen in its port. Such advantageous situations have enabled those two
      colonies to surmount all the obstacles which the oppressive genius of an
      exclusive company may have occasionally opposed to their growth. They have
      enabled Batavia to surmount the additional disadvantage of perhaps the
      most unwholesome climate in the world.
    
      The English and Dutch companies, though they have established no
      considerable colonies, except the two above mentioned, have both made
      considerable conquests in the East Indies. But in the manner in which they
      both govern their new subjects, the natural genius of an exclusive company
      has shewn itself most distinctly. In the spice islands, the Dutch are said
      to burn all the spiceries which a fertile season produces, beyond what
      they expect to dispose of in Europe with such a profit as they think
      sufficient. In the islands where they have no settlements, they give a
      premium to those who collect the young blossoms and green leaves of the
      clove and nutmeg trees, which naturally grow there, but which this savage
      policy has now, it is said, almost completely extirpated. Even in the
      islands where they have settlements, they have very much reduced, it is
      said, the number of those trees. If the produce even of their own islands
      was much greater than what suited their market, the natives, they suspect,
      might find means to convey some part of it to other nations; and the best
      way, they imagine, to secure their own monopoly, is to take care that no
      more shall grow than what they themselves carry to market. By different
      arts of oppression, they have reduced the population of several of the
      Moluccas nearly to the number which is sufficient to supply with fresh
      provisions, and other necessaries of life, their own insignificant
      garrisons, and such of their ships as occasionally come there for a cargo
      of spices. Under the government even of the Portuguese, however, those
      islands are said to have been tolerably well inhabited. The English
      company have not yet had time to establish in Bengal so perfectly
      destructive a system. The plan of their government, however, has had
      exactly the same tendency. It has not been uncommon, I am well assured,
      for the chief, that is, the first clerk or a factory, to order a peasant
      to plough up a rich field of poppies, and sow it with rice, or some other
      grain. The pretence was, to prevent a scarcity of provisions; but the real
      reason, to give the chief an opportunity of selling at a better price a
      large quantity of opium which he happened then to have upon hand. Upon
      other occasions, the order has been reversed; and a rich field of rice or
      other grain has been ploughed up, in order to make room for a plantation
      of poppies, when the chief foresaw that extraordinary profit was likely to
      be made by opium. The servants of the company have, upon several
      occasions, attempted to establish in their own favour the monopoly of some
      of the most important branches, not only of the foreign, but of the inland
      trade of the country. Had they been allowed to go on, it is impossible
      that they should not, at some time or another, have attempted to restrain
      the production of the particular articles of which they had thus usurped
      the monopoly, not only to the quantity which they themselves could
      purchase, but to that which they could expect to sell with such a profit
      as they might think sufficient. In the course of a century or two, the
      policy of the English company would, in this manner, have probably proved
      as completely destructive as that of the Dutch.
    
      Nothing, however, can be more directly contrary to the real interest of
      those companies, considered as the sovereigns of the countries which they
      have conquered, than this destructive plan. In almost all countries, the
      revenue of the sovereign is drawn from that of the people. The greater the
      revenue of the people, therefore, the greater the annual produce of their
      land and labour, the more they can afford to the sovereign. It is his
      interest, therefore, to increase as much as possible that annual produce.
      But if this is the interest of every sovereign, it is peculiarly so of one
      whose revenue, like that of the sovereign of Bengal, arises chiefly from a
      land-rent. That rent must necessarily be in proportion to the quantity and
      value of the produce; and both the one and the other must depend upon the
      extent of the market. The quantity will always be suited, with more or
      less exactness, to the consumption of those who can afford to pay for it;
      and the price which they will pay will always be in proportion to the
      eagerness of their competition. It is the interest of such a sovereign,
      therefore, to open the most extensive market for the produce of his
      country, to allow the most perfect freedom of commerce, in order to
      increase as much as possible the number and competition of buyers; and
      upon this account to abolish, not only all monopolies, but all restraints
      upon the transportation of the home produce from one part of the country
      to another, upon its exportation to foreign countries, or upon the
      importation of goods of any kind for which it can be exchanged. He is in
      this manner most likely to increase both the quantity and value of that
      produce, and consequently of his own share of it, or of his own revenue.
    
      But a company of merchants, are, it seems, incapable of considering
      themselves as sovereigns, even after they have become such. Trade, or
      buying in order to sell again, they still consider as their principal
      business, and by a strange absurdity, regard the character of the
      sovereign as but an appendix to that of the merchant; as something which
      ought to be made subservient to it, or by means of which they may be
      enabled to buy cheaper in India, and thereby to sell with a better profit
      in Europe. They endeavour, for this purpose, to keep out as much as
      possible all competitors from the market of the countries which are
      subject to their government, and consequently to reduce, at least, some
      part of the surplus produce of those countries to what is barely
      sufficient for supplying their own demand, or to what they can expect to
      sell in Europe, with such a profit as they may think reasonable. Their
      mercantile habits draw them in this manner, almost necessarily, though
      perhaps insensibly, to prefer, upon all ordinary occasions, the little and
      transitory profit of the monopolist to the great and permanent revenue of
      the sovereign; and would gradually lead them to treat the countries
      subject to their government nearly as the Dutch treat the Moluccas. It is
      the interest of the East India company, considered as sovereigns, that the
      European goods which are carried to their Indian dominions should be sold
      there as cheap as possible; and that the Indian goods which are brought
      from thence should bring there as good a price, or should be sold there as
      dear as possible. But the reverse of this is their interest as merchants.
      As sovereigns, their interest is exactly the same with that of the country
      which they govern. As merchants, their interest is directly opposite to
      that interest.
    
      But if the genius of such a government, even as to what concerns its
      direction in Europe, is in this manner essentially, and perhaps incurably
      faulty, that of its administration in India is still more so. That
      administration is necessarily composed of a council of merchants, a
      profession no doubt extremely respectable, but which in no country in the
      world carries along with it that sort of authority which naturally
      overawes the people, and without force commands their willing obedience.
      Such a council can command obedience only by the military force with which
      they are accompanied; and their government is, therefore, necessarily
      military and despotical. Their proper business, however, is that of
      merchants. It is to sell, upon their master’s account, the European goods
      consigned to them, and to buy, in return, Indian goods for the European
      market. It is to sell the one as dear, and to buy the other as cheap as
      possible, and consequently to exclude, as much as possible, all rivals
      from the particular market where they keep their shop. The genius of the
      administration, therefore, so far as concerns the trade of the company, is
      the same as that of the direction. It tends to make government subservient
      to the interest of monopoly, and consequently to stunt the natural growth
      of some parts, at least, of the surplus produce of the country, to what is
      barely sufficient for answering the demand of the company.
    
      All the members of the administration besides, trade more or less upon
      their own account; and it is in vain to prohibit them from doing so.
      Nothing can be more completely foolish than to expect that the clerk of a
      great counting-house, at ten thousand miles distance, and consequently
      almost quite out of sight, should, upon a simple order from their master,
      give up at once doing any sort of business upon their own account abandon
      for ever all hopes of making a fortune, of which they have the means in
      their hands; and content themselves with the moderate salaries which those
      masters allow them, and which, moderate as they are, can seldom be
      augmented, being commonly as large as the real profits of the company
      trade can afford. In such circumstances, to prohibit the servants of the
      company from trading upon their own account, can have scarce any other
      effect than to enable its superior servants, under pretence of executing
      their master’s order, to oppress such of the inferior ones as have had the
      misfortune to fall under their displeasure. The servants naturally
      endeavour to establish the same monopoly in favour of their own private
      trade as of the public trade of the company. If they are suffered to act
      as they could wish, they will establish this monopoly openly and directly,
      by fairly prohibiting all other people from trading in the articles in
      which they choose to deal; and this, perhaps, is the best and least
      oppressive way of establishing it. But if, by an order from Europe, they
      are prohibited from doing this, they will, notwithstanding, endeavour to
      establish a monopoly of the same kind secretly and indirectly, in a way
      that is much more destructive to the country. They will employ the whole
      authority of government, and pervert the administration of Justice, in
      order to harass and ruin those who interfere with them in any branch of
      commerce, which by means of agents, either concealed, or at least not
      publicly avowed, they may choose to carry on. But the private trade of the
      servants will naturally extend to a much greater variety of articles than
      the public trade of the company. The public trade of the company extends
      no further than the trade with Europe, and comprehends a part only of the
      foreign trade of the country. But the private trade of the servants may
      extend to all the different branches both of its inland and foreign trade.
      The monopoly of the company can tend only to stunt the natural growth of
      that part of the surplus produce which, in the case of a free trade, would
      be exported to Europe. That of the servants tends to stunt the natural
      growth of every part of the produce in which they choose to deal; of what
      is destined for home consumption, as well as of what is destined for
      exportation; and consequently to degrade the cultivation of the whole
      country, and to reduce the number of its inhabitants. It tends to reduce
      the quantity of every sort of produce, even that of the necessaries of
      life, whenever the servants of the country choose to deal in them, to what
      those servants can both afford to buy and expect to sell with such a
      profit as pleases them.
    
      From the nature of their situation, too, the servants must be more
      disposed to support with rigourous severity their own interest, against
      that of the country which they govern, than their masters can be to
      support theirs. The country belongs to their masters, who cannot avoid
      having some regard for the interest of what belongs to them; but it does
      not belong to the servants. The real interest of their masters, if they
      were capable of understanding it, is the same with that of the country;
      {The interest of every proprietor of India stock, however, is by no means
      the same with that of the country in the government of which his vote
      gives him some influence.—See book v, chap. 1, part ii.}and it is
      from ignorance chiefly, and the meanness of mercantile prejudice, that
      they ever oppress it. But the real interest of the servants is by no means
      the same with that of the country, and the most perfect information would
      not necessarily put an end to their oppressions. The regulations,
      accordingly, which have been sent out from Europe, though they have been
      frequently weak, have upon most occasions been well meaning. More
      intelligence, and perhaps less good meaning, has sometimes appeared in
      those established by the servants in India. It is a very singular
      government in which every member of the administration wishes to get out
      of the country, and consequently to have done with the government, as soon
      as he can, and to whose interest, the day after he has left it, and
      carried his whole fortune with him, it is perfectly indifferent though the
      whole country was swallowed up by an earthquake.
    
      I mean not, however, by any thing which I have here said, to throw any
      odious imputation upon the general character of the servants of the East
      India company, and touch less upon that of any particular persons. It is
      the system of government, the situation in which they are placed, that I
      mean to censure, not the character of those who have acted in it. They
      acted as their situation naturally directed, and they who have clamoured
      the loudest against them would probably not have acted better themselves.
      In war and negotiation, the councils of Madras and Calcutta, have upon
      several occasions, conducted themselves with a resolution and decisive
      wisdom, which would have done honour to the senate of Rome in the best
      days of that republic. The members of those councils, however, had been
      bred to professions very different from war and politics. But their
      situation alone, without education, experience, or even example, seems to
      have formed in them all at once the great qualities which it required, and
      to have inspired them both with abilities and virtues which they
      themselves could not well know that they possessed. If upon some
      occasions, therefore, it has animated them to actions of magnanimity which
      could not well have been expected from them, we should not wonder if, upon
      others, it has prompted them to exploits of somewhat a different nature.
    
      Such exclusive companies, therefore, are nuisances in every respect;
      always more or less inconvenient to the countries in which they are
      established, and destructive to those which have the misfortune to fall
      under their government.
    


CHAPTER VIII.
CONCLUSION OF THE MERCANTILE SYSTEM.


    
      Though the encouragement of exportation, and the discouragement of
      importation, are the two great engines by which the mercantile system
      proposes to enrich every country, yet, with regard to some particular
      commodities, it seems to follow an opposite plan: to discourage
      exportation, and to encourage importation. Its ultimate object, however,
      it pretends, is always the same, to enrich the country by an advantageous
      balance of trade. It discourages the exportation of the materials of
      manufacture, and of the instruments of trade, in order to give our own
      workmen an advantage, and to enable them to undersell those of other
      nations in all foreign markets; and by restraining, in this manner, the
      exportation of a few commodities, of no great price, it proposes to
      occasion a much greater and more valuable exportation of others. It
      encourages the importation of the materials of manufacture, in order that
      our own people may be enabled to work them up more cheaply, and thereby
      prevent a greater and more valuable importation of the manufactured
      commodities. I do not observe, at least in our statute book, any
      encouragement given to the importation of the instruments of trade. When
      manufactures have advanced to a certain pitch of greatness, the
      fabrication of the instruments of trade becomes itself the object of a
      great number of very important manufactures. To give any particular
      encouragement to the importation of such instruments, would interfere too
      much with the interest of those manufactures. Such importation, therefore,
      instead of being encouraged, has frequently been prohibited. Thus the
      importation of wool cards, except from Ireland, or when brought in as
      wreck or prize goods, was prohibited by the 3rd of Edward IV.; which
      prohibition was renewed by the 39th of Elizabeth, and has been continued
      and rendered perpetual by subsequent laws.
    
      The importation of the materials of manufacture has sometimes been
      encouraged by an exemption from the duties to which other goods are
      subject, and sometimes by bounties.
    
      The importation of sheep’s wool from several different countries, of
      cotton wool from all countries, of undressed flax, of the greater part of
      dyeing drugs, of the greater part of undressed hides from Ireland, or the
      British colonies, of seal skins from the British Greenland fishery, of pig
      and bar iron from the British colonies, as well as of several other
      materials of manufacture, has been encouraged by an exemption from all
      duties, if properly entered at the custom-house. The private interest of
      our merchants and manufacturers may, perhaps, have extorted from the
      legislature these exemptions, as well as the greater part of our other
      commercial regulations. They are, however, perfectly just and reasonable;
      and if, consistently with the necessities of the state, they could be
      extended to all the other materials of manufacture, the public would
      certainly be a gainer.
    
      The avidity of our great manufacturers, however, has in some cases
      extended these exemptions a good deal beyond what can justly be considered
      as the rude materials of their work. By the 24th Geo. II. chap. 46, a
      small duty of only 1d. the pound was imposed upon the importation of
      foreign brown linen yarn, instead of much higher duties, to which it had
      been subjected before, viz. of 6d. the pound upon sail yarn, of 1s. the
      pound upon all French and Dutch yarn, and of £2:13:4 upon the hundred
      weight of all spruce or Muscovia yarn. But our manufacturers were not long
      satisfied with this reduction: by the 29th of the same king, chap. 15, the
      same law which gave a bounty upon the exportation of British and Irish
      linen, of which the price did not exceed 18d. the yard, even this small
      duty upon the importation of brown linen yarn was taken away. In the
      different operations, however, which are necessary for the preparation of
      linen yarn, a good deal more industry is employed, than in the subsequent
      operation of preparing linen cloth from linen yarn. To say nothing of the
      industry of the flax-growers and flaxdressers, three or four spinners at
      least are necessary in order to keep one weaver in constant employment;
      and more than four-fifths of the whole quantity of labour necessary for
      the preparation of linen cloth, is employed in that of linen yarn; but our
      spinners are poor people; women commonly scattered about in all different
      parts of the country, without support or protection. It is not by the sale
      of their work, but by that of the complete work of the weavers, that our
      great master manufacturers make their profits. As it is their interest to
      sell the complete manufacture as dear, so it is to buy the materials as
      cheap as possible. By extorting from the legislature bounties upon the
      exportation of their own linen, high duties upon the importation of all
      foreign linen, and a total prohibition of the home consumption of some
      sorts of French linen, they endeavour to sell their own goods as dear as
      possible. By encouraging the importation of foreign linen yarn, and
      thereby bringing it into competition with that which is made by our own
      people, they endeavour to buy the work of the poor spinners as cheap as
      possible. They are as intent to keep down the wages of their own weavers,
      as the earnings of the poor spinners; and it is by no means for the
      benefit of the workmen that they endeavour either to raise the price of
      the complete work, or to lower that of the rude materials. It is the
      industry which is carried on for the benefit of the rich and the powerful,
      that is principally encouraged by our mercantile system. That which is
      carried on for the benefit of the poor and the indigent is too often
      either neglected or oppressed.
    
      Both the bounty upon the exportation of linen, and the exemption from the
      duty upon the importation of foreign yarn, which were granted only for
      fifteen years, but continued by two different prolongations, expire with
      the end of the session of parliament which shall immediately follow the
      24th of June 1786.
    
      The encouragement given to the importation of the materials of manufacture
      by bounties, has been principally confined to such as were imported from
      our American plantations.
    
      The first bounties of this kind were those granted about the beginning of
      the present century, upon the importation of naval stores from America.
      Under this denomination were comprehended timber fit for masts, yards, and
      bowsprits; hemp, tar, pitch, and turpentine. The bounty, however, of £1
      the ton upon masting-timber, and that of £6 the ton upon hemp, were
      extended to such as should be imported into England from Scotland. Both
      these bounties continued, without any variation, at the same rate, till
      they were severally allowed to expire; that upon hemp on the 1st of
      January 1741, and that upon masting-timber at the end of the session of
      parliament immediately following the 24th June 1781.
    
      The bounties upon the importation of tar, pitch, and turpentine,
      underwent, during their continuance, several alterations. Originally, that
      upon tar was £4 the ton; that upon pitch the same; and that upon
      turpentine £3 the ton. The bounty of £4 the ton upon tar was afterwards
      confined to such as had been prepared in a particular manner; that upon
      other good, clean, and merchantable tar was reduced to £2:4s. the ton. The
      bounty upon pitch was likewise reduced to £1, and that upon turpentine to
      £1:10s. the ton.
    
      The second bounty upon the importation of any of the materials of
      manufacture, according to the order of time, was that granted by the 21st
      Geo. II. chap.30, upon the importation of indigo from the British
      plantations. When the plantation indigo was worth three-fourths of the
      price of the best French indigo, it was, by this act, entitled to a bounty
      of 6d. the pound. This bounty, which, like most others, was granted only
      for a limited time, was continued by several prolongations, but was
      reduced to 4d. the pound. It was allowed to expire with the end of the
      session of parliament which followed the 25th March 1781.
    
      The third bounty of this kind was that granted (much about the time that
      we were beginning sometimes to court, and sometimes to quarrel with our
      American colonies), by the 4th. Geo. III. chap. 26, upon the importation
      of hemp, or undressed flax, from the British plantations. This bounty was
      granted for twenty-one years, from the 24th June 1764 to the 24th June
      1785. For the first seven years, it was to be at the rate of £8 the ton;
      for the second at £6; and for the third at £4. It was not extended to
      Scotland, of which the climate (although hemp is sometimes raised there in
      small quantities, and of an inferior quality) is not very fit for that
      produce. Such a bounty upon the importation of Scotch flax in England
      would have been too great a discouragement to the native produce of the
      southern part of the united kingdom.
    
      The fourth bounty of this kind was that granted by the 5th Geo. III. chap.
      45, upon the importation of wood from America. It was granted for nine
      years from the 1st January 1766 to the 1st January 1775. During the first
      three years, it was to be for every hundred-and-twenty good deals, at the
      rate of £1, and for every load containing fifty cubic feet of other square
      timber, at the rate of 12s. For the second three years, it was for deals,
      to be at the rate of 15s., and for other squared timber at the rate of
      8s.; and for the third three years, it was for deals, to be at the rate of
      10s.; and for every other squared timber at the rate of 5s.
    
      The fifth bounty of this kind was that granted by the 9th Geo. III. chap.
      38, upon the importation of raw silk from the British plantations. It was
      granted for twenty-one years, from the 1st January 1770, to the 1st
      January 1791. For the first seven years, it was to be at the rate of £25
      for every hundred pounds value; for the second, at £20; and for the third,
      at £15. The management of the silk-worm, and the preparation of silk,
      requires so much hand-labour, and labour is so very dear in America, that
      even this great bounty, I have been informed, was not likely to produce
      any considerable effect.
    
      The sixth Bounty of this kind was that granted by 11th Geo. III. chap. 50,
      for the importation of pipe, hogshead, and barrelstaves and leading from
      the British plantations. It was granted for nine years, from 1st January
      1772 to the 1st January 1781. For the first three years, it was, for a
      certain quantity of each, to be at the rate of £6; for the second three
      years at £4; and for the third three years at £2.
    
      The seventh and last bounty of this kind was that granted by the 19th Geo.
      III chap. 37, upon the importation of hemp from Ireland. It was granted in
      the same manner as that for the importation of hemp and undressed flax
      from America, for twenty-one years, from the 24th June 1779 to the 24th
      June 1800. The term is divided likewise into three periods, of seven years
      each; and in each of those periods, the rate of the Irish bounty is the
      same with that of the American. It does not, however, like the American
      bounty, extend to the importation of undressed flax. It would have been
      too great a discouragement to the cultivation of that plant in Great
      Britain. When this last bounty was granted, the British and Irish
      legislatures were not in much better humour with one another, than the
      British and American had been before. But this boon to Ireland, it is to
      be hoped, has been granted under more fortunate auspices than all those to
      America. The same commodities, upon which we thus gave bounties, when
      imported from America, were subjected to considerable duties when imported
      from any other country. The interest of our American colonies was regarded
      as the same with that of the mother country. Their wealth was considered
      as our wealth. Whatever money was sent out to them, it was said, came all
      back to us by the balance of trade, and we could never become a farthing
      the poorer by any expense which we could lay out upon them. They were our
      own in every respect, and it was an expense laid out upon the improvement
      of our own property, and for the profitable employment of our own people.
      It is unnecessary, I apprehend, at present to say anything further, in
      order to expose the folly of a system which fatal experience has now
      sufficiently exposed. Had our American colonies really been a part of
      Great Britain, those bounties might have been considered as bounties upon
      production, and would still have been liable to all the objections to
      which such bounties are liable, but to no other.
    
      The exportation of the materials of manufacture is sometimes discouraged
      by absolute prohibitions, and sometimes by high duties.
    
      Our woollen manufacturers have been more successful than any other class
      of workmen, in persuading the legislature that the prosperity of the
      nation depended upon the success and extension of their particular
      business. They have not only obtained a monopoly against the consumers, by
      an absolute prohibition of importing woollen cloths from any foreign
      country; but they have likewise obtained another monopoly against the
      sheep farmers and growers of wool, by a similar prohibition of the
      exportation of live sheep and wool. The severity of many of the laws which
      have been enacted for the security of the revenue is very justly
      complained of, as imposing heavy penalties upon actions which, antecedent
      to the statutes that declared them to be crimes, had always been
      understood to be innocent. But the cruellest of our revenue laws, I will
      venture to affirm, are mild and gentle, in comparison to some of those
      which the clamour of our merchants and manufacturers has extorted from the
      legislature, for the support of their own absurd and oppressive
      monopolies. Like the laws of Draco, these laws may be said to be all
      written in blood.
    
      By the 8th of Elizabeth, chap. 3, the exporter of sheep, lambs, or rams,
      was for the first offence, to forfeit all his goods for ever, to suffer a
      year’s imprisonment, and then to have his left hand cut off in a market
      town, upon a market day, to be there nailed up; and for the second
      offence, to be adjudged a felon, and to suffer death accordingly. To
      prevent the breed of our sheep from being propagated in foreign countries,
      seems to have been the object of this law. By the 13th and 14th of Charles
      II. chap. 18, the exportation of wool was made felony, and the exporter
      subjected to the same penalties and forfeitures as a felon.
    
      For the honour of the national humanity, it is to be hoped that neither of
      these statutes was ever executed. The first of them, however, so far as I
      know, has never been directly repealed, and serjeant Hawkins seems to
      consider it as still in force. It may, however, perhaps be considered as
      virtually repealed by the 12th of Charles II. chap. 32, sect. 3, which,
      without expressly taking away the penalties imposed by former statutes,
      imposes a new penalty, viz. that of 20s. for every sheep exported, or
      attempted to be exported, together with the forfeiture of the sheep, and
      of the owner’s share of the sheep. The second of them was expressly
      repealed by the 7th and 8th of William III. chap. 28, sect. 4, by which it
      is declared that “Whereas the statute of the 13th and 14th of king Charles
      II. made against the exportation of wool, among other things in the said
      act mentioned, doth enact the same to be deemed felony, by the severity of
      which penalty the prosecution of offenders hath not been so effectually
      put in execution; be it therefore enacted, by the authority aforesaid,
      that so much of the said act, which relates to the making the said offence
      felony, be repealed and made void.”
    
      The penalties, however, which are either imposed by this milder statute,
      or which, though imposed by former statutes, are not repealed by this one,
      are still sufficiently severe. Besides the forfeiture of the goods, the
      exporter incurs the penalty of 3s. for every pound weight of wool, either
      exported or attempted to be exported, that is, about four or five times
      the value. Any merchant, or other person convicted of this offence, is
      disabled from requiring any debt or account belonging to him from any
      factor or other person. Let his fortune be what it will, whether he is or
      is not able to pay those heavy penalties, the law means to ruin him
      completely. But, as the morals of the great body of the people are not yet
      so corrupt as those of the contrivers of this statute, I have not heard
      that any advantage has ever been taken of this clause. If the person
      convicted of this offence is not able to pay the penalties within three
      months after judgment, he is to be transported for seven years; and if he
      returns before the expiration of that term, he is liable to the pains of
      felony, without benefit of clergy. The owner of the ship, knowing this
      offence, forfeits all his interest in the ship and furniture. The master
      and mariners, knowing this offence, forfeit all their goods and chattels,
      and suffer three months imprisonment. By a subsequent statute, the master
      suffers six months imprisonment.
    
      In order to prevent exportation, the whole inland commerce of wool is laid
      under very burdensome and oppressive restrictions. It cannot be packed in
      any box, barrel, cask, case, chest, or any other package, but only in
      packs of leather or pack-cloth, on which must be marked on the outside the
      words WOOL or YARN, in large letters, not less than three inches long, on
      pain of forfeiting the same and the package, and 8s. for every pound
      weight, to be paid by the owner or packer. It cannot be loaden on any
      horse or cart, or carried by land within five miles of the coast, but
      between sun-rising, and sun-setting, on pain of forfeiting the same, the
      horses and carriages. The hundred next adjoining to the sea coast, out of,
      or through which the wool is carried or exported, forfeits £20, if the
      wool is under the value of £10; and if of greater value, then treble that
      value, together with treble costs, to be sued for within the year. The
      execution to be against any two of the inhabitants, whom the sessions must
      reimburse, by an assessment on the other inhabitants, as in the cases of
      robbery. And if any person compounds with the hundred for less than this
      penalty, he is to be imprisoned for five years; and any other person may
      prosecute. These regulations take place through the whole kingdom.
    
      But in the particular counties of Kent and Sussex, the restrictions are
      still more troublesome. Every owner of wool within ten miles of the sea
      coast must give an account in writing, three days after shearing, to the
      next officer of the customs, of the number of his fleeces, and of the
      places where they are lodged. And before he removes any part of them, he
      must give the like notice of the number and weight of the fleeces, and of
      the name and abode of the person to whom they are sold, and of the place
      to which it is intended they should be carried. No person within fifteen
      miles of the sea, in the said counties, can buy any wool, before he enters
      into bond to the king, that no part of the wool which he shall so buy
      shall be sold by him to any other person within fifteen miles of the sea.
      If any wool is found carrying towards the sea side in the said counties,
      unless it has been entered and security given as aforesaid, it is
      forfeited, and the offender also forfeits 3s. for every pound weight, if
      any person lay any wool, not entered as aforesaid, within fifteen miles of
      the sea, it must be seized and forfeited; and if, after such seizure, any
      person shall claim the same, he must give security to the exchequer, that
      if he is cast upon trial he shall pay treble costs, besides all other
      penalties.
    
      When such restrictions are imposed upon the inland trade, the coasting
      trade, we may believe, cannot be left very free. Every owner of wool, who
      carrieth, or causeth to be carried, any wool to any port or place on the
      sea coast, in order to be from thence transported by sea to any other
      place or port on the coast, must first cause an entry thereof to be made
      at the port from whence it is intended to be conveyed, containing the
      weight, marks, and number, of the packages, before he brings the same
      within five miles of that port, on pain of forfeiting the same, and also
      the horses, carts, and other carriages; and also of suffering and
      forfeiting, as by the other laws in force against the exportation of wool.
      This law, however (1st of William III. chap. 32), is so very indulgent as
      to declare, that this shall not hinder any person from carrying his wool
      home from the place of shearing, though it be within five miles of the
      sea, provided that in ten days after shearing, and before he remove the
      wool, he do under his hand certify to the next officer of the customs the
      true number of fleeces, and where it is housed; and do not remove the
      same, without certifying to such officer, under his hand, his intention so
      to do, three days before. Bond must be given that the wool to be carried
      coast-ways is to be landed at the particular port for which it is entered
      outwards; and if my part of it is landed without the presence of an
      officer, not only the forfeiture of the wool is incurred, as in other
      goods, but the usual additional penalty of 3s. for every pound weight is
      likewise incurred.
    
      Our woollen manufacturers, in order to justify their demand of such
      extraordinary restrictions and regulations, confidently asserted, that
      English wool was of a peculiar quality, superior to that of any other
      country; that the wool of other countries could not, without some mixture
      of it, be wrought up into any tolerable manufacture; that fine cloth could
      not be made without it; that England, therefore, if the exportation of it
      could be totally prevented, could monopolize to herself almost the whole
      woollen trade of the world; and thus, having no rivals, could sell at what
      price she pleased, and in a short time acquire the most incredible degree
      of wealth by the most advantageous balance of trade. This doctrine, like
      most other doctrines which are confidently asserted by any considerable
      number of people, was, and still continues to be, most implicitly believed
      by a much greater number: by almost all those who are either unacquainted
      with the woollen trade, or who have not made particular inquiries. It is,
      however, so perfectly false, that English wool is in any respect necessary
      for the making of fine cloth, that it is altogether unfit for it. Fine
      cloth is made altogether of Spanish wool. English wool, cannot be even so
      mixed with Spanish wool, as to enter into the composition without spoiling
      and degrading, in some degree, the fabric of the cloth.
    
      It has been shown in the foregoing part of this work, that the effect of
      these regulations has been to depress the price of English wool, not only
      below what it naturally would be in the present times, but very much below
      what it actually was in the time of Edward III. The price of Scotch wool,
      when, in consequence of the Union, it became subject to the same
      regulations, is said to have fallen about one half. It is observed by the
      very accurate and intelligent author of the Memoirs of Wool, the Reverend
      Mr. John Smith, that the price of the best English wool in England, is
      generally below what wool of a very inferior quality commonly sells for in
      the market of Amsterdam. To depress the price of this commodity below what
      may be called its natural and proper price, was the avowed purpose of
      those regulations; and there seems to be no doubt of their having produced
      the effect that was expected from them.
    
      This reduction of price, it may perhaps be thought, by discouraging the
      growing of wool, must have reduced very much the annual produce of that
      commodity, though not below what it formerly was, yet below what, in the
      present state of things, it would probably have been, had it, in
      consequence of an open and free market, been allowed to rise to the
      natural and proper price. I am, however, disposed to believe, that the
      quantity of the annual produce cannot have been much, though it may,
      perhaps, have been a little affected by these regulations. The growing of
      wool is not the chief purpose for which the sheep farmer employs his
      industry and stock. He expects his profit, not so much from the price of
      the fleece, as from that of the carcase; and the average or ordinary price
      of the latter must even, in many cases, make up to him whatever deficiency
      there may be in the average or ordinary price of the former. It has been
      observed, in the foregoing part of this work, that ‘whatever regulations
      tend to sink the price, either of wool or of raw hides, below what it
      naturally would be, must, in an improved and cultivated country, have some
      tendency to raise the price of butcher’s meat. The price, both of the
      great and small cattle which are fed on improved and cultivated land, must
      be sufficient to pay the rent which the landlord, and the profit which the
      farmer, has reason to expect from improved and cultivated land. If it is
      not, they will soon cease to feed them. Whatever part of this price,
      therefore, is not paid by the wool and the hide, must be paid by the
      carcase. The less there is paid for the one, the more must be paid for the
      other. In what manner this price is to be divided upon the different parts
      of the beast, is indifferent to the landlords and farmers, provided it is
      all paid to them. In an improved and cultivated country, therefore, their
      interest as landlords and farmers cannot be much affected by such
      regulations, though their interest as consumers may, by the rise in the
      price of provisions.’ According to this reasoning, therefore, this
      degradation in the price of wool is not likely, in an improved and
      cultivated country, to occasion any diminution in the annual produce of
      that commodity; except so far as, by raising the price of mutton, it may
      somewhat diminish the demand for, and consequently the production of, that
      particular species of butcher’s meat, Its effect, however, even in this
      way, it is probable, is not very considerable.
    
      But though its effect upon the quantity of the annual produce may not have
      been very considerable, its effect upon the quality, it may perhaps be
      thought, must necessarily have been very great. The degradation in the
      quality of English wool, if not below what it was in former times, yet
      below what it naturally would have been in the present state of
      improvement and cultivation, must have been, it may perhaps be supposed,
      very nearly in proportion to the degradation of price. As the quality
      depends upon the breed, upon the pasture, and upon the management and
      cleanliness of the sheep, during the whole progress of the growth of the
      fleece, the attention to these circumstances, it may naturally enough be
      imagined, can never be greater than in proportion to the recompence which
      the price of the fleece is likely to make for the labour and expense which
      that attention requires. It happens, however, that the goodness of the
      fleece depends, in a great measure, upon the health, growth, and bulk of
      the animal: the same attention which is necessary for the improvement of
      the carcase is, in some respect, sufficient for that of the fleece.
      Notwithstanding the degradation of price, English wool is said to have
      been improved considerably during the course even of the present century.
      The improvement, might, perhaps, have been greater if the price had been
      better; but the lowness of price, though it may have obstructed, yet
      certainly it has not altogether prevented that improvement.
    
      The violence of these regulations, therefore, seems to have affected
      neither the quantity nor the quality of the annual produce of wool, so
      much as it might have been expected to do (though I think it probable that
      it may have affected the latter a good deal more than the former); and the
      interest of the growers of wool, though it must have been hurt in some
      degree, seems upon the whole, to have been much less hurt than could well
      have been imagined.
    
      These considerations, however, will not justify the absolute prohibition
      of the exportation of wool; but they will fully justify the imposition of
      a considerable tax upon that exportation.
    
      To hurt, in any degree, the interest of any one order of citizens, for no
      other purpose but to promote that of some other, is evidently contrary to
      that justice and equality of treatment which the sovereign owes to all the
      different orders of his subjects. But the prohibition certainly hurts, in
      some degree, the interest of the growers of wool, for no other purpose but
      to promote that of the manufacturers.
    
      Every different order of citizens is bound to contribute to the support of
      the sovereign or commonwealth. A tax of five, or even of ten shillings,
      upon the exportation of every tod of wool, would produce a very
      considerable revenue to the sovereign. It would hurt the interest of the
      growers somewhat less than the prohibition, because it would not probably
      lower the price of wool quite so much. It would afford a sufficient
      advantage to the manufacturer, because, though he might not buy his wool
      altogether so cheap as under the prohibition, he would still buy it at
      least five or ten shillings cheaper than any foreign manufacturer could
      buy it, besides saving the freight and insurance which the other would be
      obliged to pay. It is scarce possible to devise a tax which could produce
      any considerable revenue to the sovereign, and at the same time occasion
      so little inconveniency to anybody.
    
      The prohibition, notwithstanding all the penalties which guard it, does
      not prevent the exportation of wool. It is exported, it is well known, in
      great quantities. The great difference between the price in the home and
      that in the foreign market, presents such a temptation to smuggling, that
      all the rigour of the law cannot prevent it. This illegal exportation is
      advantageous to nobody but the smuggler. A legal exportation, subject to a
      tax, by affording a revenue to the sovereign, and thereby saving the
      imposition of some other, perhaps more burdensome and inconvenient taxes,
      might prove advantageous to all the different subjects of the state.
    
      The exportation of fuller’s earth, or fuller’s clay, supposed to be
      necessary for preparing and cleansing the woollen manufactures, has been
      subjected to nearly the same penalties as the exportation of wool. Even
      tobacco-pipe clay, though acknowledged to be different from fuller’s clay,
      yet, on account of their resemblance, and because fuller’s clay might
      sometimes be exported as tobacco-pipe clay, has been laid under the same
      prohibitions and penalties.
    
      By the 13th and 14th of Charles II. chap, 7, the exportation, not only of
      raw hides, but of tanned leather, except in the shape of boots, shoes, or
      slippers, was prohibited; and the law gave a monopoly to our boot-makers
      and shoe-makers, not only against our graziers, but against our tanners.
      By subsequent statutes, our tanners have got themselves exempted from this
      monopoly, upon paying a small tax of only one shilling on the hundred
      weight of tanned leather, weighing one hundred and twelve pounds. They
      have obtained likewise the drawback of two-thirds of the excise duties
      imposed upon their commodity, even when exported without further
      manufacture. All manufactures of leather may be exported duty free; and
      the exporter is besides entitled to the drawback of the whole duties of
      excise. Our graziers still continue subject to the old monopoly. Graziers,
      separated from one another, and dispersed through all the different
      corners of the country, cannot, without great difficulty, combine together
      for the purpose either of imposing monopolies upon their fellow-citizens,
      or of exempting themselves from such as may have been imposed upon them by
      other people. Manufacturers of all kinds, collected together in numerous
      bodies in all great cities, easily can. Even the horns of cattle are
      prohibited to be exported; and the two insignificant trades of the horner
      and comb-maker enjoy, in this respect, a monopoly against the graziers.
    
      Restraints, either by prohibitions, or by taxes, upon the exportation of
      goods which are partially, but not completely manufactured, are not
      peculiar to the manufacture of leather. As long as anything remains to be
      done, in order to fit any commodity for immediate use and consumption, our
      manufacturers think that they themselves ought to have the doing of it.
      Woollen yarn and worsted are prohibited to be exported, under the same
      penalties as wool even white cloths we subject to a duty upon exportation;
      and our dyers have so far obtained a monopoly against our clothiers. Our
      clothiers would probably have been able to defend themselves against it;
      but it happens that the greater part of our principal clothiers are
      themselves likewise dyers. Watch-cases, clock-cases, and dial-plates for
      clocks and watches, have been prohibited to be exported. Our clock-makers
      and watch-makers are, it seems, unwilling that the price of this sort of
      workmanship should be raised upon them by the competition of foreigners.
    
      By some old statutes of Edward III, Henry VIII. and Edward VI. the
      exportation of all metals was prohibited. Lead and tin were alone
      excepted, probably on account of the great abundance of those metals; in
      the exportation of which a considerable part of the trade of the kingdom
      in those days consisted. For the encouragement of the mining trade, the
      5th of William and Mary, chap.17, exempted from this prohibition iron,
      copper, and mundic metal made from British ore. The exportation of all
      sorts of copper bars, foreign as well as British, was afterwards permitted
      by the 9th and 10th of William III. chap 26. The exportation of
      unmanufactured brass, of what is called gun-metal, bell-metal, and shroff
      metal, still continues to be prohibited. Brass manufactures of all sorts
      may be exported duty free.
    
      The exportation of the materials of manufacture, where it is not
      altogether prohibited, is, in many cases, subjected to considerable
      duties.
    
      By the 8th Geo. I. chap.15, the exportation of all goods, the produce of
      manufacture of Great Britain, upon which any duties had been imposed by
      former statutes, was rendered duty free. The following goods, however,
      were excepted: alum, lead, lead-ore, tin, tanned leather, copperas, coals,
      wool, cards, white woollen cloths, lapis calaminaris, skins of all sorts,
      glue, coney hair or wool, hares wool, hair of all sorts, horses, and
      litharge of lead. If you except horses, all these are either materials of
      manufacture, or incomplete manufactures (which may be considered as
      materials for still further manufacture), or instruments of trade. This
      statute leaves them subject to all the old duties which had ever been
      imposed upon them, the old subsidy, and one per cent. outwards.
    
      By the same statute, a great number of foreign drugs for dyers use are
      exempted from all duties upon importation. Each of them, however, is
      afterwards subjected to a certain duty, not indeed a very heavy one, upon
      exportation. Our dyers, it seems, while they thought it for their interest
      to encourage the importation of those drugs, by an exemption from all
      duties, thought it likewise for their own interest to throw some small
      discouragement upon their exportation. The avidity, however, which
      suggested this notable piece of mercantile ingenuity, most probably
      disappointed itself of its object. It necessarily taught the importers to
      be more careful than they might otherwise have been, that their
      importation should not exceed what was necessary for the supply of the
      home market. The home market was at all times likely to be more scantily
      supplied; the commodities were at all times likely to be somewhat dearer
      there than they would have been, had the exportation been rendered as free
      as the importation.
    
      By the above-mentioned statute, gum senega, or gum arabic, being among the
      enumerated dyeing drugs, might be imported duty free. They were subjected,
      indeed, to a small poundage duty, amounting only to threepence in the
      hundred weight, upon their re-exportation. France enjoyed, at that time,
      an exclusive trade to the country most productive of those drugs, that
      which lies in the neighbourhood of the Senegal; and the British market
      could not be easily supplied by the immediate importation of them from the
      place of growth. By the 25th Geo. II. therefore, gum senega was allowed to
      be imported (contrary to the general dispositions of the act of
      navigation) from any part of Europe. As the law, however, did not mean to
      encourage this species of trade, so contrary to the general principles of
      the mercantile policy of England, it imposed a duty of ten shillings the
      hundred weight upon such importation, and no part of this duty was to be
      afterwards drawn back upon its exportation. The successful war which began
      in 1755 gave Great Britain the same exclusive trade to those countries
      which France had enjoyed before. Our manufactures, as soon as the peace
      was made, endeavoured to avail themselves of this advantage, and to
      establish a monopoly in their own favour both against the growers and
      against the importers of this commodity. By the 5th of Geo. III.
      therefore, chap. 37, the exportation of gum senega, from his majesty’s
      dominions in Africa, was confined to Great Britain, and was subjected to
      all the same restrictions, regulations, forfeitures, and penalties, as
      that of the enumerated commodities of the British colonies in America and
      the West Indies. Its importation, indeed, was subjected to a small duty of
      sixpence the hundred weight; but its re-exportation was subjected to the
      enormous duty of one pound ten shillings the hundred weight. It was the
      intention of our manufacturers, that the whole produce of those countries
      should be imported into Great Britain; and in order that they themselves
      might be enabled to buy it at their own price, that no part of it should
      be exported again, but at such an expense as would sufficiently discourage
      that exportation. Their avidity, however, upon this, as well as upon many
      other occasions, disappointed itself of its object. This enormous duty
      presented such a temptation to smuggling, that great quantities of this
      commodity were clandestinely exported, probably to all the manufacturing
      countries of Europe, but particularly to Holland, not only from Great
      Britain, but from Africa. Upon this account, by the 14th Geo. III.
      chap.10, this duty upon exportation was reduced to five shillings the
      hundred weight.
    
      In the book of rates, according to which the old subsidy was levied,
      beaver skins were estimated at six shillings and eight pence a piece; and
      the different subsidies and imposts which, before the year 1722, had been
      laid upon their importation, amounted to one-fifth part of the rate, or to
      sixteen pence upon each skin; all of which, except half the old subsidy,
      amounting only to twopence, was drawn back upon exportation. This duty,
      upon the importation of so important a material of manufacture, had been
      thought too high; and, in the year 1722, the rate was reduced to two
      shillings and sixpence, which reduced the duty upon importation to
      sixpence, and of this only one-half was to be drawn back upon exportation.
      The same successful war put the country most productive of beaver under
      the dominion of Great Britain; and beaver skins being among the enumerated
      commodities, the exportation from America was consequently confined to the
      market of Great Britain. Our manufacturers soon bethought themselves of
      the advantage which they might make of this circumstance; and in the year
      1764, the duty upon the importation of beaver skin was reduced to one
      penny, but the duty upon exportation was raised to sevenpence each skin,
      without any drawback of the duty upon importation. By the same law, a duty
      of eighteen pence the pound was imposed upon the exportation of beaver
      wool or woumbs, without making any alteration in the duty upon the
      importation of that commodity, which, when imported by British, and in
      British shipping, amounted at that time to between fourpence and fivepence
      the piece.
    
      Coals may be considered both as a material of manufacture, and as an
      instrument of trade. Heavy duties, accordingly, have been imposed upon
      their exportation, amounting at present (1783) to more than five shillings
      the ton, or more than fifteen shillings the chaldron, Newcastle measure;
      which is, in most cases, more than the original value of the commodity at
      the coal-pit, or even at the shipping port for exportation.
    
      The exportation, however, of the instruments of trade, properly so called,
      is commonly restrained, not by high duties, but by absolute prohibitions.
      Thus, by the 7th and 8th of William III chap.20, sect.8, the exportation
      of frames or engines for knitting gloves or stockings, is prohibited,
      under the penalty, not only of the forfeiture of such frames or engines,
      so exported, or attempted to be exported, but of forty pounds, one half to
      the king, the other to the person who shall inform or sue for the same. In
      the same manner, by the 14th Geo. III. chap. 71, the exportation to
      foreign parts, of any utensils made use of in the cotton, linen, woollen,
      and silk manufactures, is prohibited under the penalty, not only of the
      forfeiture of such utensils, but of two hundred pounds, to be paid by the
      person who shall offend in this manner; and likewise of two hundred
      pounds, to be paid by the master of the ship, who shall knowingly suffer
      such utensils to be loaded on board his ship.
    
      When such heavy penalties were imposed upon the exportation of the dead
      instruments of trade, it could not well be expected that the living
      instrument, the artificer, should be allowed to go free. Accordingly, by
      the 5th Geo. I. chap. 27, the person who shall be convicted of enticing
      any artificer, of or in any of the manufactures of Great Britain, to go
      into any foreign parts, in order to practise or teach his trade, is
      liable, for the first offence, to be fined in any sum not exceeding one
      hundred pounds, and to three months imprisonment, and until the fine shall
      be paid; and for the second offence, to be fined in any sum, at the
      discretion of the court, and to imprisonment for twelve months, and until
      the fine shall be paid. By the 23d Geo. II. chap. 13, this penalty is
      increased, for the first offence, to five hundred pounds for every
      artificer so enticed, and to twelve months imprisonment, and until the
      fine shall be paid; and for the second offence, to one thousand pounds,
      and to two years imprisonment, and until the fine shall be paid.
    
      By the former of these two statutes, upon proof that any person has been
      enticing any artificer, or that any artificer has promised or contracted
      to go into foreign parts, for the purposes aforesaid, such artificer may
      be obliged to give security, at the discretion of the court, that he shall
      not go beyond the seas, and may be committed to prison until he give such
      security.
    
      If any artificer has gone beyond the seas, and is exercising or teaching
      his trade in any foreign country, upon warning being given to him by any
      of his majesty’s ministers or consuls abroad, or by one of his majesty’s
      secretaries of state, for the time being, if he does not, within six
      months after such warning, return into this realm, and from henceforth
      abide and inhabit continually within the same, he is from thenceforth
      declared incapable of taking any legacy devised to him within this
      kingdom, or of being executor or administrator to any person, or of taking
      any lands within this kingdom, by descent, devise, or purchase. He
      likewise forfeits to the king all his lands, goods, and chattels; is
      declared an alien in every respect; and is put out of the king’s
      protection.
    
      It is unnecessary, I imagine, to observe how contrary such regulations are
      to the boasted liberty of the subject, of which we affect to be so very
      jealous; but which, in this case, is so plainly sacrificed to the futile
      interests of our merchants and manufacturers.
    
      The laudable motive of all these regulations, is to extend our own
      manufactures, not by their own improvement, but by the depression of those
      of all our neighbours, and by putting an end, as much as possible, to the
      troublesome competition of such odious and disagreeable rivals. Our master
      manufacturers think it reasonable that they themselves should have the
      monopoly of the ingenuity of all their countrymen. Though by restraining,
      in some trades, the number of apprentices which can be employed at one
      time, and by imposing the necessity of a long apprenticeship in all
      trades, they endeavour, all of them, to confine the knowledge of their
      respective employments to as small a number as possible; they are
      unwilling, however, that any part of this small number should go abroad to
      instruct foreigners.
    
      Consumption is the sole end and purpose of all production; and the
      interest of the producer ought to be attended to, only so far as it may be
      necessary for promoting that of the consumer.
    
      The maxim is so perfectly self-evident, that it would be absurd to attempt
      to prove it. But in the mercantile system, the interest of the consumer is
      almost constantly sacrificed to that of the producer; and it seems to
      consider production, and not consumption, as the ultimate end and object
      of all industry and commerce.
    
      In the restraints upon the importation of all foreign commodities which
      can come into competition with those of our own growth or manufacture, the
      interest of the home consumer is evidently sacrificed to that of the
      producer. It is altogether for the benefit of the latter, that the former
      is obliged to pay that enhancement of price which this monopoly almost
      always occasions.
    
      It is altogether for the benefit of the producer, that bounties are
      granted upon the exportation of some of his productions. The home consumer
      is obliged to pay, first the tax which is necessary for paying the bounty;
      and, secondly, the still greater tax which necessarily arises from the
      enhancement of the price of the commodity in the home market.
    
      By the famous treaty of commerce with Portugal, the consumer is prevented
      by duties from purchasing of a neighbouring country, a commodity which our
      own climate does not produce; but is obliged to purchase it of a distant
      country, though it is acknowledged, that the commodity of the distant
      country is of a worse quality than that of the near one. The home consumer
      is obliged to submit to this inconvenience, in order that the producer may
      import into the distant country some of his productions, upon more
      advantageous terms than he otherwise would have been allowed to do. The
      consumer, too, is obliged to pay whatever enhancement in the price of
      those very productions this forced exportation may occasion in the home
      market.
    
      But in the system of laws which has been established for the management of
      our American and West Indian colonies, the interest of the home consumer
      has been sacrificed to that of the producer, with a more extravagant
      profusion than in all our other commercial regulations. A great empire has
      been established for the sole purpose of raising up a nation of customers,
      who should be obliged to buy, from the shops of our different producers,
      all the goods with which these could supply them. For the sake of that
      little enhancement of price which this monopoly might afford our
      producers, the home consumers have been burdened with the whole expense of
      maintaining and defending that empire. For this purpose, and for this
      purpose only, in the two last wars, more than two hundred millions have
      been spent, and a new debt of more than a hundred and seventy millions has
      been contracted, over and above all that had been expended for the same
      purpose in former wars. The interest of this debt alone is not only
      greater than the whole extraordinary profit which, it never could be
      pretended, was made by the monopoly of the colony trade, but than the
      whole value of that trade, or than the whole value of the goods which, at
      an average, have been annually exported to the colonies.
    
      It cannot be very difficult to determine who have been the contrivers of
      this whole mercantile system; not the consumers, we may believe, whose
      interest has been entirely neglected; but the producers, whose interest
      has been so carefully attended to; and among this latter class, our
      merchants and manufacturers have been by far the principal architects. In
      the mercantile regulations which have been taken notice of in this
      chapter, the interest of our manufacturers has been most peculiarly
      attended to; and the interest, not so much of the consumers, as that of
      some other sets of producers, has been sacrificed to it.
    


CHAPTER IX.
OF THE AGRICULTURAL SYSTEMS, OR OF
THOSE SYSTEMS OF POLITICAL ECONOMY WHICH REPRESENT THE PRODUCE OF LAND, AS
EITHER THE SOLE OR THE PRINCIPAL SOURCE OF THE REVENUE AND WEALTH OF EVERY
COUNTRY.


    
      The agricultural systems of political economy will not require so long an
      explanation as that which I have thought it necessary to bestow upon the
      mercantile or commercial system.
    
      That system which represents the produce of land as the sole source of the
      revenue and wealth of every country, has so far as I know, never been
      adopted by any nation, and it at present exists only in the speculations
      of a few men of great learning and ingenuity in France. It would not,
      surely, be worth while to examine at great length the errors of a system
      which never has done, and probably never will do, any harm in any part of
      the world. I shall endeavour to explain, however, as distinctly as I can,
      the great outlines of this very ingenious system.
    
      Mr. Colbert, the famous minister of Lewis XIV. was a man of probity, of
      great industry, and knowledge of detail; of great experience and acuteness
      in the examination of public accounts; and of abilities, in short, every
      way fitted for introducing method and good order into the collection and
      expenditure of the public revenue. That minister had unfortunately
      embraced all the prejudices of the mercantile system, in its nature and
      essence a system of restraint and regulation, and such as could scarce
      fail to be agreeable to a laborious and plodding man of business, who had
      been accustomed to regulate the different departments of public offices,
      and to establish the necessary checks and controls for confining each to
      its proper sphere. The industry and commerce of a great country, he
      endeavoured to regulate upon the same model as the departments of a public
      office; and instead of allowing every man to pursue his own interest his
      own way, upon the liberal plan of equality, liberty, and justice, he
      bestowed upon certain branches of industry extraordinary privileges, while
      he laid others under as extraordinary restraints. He was not only
      disposed, like other European ministers, to encourage more the industry of
      the towns than that of the country; but, in order to support the industry
      of the towns, he was willing even to depress and keep down that of the
      country. In order to render provisions cheap to the inhabitants of the
      towns, and thereby to encourage manufactures and foreign commerce, he
      prohibited altogether the exportation of corn, and thus excluded the
      inhabitants of the country from every foreign market, for by far the most
      important part of the produce of their industry. This prohibition, joined
      to the restraints imposed by the ancient provincial laws of France upon
      the transportation of corn from one province to another, and to the
      arbitrary and degrading taxes which are levied upon the cultivators in
      almost all the provinces, discouraged and kept down the agriculture of
      that country very much below the state to which it would naturally have
      risen in so very fertile a soil, and so very happy a climate. This state
      of discouragement and depression was felt more or less in every different
      part of the country, and many different inquiries were set on foot
      concerning the causes of it. One of those causes appeared to be the
      preference given, by the institutions of Mr. Colbert, to the industry of
      the towns above that of the country.
    
      If the rod be bent too much one way, says the proverb, in order to make it
      straight, you must bend it as much the other. The French philosophers, who
      have proposed the system which represents agriculture as the sole source
      of the revenue and wealth of every country, seem to have adopted this
      proverbial maxim; and, as in the plan of Mr. Colbert, the industry of the
      towns was certainly overvalued in comparison with that of the country, so
      in their system it seems to be as certainly under-valued.
    
      The different orders of people, who have ever been supposed to contribute
      in any respect towards the annual produce of the land and labour of the
      country, they divide into three classes. The first is the class of the
      proprietors of land. The second is the class of the cultivators, of
      farmers and country labourers, whom they honour with the peculiar
      appellation of the productive class. The third is the class of artificers,
      manufacturers, and merchants, whom they endeavour to degrade by the
      humiliating appellation of the barren or unproductive class.
    
      The class of proprietors contributes to the annual produce, by the expense
      which they may occasionally lay out upon the improvement of the land, upon
      the buildings, drains, inclosures, and other ameliorations, which they may
      either make or maintain upon it, and by means of which the cultivators are
      enabled, with the same capital, to raise a greater produce, and
      consequently to pay a greater rent. This advanced rent may be considered
      as the interest or profit due to the proprietor, upon the expense or
      capital which he thus employs in the improvement of his land. Such
      expenses are in this system called ground expenses (depenses foncieres).
    
      The cultivators or farmers contribute to the annual produce, by what are
      in this system called the original and annual expenses (depenses
      primitives, et depenses annuelles), which they lay out upon the
      cultivation of the land. The original expenses consist in the instruments
      of husbandry, in the stock of cattle, in the seed, and in the maintenance
      of the farmer’s family, servants, and cattle, during at least a great part
      of the first year of his occupancy, or till he can receive some return
      from the land. The annual expenses consist in the seed, in the wear and
      tear of instruments of husbandry, and in the annual maintenance of the
      farmer’s servants and cattle, and of his family too, so far as any part of
      them can be considered as servants employed in cultivation. That part of
      the produce of the land which remains to him after paying the rent, ought
      to be sufficient, first, to replace to him, within a reasonable time, at
      least during the term of his occupancy, the whole of his original
      expenses, together with the ordinary profits of stock; and, secondly, to
      replace to him annually the whole of his annual expenses, together
      likewise with the ordinary profits of stock. Those two sorts of expenses
      are two capitals which the farmer employs in cultivation; and unless they
      are regularly restored to him, together with a reasonable profit, he
      cannot carry on his employment upon a level with other employments; but,
      from a regard to his own interest, must desert it as soon as possible, and
      seek some other. That part of the produce of the land which is thus
      necessary for enabling the farmer to continue his business, ought to be
      considered as a fund sacred to cultivation, which, if the landlord
      violates, he necessarily reduces the produce of his own land, and, in a
      few years, not only disables the farmer from paying this racked rent, but
      from paying the reasonable rent which he might otherwise have got for his
      land. The rent which properly belongs to the landlord, is no more than the
      neat produce which remains after paying, in the completest manner, all the
      necessary expenses which must be previously laid out, in order to raise
      the gross or the whole produce. It is because the labour of the
      cultivators, over and above paying completely all those necessary
      expenses, affords a neat produce of this kind, that this class of people
      are in this system peculiarly distinguished by the honourable appellation
      of the productive class. Their original and annual expenses are for the
      same reason called, In this system, productive expenses, because, over and
      above replacing their own value, they occasion the annual reproduction of
      this neat produce.
    
      The ground expenses, as they are called, or what the landlord lays out
      upon the improvement of his land, are, in this system, too, honoured with
      the appellation of productive expenses. Till the whole of those expenses,
      together with the ordinary profits of stock, have been completely repaid
      to him by the advanced rent which he gets from his land, that advanced
      rent ought to be regarded as sacred and inviolable, both by the church and
      by the king; ought to be subject neither to tithe nor to taxation. If it
      is otherwise, by discouraging the improvement of land, the church
      discourages the future increase of her own tithes, and the king the future
      increase of his own taxes. As in a well ordered state of things,
      therefore, those ground expenses, over and above reproducing in the
      completest manner their own value, occasion likewise, after a certain
      time, a reproduction of a neat produce, they are in this system considered
      as productive expenses.
    
      The ground expenses of the landlord, however, together with the original
      and the annual expenses of the farmer, are the only three sorts of
      expenses which in this system are considered as productive. All other
      expenses, and all other orders of people, even those who, in the common
      apprehensions of men, are regarded as the most productive, are, in this
      account of things, represented as altogether barren and unproductive.
    
      Artificers and manufacturers, in particular, whose industry, in the common
      apprehensions of men, increases so much the value of the rude produce of
      land, are in this system represented as a class of people altogether
      barren and unproductive. Their labour, it is said, replaces only the stock
      which employs them, together with its ordinary profits. That stock
      consists in the materials, tools, and wages, advanced to them by their
      employer; and is the fund destined for their employment and maintenance.
      Its profits are the fund destined for the maintenance of their employer.
      Their employer, as he advances to them the stock of materials, tools, and
      wages, necessary for their employment, so he advances to himself what is
      necessary for his own maintenance; and this maintenance he generally
      proportions to the profit which he expects to make by the price of their
      work. Unless its price repays to him the maintenance which he advances to
      himself, as well as the materials, tools, and wages, which he advances to
      his workmen, it evidently does not repay to him the whole expense which he
      lays out upon it. The profits of manufacturing stock, therefore, are not,
      like the rent of land, a neat produce which remains after completely
      repaying the whole expense which must be laid out in order to obtain them.
      The stock of the farmer yields him a profit, as well as that of the master
      manufacturer; and it yields a rent likewise to another person, which that
      of the master manufacturer does not. The expense, therefore, laid out in
      employing and maintaining artificers and manufacturers, does no more than
      continue, if one may say so, the existence of its own value, and does not
      produce any new value. It is, therefore, altogether a barren and
      unproductive expense. The expense, on the contrary, laid out in employing
      farmers and country labourers, over and above continuing the existence of
      its own value, produces a new value the rent of the landlord. It is,
      therefore, a productive expense.
    
      Mercantile stock is equally barren and unproductive with manufacturing
      stock. It only continues the existence of its own value, without producing
      any new value. Its profits are only the repayment of the maintenance which
      its employer advances to himself during the time that he employs it, or
      till he receives the returns of it. They are only the repayment of a part
      of the expense which must be laid out in employing it.
    
      The labour of artificers and manufacturers never adds any thing to the
      value of the whole annual amount of the rude produce of the land. It adds,
      indeed, greatly to the value of some particular parts of it. But the
      consumption which, in the mean time, it occasions of other parts, is
      precisely equal to the value which it adds to those parts; so that the
      value of the whole amount is not, at any one moment of time, in the least
      augmented by it. The person who works the lace of a pair of fine ruffles
      for example, will sometimes raise the value of, perhaps, a pennyworth of
      flax to £30 sterling. But though, at first sight, he appears thereby to
      multiply the value of a part of the rude produce about seven thousand and
      two hundred times, he in reality adds nothing to the value of the whole
      annual amount of the rude produce. The working of that lace costs him,
      perhaps, two years labour. The £30 which he gets for it when it is
      finished, is no more than the repayment of the subsistence which he
      advances to himself during the two years that he is employed about it. The
      value which, by every day’s, month’s, or year’s labour, he adds to the
      flax, does no more than replace the value of his own consumption during
      that day, month, or year. At no moment of time, therefore, does he add any
      thing to the value of the whole annual amount of the rude produce of the
      land: the portion of that produce which he is continually consuming, being
      always equal to the value which he is continually producing. The extreme
      poverty of the greater part of the persons employed in this expensive,
      though trifling manufacture, may satisfy us that the price of their work
      does not, in ordinary cases, exceed the value of their subsistence. It is
      otherwise with the work of farmers and country labourers. The rent of the
      landlord is a value which, in ordinary cases, it is continually producing
      over and above replacing, in the most complete manner, the whole
      consumption, the whole expense laid out upon the employment and
      maintenance both of the workmen and of their employer.
    
      Artificers, manufacturers, and merchants, can augment the revenue and
      wealth of their society by parsimony only; or, as it is expressed in this
      system, by privation, that is, by depriving themselves of a part of the
      funds destined for their own subsistence. They annually reproduce nothing
      but those funds. Unless, therefore, they annually save some part of them,
      unless they annually deprive themselves of the enjoyment of some part of
      them, the revenue and wealth of their society can never be, in the
      smallest degree, augmented by means of their industry. Farmers and country
      labourers, on the contrary, may enjoy completely the whole funds destined
      for their own subsistence, and yet augment, at the same time, the revenue
      and wealth of their society. Over and above what is destined for their own
      subsistence, their industry annually affords a neat produce, of which the
      augmentation necessarily augments the revenue and wealth of their society.
      Nations, therefore, which, like France or England, consist in a great
      measure, of proprietors and cultivators, can be enriched by industry and
      enjoyment. Nations, on the contrary, which, like Holland and Hamburgh, are
      composed chiefly of merchants, artificers, and manufacturers, can grow
      rich only through parsimony and privation. As the interest of nations so
      differently circumstanced is very different, so is likewise the common
      character of the people. In those of the former kind, liberality,
      frankness, and good fellowship, naturally make a part of their common
      character; in the latter, narrowness, meanness, and a selfish disposition,
      averse to all social pleasure and enjoyment.
    
      The unproductive class, that of merchants, artificers, and manufacturers,
      is maintained and employed altogether at the expense of the two other
      classes, of that of proprietors, and of that of cultivators. They furnish
      it both with the materials of its work, and with the fund of its
      subsistence, with the corn and cattle which it consumes while it is
      employed about that work. The proprietors and cultivators finally pay both
      the wages of all the workmen of the unproductive class, and the profits of
      all their employers. Those workmen and their employers are properly the
      servants of the proprietors and cultivators. They are only servants who
      work without doors, as menial servants work within. Both the one and the
      other, however, are equally maintained at the expense of the same masters.
      The labour of both is equally unproductive. It adds nothing to the value
      of the sum total of the rude produce of the land. Instead of increasing
      the value of that sum total, it is a charge and expense which must be paid
      out of it.
    
      The unproductive class, however, is not only useful, but greatly useful,
      to the other two classes. By means of the industry of merchants,
      artificers, and manufacturers, the proprietors and cultivators can
      purchase both the foreign goods and the manufactured produce of their own
      country, which they have occasion for, with the produce of a much smaller
      quantity of their own labour, than what they would be obliged to employ,
      if they were to attempt, in an awkward and unskilful manner, either to
      import the one, or to make the other, for their own use. By means of the
      unproductive class, the cultivators are delivered from many cares, which
      would otherwise distract their attention from the cultivation of land. The
      superiority of produce, which in consequence of this undivided attention,
      they are enabled to raise, is fully sufficient to pay the whole expense
      which the maintenance and employment of the unproductive class costs
      either the proprietors or themselves. The industry of merchants,
      artificers, and manufacturers, though in its own nature altogether
      unproductive, yet contributes in this manner indirectly to increase the
      produce of the land. It increases the productive powers of productive
      labour, by leaving it at liberty to confine itself to its proper
      employment, the cultivation of land; and the plough goes frequently the
      easier and the better, by means of the labour of the man whose business is
      most remote from the plough.
    
      It can never be the interest of the proprietors and cultivators, to
      restrain or to discourage, in any respect, the industry of merchants,
      artificers, and manufacturers. The greater the liberty which this
      unproductive class enjoys, the greater will be the competition in all the
      different trades which compose it, and the cheaper will the other two
      classes be supplied, both with foreign goods and with the manufactured
      produce of their own country.
    
      It can never be the interest of the unproductive class to oppress the
      other two classes. It is the surplus produce of the land, or what remains
      after deducting the maintenance, first of the cultivators, and afterwards
      of the proprietors, that maintains and employs the unproductive class. The
      greater this surplus, the greater must likewise be the maintenance and
      employment of that class. The establishment of perfect justice, of perfect
      liberty, and of perfect equality, is the very simple secret which most
      effectually secures the highest degree of prosperity to all the three
      classes.
    
      The merchants, artificers, and manufacturers of those mercantile states,
      which, like Holland and Hamburgh, consist chiefly of this unproductive
      class, are in the same manner maintained and employed altogether at the
      expense of the proprietors and cultivators of land. The only difference
      is, that those proprietors and cultivators are, the greater part of them,
      placed at a most inconvenient distance from the merchants, artificers, and
      manufacturers, whom they supply with the materials of their work and the
      fund of their subsistence; are the inhabitants of other countries, and the
      subjects of other governments.
    
      Such mercantile states, however, are not only useful, but greatly useful,
      to the inhabitants of those other countries. They fill up, in some
      measure, a very important void; and supply the place of the merchants,
      artificers, and manufacturers, whom the inhabitants of those countries
      ought to find at home, but whom, from some defect in their policy, they do
      not find at home.
    
      It can never be the interest of those landed nations, if I may call them
      so, to discourage or distress the industry of such mercantile states, by
      imposing high duties upon their trade, or upon the commodities which they
      furnish. Such duties, by rendering those commodities dearer, could serve
      only to sink the real value of the surplus produce of their own land, with
      which, or, what comes to the same thing, with the price of which those
      commodities are purchased. Such duties could only serve to discourage the
      increase of that surplus produce, and consequently the improvement and
      cultivation of their own land. The most effectual expedient, on the
      contrary, for raising the value of that surplus produce, for encouraging
      its increase, and consequently the improvement and cultivation of their
      own land, would be to allow the most perfect freedom to the trade of all
      such mercantile nations.
    
      This perfect freedom of trade would even be the most effectual expedient
      for supplying them, in due time, with all the artificers, manufacturers,
      and merchants, whom they wanted at home; and for filling up, in the
      properest and most advantageous manner, that very important void which
      they felt there.
    
      The continual increase of the surplus produce of their land would, in due
      time, create a greater capital than what would be employed with the
      ordinary rate of profit in the improvement and cultivation of land; and
      the surplus part of it would naturally turn itself to the employment of
      artificers and manufacturers, at home. But these artificers and
      manufacturers, finding at home both the materials of their work and the
      fund of their subsistence, might immediately, even with much less art and
      skill be able to work as cheap as the little artificers and manufacturers
      of such mercantile states, who had both to bring from a greater distance.
      Even though, from want of art and skill, they might not for some time be
      able to work as cheap, yet, finding a market at home, they might be able
      to sell their work there as cheap as that of the artificers and
      manufacturers of such mercantile states, which could not be brought to
      that market but from so great a distance; and as their art and skill
      improved, they would soon be able to sell it cheaper. The artificers and
      manufacturers of such mercantile states, therefore, would immediately be
      rivalled in the market of those landed nations, and soon after undersold
      and justled out of it altogether. The cheapness of the manufactures of
      those landed nations, in consequence of the gradual improvements of art
      and skill, would, in due time, extend their sale beyond the home market,
      and carry them to many foreign markets, from which they would, in the same
      manner, gradually justle out many of the manufacturers of such mercantile
      nations.
    
      This continual increase, both of the rude and manufactured produce of
      those landed nations, would, in due time, create a greater capital than
      could, with the ordinary rate of profit, be employed either in agriculture
      or in manufactures. The surplus of this capital would naturally turn
      itself to foreign trade and be employed in exporting, to foreign
      countries, such parts of the rude and manufactured produce of its own
      country, as exceeded the demand of the home market. In the exportation of
      the produce of their own country, the merchants of a landed nation would
      have an advantage of the same kind over those of mercantile nations, which
      its artificers and manufacturers had over the artificers and manufacturers
      of such nations; the advantage of finding at home that cargo, and those
      stores and provisions, which the others were obliged to seek for at a
      distance. With inferior art and skill in navigation, therefore, they would
      be able to sell that cargo as cheap in foreign markets as the merchants of
      such mercantile nations; and with equal art and skill they would be able
      to sell it cheaper. They would soon, therefore, rival those mercantile
      nations in this branch of foreign trade, and, in due time, would justle
      them out of it altogether.
    
      According to this liberal and generous system, therefore, the most
      advantageous method in which a landed nation can raise up artificers,
      manufacturers, and merchants of its own, is to grant the most perfect
      freedom of trade to the artificers, manufacturers, and merchants of all
      other nations. It thereby raises the value of the surplus produce of its
      own land, of which the continual increase gradually establishes a fund,
      which, in due time, necessarily raises up all the artificers,
      manufacturers, and merchants, whom it has occasion for.
    
      When a landed nation on the contrary, oppresses, either by high duties or
      by prohibitions, the trade of foreign nations, it necessarily hurts its
      own interest in two different ways. First, by raising the price of all
      foreign goods, and of all sorts of manufactures, it necessarily sinks the
      real value of the surplus produce of its own land, with which, or, what
      comes to the same thing, with the price of which, it purchases those
      foreign goods and manufactures. Secondly, by giving a sort of monopoly of
      the home market to its own merchants, artificers, and manufacturers, it
      raises the rate of mercantile and manufacturing profit, in proportion to
      that of agricultural profit; and, consequently, either draws from
      agriculture a part of the capital which had before been employed in it, or
      hinders from going to it a part of what would otherwise have gone to it.
      This policy, therefore, discourages agriculture in two different ways;
      first, by sinking the real value of its produce, and thereby lowering the
      rate of its profits; and, secondly, by raising the rate of profit in all
      other employments. Agriculture is rendered less advantageous, and trade
      and manufactures more advantageous, than they otherwise would be; and
      every man is tempted by his own interest to turn, as much as he can, both
      his capital and his industry from the former to the latter employments.
    
      Though, by this oppressive policy, a landed nation should be able to raise
      up artificers, manufacturers, and merchants of its own, somewhat sooner
      than it could do by the freedom of trade; a matter, however, which is not
      a little doubtful; yet it would raise them up, if one may say so,
      prematurely, and before it was perfectly ripe for them. By raising up too
      hastily one species of industry, it would depress another more valuable
      species of industry. By raising up too hastily a species of industry which
      duly replaces the stock which employs it, together with the ordinary
      profit, it would depress a species of industry which, over and above
      replacing that stock, with its profit, affords likewise a neat produce, a
      free rent to the landlord. It would depress productive labour, by
      encouraging too hastily that labour which is altogether barren and
      unproductive.
    
      In what manner, according to this system, the sum total of the annual
      produce of the land is distributed among the three classes above
      mentioned, and in what manner the labour of the unproductive class does no
      more than replace the value of its own consumption, without increasing in
      any respect the value of that sum total, is represented by Mr Quesnai, the
      very ingenious and profound author of this system, in some arithmetical
      formularies. The first of these formularies, which, by way of eminence, he
      peculiarly distinguishes by the name of the Economical Table, represents
      the manner in which he supposes this distribution takes place, in a state
      of the most perfect liberty, and, therefore, of the highest prosperity; in
      a state where the annual produce is such as to afford the greatest
      possible neat produce, and where each class enjoys its proper share of the
      whole annual produce. Some subsequent formularies represent the manner in
      which he supposes this distribution is made in different states of
      restraint and regulation; in which, either the class of proprietors, or
      the barren and unproductive class, is more favoured than the class of
      cultivators; and in which either the one or the other encroaches, more or
      less, upon the share which ought properly to belong to this productive
      class. Every such encroachment, every violation of that natural
      distribution, which the most perfect liberty would establish, must,
      according to this system, necessarily degrade, more or less, from one year
      to another, the value and sum total of the annual produce, and must
      necessarily occasion a gradual declension in the real wealth and revenue
      of the society; a declension, of which the progress must be quicker or
      slower, according to the degree of this encroachment, according as that
      natural distribution, which the most perfect liberty would establish, is
      more or less violated. Those subsequent formularies represent the
      different degrees of declension which, according to this system,
      correspond to the different degrees in which this natural distribution of
      things is violated.
    
      Some speculative physicians seem to have imagined that the health of the
      human body could be preserved only by a certain precise regimen of diet
      and exercise, of which every, the smallest violation, necessarily
      occasioned some degree of disease or disorder proportionate to the degree
      of the violation. Experience, however, would seem to shew, that the human
      body frequently preserves, to all appearance at least, the most perfect
      state of health under a vast variety of different regimens; even under
      some which are generally believed to be very far from being perfectly
      wholesome. But the healthful state of the human body, it would seem,
      contains in itself some unknown principle of preservation, capable either
      of preventing or of correcting, in many respects, the bad effects even of
      a very faulty regimen. Mr Quesnai, who was himself a physician, and a very
      speculative physician, seems to have entertained a notion of the same kind
      concerning the political body, and to have imagined that it would thrive
      and prosper only under a certain precise regimen, the exact regimen of
      perfect liberty and perfect justice. He seems not to have considered, that
      in the political body, the natural effort which every man is continually
      making to better his own condition, is a principle of preservation capable
      of preventing and correcting, in many respects, the bad effects of a
      political economy, in some degree both partial and oppressive. Such a
      political economy, though it no doubt retards more or less, is not always
      capable of stopping altogether, the natural progress of a nation towards
      wealth and prosperity, and still less of making it go backwards. If a
      nation could not prosper without the enjoyment of perfect liberty and
      perfect justice, there is not in the world a nation which could ever have
      prospered. In the political body, however, the wisdom of nature has
      fortunately made ample provision for remedying many of the bad effects of
      the folly and injustice of man; it the same manner as it has done in the
      natural body, for remedying those of his sloth and intemperance.
    
      The capital error of this system, however, seems to lie in its
      representing the class of artificers, manufacturers, and merchants, as
      altogether barren and unproductive. The following observations may serve
      to shew the impropriety of this representation:—
    
      First, this class, it is acknowledged, reproduces annually the value of
      its own annual consumption, and continues, at least, the existence of the
      stock or capital which maintains and employs it. But, upon this account
      alone, the denomination of barren or unproductive should seem to be very
      improperly applied to it. We should not call a marriage barren or
      unproductive, though it produced only a son and a daughter, to replace the
      father and mother, and though it did not increase the number of the human
      species, but only continued it as it was before. Farmers and country
      labourers, indeed, over and above the stock which maintains and employs
      them, reproduce annually a neat produce, a free rent to the landlord. As a
      marriage which affords three children is certainly more productive than
      one which affords only two, so the labour of farmers and country labourers
      is certainly more productive than that of merchants, artificers, and
      manufacturers. The superior produce of the one class, however, does not,
      render the other barren or unproductive.
    
      Secondly, it seems, on this account, altogether improper to consider
      artificers, manufacturers, and merchants, in the same light as menial
      servants. The labour of menial servants does not continue the existence of
      the fund which maintains and employs them. Their maintenance and
      employment is altogether at the expense of their masters, and the work
      which they perform is not of a nature to repay that expense. That work
      consists in services which perish generally in the very instant of their
      performance, and does not fix or realize itself in any vendible commodity,
      which can replace the value of their wages and maintenance. The labour, on
      the contrary, of artificers, manufacturers, and merchants, naturally does
      fix and realize itself in some such vendible commodity. It is upon this
      account that, in the chapter in which I treat of productive and
      unproductive labour, I have classed artificers, manufacturers, and
      merchants among the productive labourers, and menial servants among the
      barren or unproductive.
    
      Thirdly, it seems, upon every supposition, improper to say, that the
      labour of artificers, manufacturers, and merchants, does not increase the
      real revenue of the society. Though we should suppose, for example, as it
      seems to be supposed in this system, that the value of the daily, monthly,
      and yearly consumption of this class was exactly equal to that of its
      daily, monthly, and yearly production; yet it would not from thence
      follow, that its labour added nothing to the real revenue, to the real
      value of the annual produce of the land and labour of the society. An
      artificer, for example, who, in the first six months after harvest,
      executes ten pounds worth of work, though he should, in the same time,
      consume ten pounds worth of corn and other necessaries, yet really adds
      the value of ten pounds to the annual produce of the land and labour of
      the society. While he has been consuming a half-yearly revenue of ten
      pounds worth of corn and other necessaries, he has produced an equal value
      of work, capable of purchasing, either to himself, or to some other
      person, an equal half-yearly revenue. The value, therefore, of what has
      been consumed and produced during these six months, is equal, not to ten,
      but to twenty pounds. It is possible, indeed, that no more than ten pounds
      worth of this value may ever have existed at any one moment of time. But
      if the ten pounds worth of corn and other necessaries which were consumed
      by the artificer, had been consumed by a soldier, or by a menial servant,
      the value of that part of the annual produce which existed at the end of
      the six months, would have been ten pounds less than it actually is in
      consequence of the labour of the artificer. Though the value of what the
      artificer produces, therefore, should not, at any one moment of time, be
      supposed greater than the value he consumes, yet, at every moment of time,
      the actually existing value of goods in the market is, in consequence of
      what he produces, greater than it otherwise would be.
    
      When the patrons of this system assert, that the consumption of
      artificers, manufacturers, and merchants, is equal to the value of what
      they produce, they probably mean no more than that their revenue, or the
      fund destined for their consumption, is equal to it. But if they had
      expressed themselves more accurately, and only asserted, that the revenue
      of this class was equal to the value of what they produced, it might
      readily have occurred to the reader, that what would naturally be saved
      out of this revenue, must necessarily increase more or less the real
      wealth of the society. In order, therefore, to make out something like an
      argument, it was necessary that they should express themselves as they
      have done; and this argument, even supposing things actually were as it
      seems to presume them to be, turns out to be a very inconclusive one.
    
      Fourthly, farmers and country labourers can no more augment, without
      parsimony, the real revenue, the annual produce of the land and labour of
      their society, than artificers, manufacturers, and merchants. The annual
      produce of the land and labour of any society can be augmented only in two
      ways; either, first, by some improvement in the productive powers of the
      useful labour actually maintained within it; or, secondly, by some
      increase in the quantity of that labour.
    
      The improvement in the productive powers of useful labour depends, first,
      upon the improvement in the ability of the workman; and, secondly, upon
      that of the machinery with which he works. But the labour of artificers
      and manufacturers, as it is capable of being more subdivided, and the
      labour of each workman reduced to a greater simplicity of operation, than
      that of farmers and country labourers; so it is likewise capable of both
      these sorts of improvement in a much higher degree {See book i chap. 1.}
      In this respect, therefore, the class of cultivators can have no sort of
      advantage over that of artificers and manufacturers.
    
      The increase in the quantity of useful labour actually employed within any
      society must depend altogether upon the increase of the capital which
      employs it; and the increase of that capital, again, must be exactly equal
      to the amount of the savings from the revenue, either of the particular
      persons who manage and direct the employment of that capital, or of some
      other persons, who lend it to them. If merchants, artificers, and
      manufacturers are, as this system seems to suppose, naturally more
      inclined to parsimony and saving than proprietors and cultivators, they
      are, so far, more likely to augment the quantity of useful labour employed
      within their society, and consequently to increase its real revenue, the
      annual produce of its land and labour.
    
      Fifthly and lastly, though the revenue of the inhabitants of every country
      was supposed to consist altogether, as this system seems to suppose, in
      the quantity of subsistence which their industry could procure to them;
      yet, even upon this supposition, the revenue of a trading and
      manufacturing country must, other things being equal, always be much
      greater than that of one without trade or manufactures. By means of trade
      and manufactures, a greater quantity of subsistence can be annually
      imported into a particular country, than what its own lands, in the actual
      state of their cultivation, could afford. The inhabitants of a town,
      though they frequently possess no lands of their own, yet draw to
      themselves, by their industry, such a quantity of the rude produce of the
      lands of other people, as supplies them, not only with the materials of
      their work, but with the fund of their subsistence. What a town always is
      with regard to the country in its neighbourhood, one independent state or
      country may frequently be with regard to other independent states or
      countries. It is thus that Holland draws a great part of its subsistence
      from other countries; live cattle from Holstein and Jutland, and corn from
      almost all the different countries of Europe. A small quantity of
      manufactured produce, purchases a great quantity of rude produce. A
      trading and manufacturing country, therefore, naturally purchases, with a
      small part of its manufactured produce, a great part of the rude produce
      of other countries; while, on the contrary, a country without trade and
      manufactures is generally obliged to purchase, at the expense of a great
      part of its rude produce, a very small part of the manufactured produce of
      other countries. The one exports what can subsist and accommodate but a
      very few, and imports the subsistence and accommodation of a great number.
      The other exports the accommodation and subsistence of a great number, and
      imports that of a very few only. The inhabitants of the one must always
      enjoy a much greater quantity of subsistence than what their own lands, in
      the actual state of their cultivation, could afford. The inhabitants of
      the other must always enjoy a much smaller quantity.
    
      This system, however, with all its imperfections, is perhaps the nearest
      approximation to the truth that has yet been published upon the subject of
      political economy; and is upon that account, well worth the consideration
      of every man who wishes to examine with attention the principles of that
      very important science. Though in representing the labour which is
      employed upon land as the only productive labour, the notions which it
      inculcates are, perhaps, too narrow and confined; yet in representing the
      wealth of nations as consisting, not in the unconsumable riches of money,
      but in the consumable goods annually reproduced by the labour of the
      society, and in representing perfect liberty as the only effectual
      expedient for rendering this annual reproduction the greatest possible,
      its doctrine seems to be in every respect as just as it is generous and
      liberal. Its followers are very numerous; and as men are fond of
      paradoxes, and of appearing to understand what surpasses the
      comprehensions of ordinary people, the paradox which it maintains,
      concerning the unproductive nature of manufacturing labour, has not,
      perhaps, contributed a little to increase the number of its admirers. They
      have for some years past made a pretty considerable sect, distinguished in
      the French republic of letters by the name of the Economists. Their works
      have certainly been of some service to their country; not only by bringing
      into general discussion, many subjects which had never been well examined
      before, but by influencing, in some measure, the public administration in
      favour of agriculture. It has been in consequence of their
      representations, accordingly, that the agriculture of France has been
      delivered from several of the oppressions which it before laboured under.
      The term, during which such a lease can be granted, as will be valid
      against every future purchaser or proprietor of the land, has been
      prolonged from nine to twenty-seven years. The ancient provincial
      restraints upon the transportation of corn from one province of the
      kingdom to another, have been entirely taken away; and the liberty of
      exporting it to all foreign countries, has been established as the common
      law of the kingdom in all ordinary cases. This sect, in their works, which
      are very numerous, and which treat not only of what is properly called
      Political Economy, or of the nature and causes or the wealth of nations,
      but of every other branch of the system of civil government, all follow
      implicitly, and without any sensible variation, the doctrine of Mr.
      Qttesnai. There is, upon this account, little variety in the greater part
      of their works. The most distinct and best connected account of this
      doctrine is to be found in a little book written by Mr. Mercier de la
      Riviere, some time intendant of Martinico, entitled, The natural and
      essential Order of Political Societies. The admiration of this whole sect
      for their master, who was himself a man of the greatest modesty and
      simplicity, is not inferior to that of any of the ancient philosophers for
      the founders of their respective systems. ‘There have been since the world
      began,’ says a very diligent and respectable author, the Marquis de
      Mirabeau, ‘three great inventions which have principally given stability
      to political societies, independent of many other inventions which have
      enriched and adorned them. The first is the invention of writing, which
      alone gives human nature the power of transmitting, without alteration,
      its laws, its contracts, its annals, and its discoveries. The second is
      the invention of money, which binds together all the relations between
      civilized societies. The third is the economical table, the result of the
      other two, which completes them both by perfecting their object; the great
      discovery of our age, but of which our posterity will reap the benefit.’
    
      As the political economy of the nations of modern Europe has been more
      favourable to manufactures and foreign trade, the industry of the towns,
      than to agriculture, the industry of the country; so that of other nations
      has followed a different plan, and has been more favourable to agriculture
      than to manufactures and foreign trade.
    
      The policy of China favours agriculture more than all other employments.
      In China, the condition of a labourer is said to be as much superior to
      that of an artificer, as in most parts of Europe that of an artificer is
      to that of a labourer. In China, the great ambition of every man is to get
      possession of a little bit of land, either in property or in lease; and
      leases are there said to be granted upon very moderate terms, and to be
      sufficiently secured to the lessees. The Chinese have little respect for
      foreign trade. Your beggarly commerce! was the language in which the
      mandarins of Pekin used to talk to Mr. De Lange, the Russian envoy,
      concerning it {See the Journal of Mr. De Lange, in Bell’s Travels, vol.
      ii. p. 258, 276, 293.}. Except with Japan, the Chinese carry on,
      themselves, and in their own bottoms, little or no foreign trade; and it
      is only into one or two ports of their kingdom that they even admit the
      ships of foreign nations. Foreign trade, therefore, is, in China, every
      way confined within a much narrower circle than that to which it would
      naturally extend itself, if more freedom was allowed to it, either in
      their own ships, or in those of foreign nations.
    
      Manufactures, as in a small bulk they frequently contain a great value,
      and can upon that account be transported at less expense from one country
      to another than most parts of rude produce, are, in almost all countries,
      the principal support of foreign trade. In countries, besides, less
      extensive, and less favourably circumstanced for inferior commerce than
      China, they generally require the support of foreign trade. Without an
      extensive foreign market, they could not well flourish, either in
      countries so moderately extensive as to afford but a narrow home market,
      or in countries where the communication between one province and another
      was so difficult, as to render it impossible for the goods of any
      particular place to enjoy the whole of that home market which the country
      could afford. The perfection of manufacturing industry, it must be
      remembered, depends altogether upon the division of labour; and the degree
      to which the division of labour can be introduced into any manufacture, is
      necessarily regulated, it has already been shewn, by the extent of the
      market. But the great extent of the empire of China, the vast multitude of
      its inhabitants, the variety of climate, and consequently of productions
      in its different provinces, and the easy communication by means of
      water-carriage between the greater part of them, render the home market of
      that country of so great extent, as to be alone sufficient to support very
      great manufactures, and to admit of very considerable subdivisions of
      labour. The home market of China is, perhaps, in extent, not much inferior
      to the market of all the different countries of Europe put together. A
      more extensive foreign trade, however, which to this great home market
      added the foreign market of all the rest of the world, especially if any
      considerable part of this trade was carried on in Chinese ships, could
      scarce fail to increase very much the manufactures of China, and to
      improve very much the productive powers of its manufacturing industry. By
      a more extensive navigation, the Chinese would naturally learn the art of
      using and constructing, themselves, all the different machines made use of
      in other countries, as well as the other improvements of art and industry
      which are practised in all the different parts of the world. Upon their
      present plan, they have little opportunity of improving themselves by the
      example of any other nation, except that of the Japanese.
    
      The policy of ancient Egypt, too, and that of the Gentoo government of
      Indostan, seem to have favoured agriculture more than all other
      employments.
    
      Both in ancient Egypt and Indostan, the whole body of the people was
      divided into different casts or tribes each of which was confined, from
      father to son, to a particular employment, or class of employments. The
      son of a priest was necessarily a priest; the son of a soldier, a soldier;
      the son of a labourer, a labourer; the son of a weaver, a weaver; the son
      of a tailor, a tailor, etc. In both countries, the cast of the priests
      holds the highest rank, and that of the soldiers the next; and in both
      countries the cast of the farmers and labourers was superior to the casts
      of merchants and manufacturers.
    
      The government of both countries was particularly attentive to the
      interest of agriculture. The works constructed by the ancient sovereigns
      of Egypt, for the proper distribution of the waters of the Nile, were
      famous in antiquity, and the ruined remains of some of them are still the
      admiration of travellers. Those of the same kind which were constructed by
      the ancient sovereigns of Indostan, for the proper distribution of the
      waters of the Ganges, as well as of many other rivers, though they have
      been less celebrated, seem to have been equally great. Both countries,
      accordingly, though subject occasionally to dearths, have been famous for
      their great fertility. Though both were extremely populous, yet, in years
      of moderate plenty, they were both able to export great quantities of
      grain to their neighbours.
    
      The ancient Egyptians had a superstitious aversion to the sea; and as the
      Gentoo religion does not permit its followers to light a fire, nor
      consequently to dress any victuals, upon the water, it, in effect,
      prohibits them from all distant sea voyages. Both the Egyptians and
      Indians must have depended almost altogether upon the navigation of other
      nations for the exportation of their surplus produce; and this dependency,
      as it must have confined the market, so it must have discouraged the
      increase of this surplus produce. It must have discouraged, too, the
      increase of the manufactured produce, more than that of the rude produce.
      Manufactures require a much more extensive market than the most important
      parts of the rude produce of the land. A single shoemaker will make more
      than 300 pairs of shoes in the year; and his own family will not, perhaps,
      wear out six pairs. Unless, therefore, he has the custom of, at least, 50
      such families as his own, he cannot dispose of the whole product of his
      own labour. The most numerous class of artificers will seldom, in a large
      country, make more than one in 50, or one in a 100, of the whole number of
      families contained in it. But in such large countries, as France and
      England, the number of people employed in agriculture has, by some authors
      been computed at a half, by others at a third and by no author that I know
      of, at less that a fifth of the whole inhabitants of the country. But as
      the produce of the agriculture of both France and England is, the far
      greater part of it, consumed at home, each person employed in it must,
      according to these computations, require little more than the custom of
      one, two, or, at most, of four such families as his own, in order to
      dispose of the whole produce of his own labour. Agriculture, therefore,
      can support itself under the discouragement of a confined market much
      better than manufactures. In both ancient Egypt and Indostan, indeed, the
      confinement of the foreign market was in some measure compensated by the
      conveniency of many inland navigations, which opened, in the most
      advantageous manner, the whole extent of the home market to every part of
      the produce of every different district of those countries. The great
      extent of Indostan, too, rendered the home market of that country very
      great, and sufficient to support a great variety of manufactures. But the
      small extent of ancient Egypt, which was never equal to England, must at
      all times, have rendered the home market of that country too narrow for
      supporting any great variety of manufactures. Bengal accordingly, the
      province of Indostan which commonly exports the greatest quantity of rice,
      has always been more remarkable for the exportation of a great variety of
      manufactures, than for that of its grain. Ancient Egypt, on the contrary,
      though it exported some manufactures, fine linen in particular, as well as
      some other goods, was always most distinguished for its great exportation
      of grain. It was long the granary of the Roman empire.
    
      The sovereigns of China, of ancient Egypt, and of the different kingdoms
      into which Indostan has, at different times, been divided, have always
      derived the whole, or by far the most considerable part, of their revenue,
      from some sort of land tax or land rent. This land tax, or land rent, like
      the tithe in Europe, consisted in a certain proportion, a fifth, it is
      said, of the produce of the land, which was either delivered in kind, or
      paid in money, according to a certain valuation, and which, therefore,
      varied from year to year, according to all the variations of the produce.
      It was natural, therefore, that the sovereigns of those countries should
      be particularly attentive to the interests of agriculture, upon the
      prosperity or declension of which immediately depended the yearly increase
      or diminution of their own revenue.
    
      The policy of the ancient republics of Greece, and that of Rome, though it
      honoured agriculture more than manufactures or foreign trade, yet seems
      rather to have discouraged the latter employments, than to have given any
      direct or intentional encouragement to the former. In several of the
      ancient states of Greece, foreign trade was prohibited altogether; and in
      several others, the employments of artificers and manufacturers were
      considered as hurtful to the strength and agility of the human body, as
      rendering it incapable of those habits which their military and gymnastic
      exercises endeavoured to form in it, and as thereby disqualifying it, more
      or less, for undergoing the fatigues and encountering the dangers of war.
      Such occupations were considered as fit only for slaves, and the free
      citizens of the states were prohibited from exercising them. Even in those
      states where no such prohibition took place, as in Rome and Athens, the
      great body of the people were in effect excluded from all the trades which
      are now commonly exercised by the lower sort of the inhabitants of towns.
      Such trades were, at Athens and Rome, all occupied by the slaves of the
      rich, who exercised them for the benefit of their masters, whose wealth,
      power, and protection, made it almost impossible for a poor freeman to
      find a market for his work, when it came into competition with that of the
      slaves of the rich. Slaves, however, are very seldom inventive; and all
      the most important improvements, either in machinery, or in the
      arrangement and distribution of work, which facilitate and abridge labour
      have been the discoveries of freemen. Should a slave propose any
      improvement of this kind, his master would be very apt to consider the
      proposal as the suggestion of laziness, and of a desire to save his own
      labour at the master’s expense. The poor slave, instead of reward would
      probably meet with much abuse, perhaps with some punishment. In the
      manufactures carried on by slaves, therefore, more labour must generally
      have been employed to execute the same quantity of work, than in those
      carried on by freemen. The work of the farmer must, upon that account,
      generally have been dearer than that of the latter. The Hungarian mines,
      it is remarked by Mr. Montesquieu, though not richer, have always been
      wrought with less expense, and therefore with more profit, than the
      Turkish mines in their neighbourhood. The Turkish mines are wrought by
      slaves; and the arms of those slaves are the only machines which the Turks
      have ever thought of employing. The Hungarian mines are wrought by
      freemen, who employ a great deal of machinery, by which they facilitate
      and abridge their own labour. From the very little that is known about the
      price of manufactures in the times of the Greeks and Romans, it would
      appear that those of the finer sort were excessively dear. Silk sold for
      its weight in gold. It was not, indeed, in those times an European
      manufacture; and as it was all brought from the East Indies, the distance
      of the carriage may in some measure account for the greatness of the
      price. The price, however, which a lady, it is said, would sometimes pay
      for a piece of very fine linen, seems to have been equally extravagant;
      and as linen was always either an European, or at farthest, an Egyptian
      manufacture, this high price can be accounted for only by the great
      expense of the labour which must have been employed about It, and the
      expense of this labour again could arise from nothing but the awkwardness
      of the machinery which is made use of. The price of fine woollens, too,
      though not quite so extravagant, seems, however, to have been much above
      that of the present times. Some cloths, we are told by Pliny {Plin. 1.
      ix.c.39.}, dyed in a particular manner, cost a hundred denarii, or
      £3:6s:8d. the pound weight. Others, dyed in another manner, cost a
      thousand denarii the pound weight, or £33:6s:8d. The Roman pound, it must
      be remembered, contained only twelve of our avoirdupois ounces. This high
      price, indeed, seems to have been principally owing to the dye. But had
      not the cloths themselves been much dearer than any which are made in the
      present times, so very expensive a dye would not probably have been
      bestowed upon them. The disproportion would have been too great between
      the value of the accessory and that of the principal. The price mentioned
      by the same author {Plin. 1. viii.c.48.}, of some triclinaria, a sort of
      woollen pillows or cushions made use of to lean upon as they reclined upon
      their couches at table, passes all credibility; some of them being said to
      have cost more than £30,000, others more than £300,000. This high price,
      too, is not said to have arisen from the dye. In the dress of the people
      of fashion of both sexes, there seems to have been much less variety, it
      is observed by Dr. Arbuthnot, in ancient than in modern times; and the
      very little variety which we find in that of the ancient statues, confirms
      his observation. He infers from this, that their dress must, upon the
      whole, have been cheaper than ours; but the conclusion does not seem to
      follow. When the expense of fashionable dress is very great, the variety
      must be very small. But when, by the improvements in the productive powers
      of manufacturing art and industry, the expense of any one dress comes to
      be very moderate, the variety will naturally be very great. The rich, not
      being able to distinguish themselves by the expense of any one dress, will
      naturally endeavour to do so by the multitude and variety of their
      dresses.
    
      The greatest and most important branch of the commerce of every nation, it
      has already been observed, is that which is carried on between the
      inhabitants of the town and those of the country. The inhabitants of the
      town draw from the country the rude produce, which constitutes both the
      materials of their work and the fund of their subsistence; and they pay
      for this rude produce, by sending back to the country a certain portion of
      it manufactured and prepared for immediate use. The trade which is carried
      on between these two different sets of people, consists ultimately in a
      certain quantity of rude produce exchanged for a certain quantity of
      manufactured produce. The dearer the latter, therefore, the cheaper the
      former; and whatever tends in any country to raise the price of
      manufactured produce, tends to lower that of the rude produce of the land,
      and thereby to discourage agriculture. The smaller the quantity of
      manufactured produce, which any given quantity of rude produce, or, what
      comes to the same thing, which the price of any given quantity of rude
      produce, is capable of purchasing, the smaller the exchangeable value of
      that given quantity of rude produce; the smaller the encouragement which
      either the landlord has to increase its quantity by improving, or the
      farmer by cultivating the land. Whatever, besides, tends to diminish in
      any country the number of artificers and manufacturers, tends to diminish
      the home market, the most important of all markets, for the rude produce
      of the land, and thereby still further to discourage agriculture.
    
      Those systems, therefore, which preferring agriculture to all other
      employments, in order to promote it, impose restraints upon manufactures
      and foreign trade, act contrary to the very end which they propose, and
      indirectly discourage that very species of industry which they mean to
      promote. They are so far, perhaps, more inconsistent than even the
      mercantile system. That system, by encouraging manufactures and foreign
      trade more than agriculture, turns a certain portion of the capital of the
      society, from supporting a more advantageous, to support a less
      advantageous species of industry. But still it really, and in the end,
      encourages that species of industry which it means to promote. Those
      agricultural systems, on the contrary, really, and in the end, discourage
      their own favourite species of industry.
    
      It is thus that every system which endeavours, either, by extraordinary
      encouragements to draw towards a particular species of industry a greater
      share of the capital of the society than what would naturally go to it,
      or, by extraordinary restraints, to force from a particular species of
      industry some share of the capital which would otherwise be employed in
      it, is, in reality, subversive of the great purpose which it means to
      promote. It retards, instead of accelerating the progress of the society
      towards real wealth and greatness; and diminishes, instead of increasing,
      the real value of the annual produce of its land and labour.
    
      All systems, either of preference or of restraint, therefore, being thus
      completely taken away, the obvious and simple system of natural liberty
      establishes itself of its own accord. Every man, as long as he does not
      violate the laws of justice, is left perfectly free to pursue his own
      interest his own way, and to bring both his industry and capital into
      competition with those of any other man, or order of men. The sovereign is
      completely discharged from a duty, in the attempting to perform which he
      must always be exposed to innumerable delusions, and for the proper
      performance of which, no human wisdom or knowledge could ever be
      sufficient; the duty of superintending the industry of private people, and
      of directing it towards the employments most suitable to the interests of
      the society. According to the system of natural liberty, the sovereign has
      only three duties to attend to; three duties of great importance, indeed,
      but plain and intelligible to common understandings: first, the duty of
      protecting the society from the violence and invasion of other independent
      societies; secondly, the duty of protecting, as far as possible, every
      member of the society from the injustice or oppression of every other
      member of it, or the duty of establishing an exact administration of
      justice; and, thirdly, the duty of erecting and maintaining certain public
      works, and certain public institutions, which it can never be for the
      interest of any individual, or small number of individuals to erect and
      maintain; because the profit could never repay the expense to any
      individual, or small number of individuals, though it may frequently do
      much more than repay it to a great society.
    
      The proper performance of those several duties of the sovereign
      necessarily supposes a certain expense; and this expense again necessarily
      requires a certain revenue to support it. In the following book,
      therefore, I shall endeavour to explain, first, what are the necessary
      expenses of the sovereign or commonwealth; and which of those expenses
      ought to be defrayed by the general contribution of the whole society; and
      which of them, by that of some particular part only, or of some particular
      members of the society: secondly, what are the different methods in which
      the whole society may be made to contribute towards defraying the expenses
      incumbent on the whole society; and what are the principal advantages and
      inconveniencies of each of those methods: and thirdly, what are the
      reasons and causes which have induced almost all modern governments to
      mortgage some part of this revenue, or to contract debts; and what have
      been the effects of those debts upon the real wealth, the annual produce
      of the land and labour of the society. The following book, therefore, will
      naturally be divided into three chapters.
    
      
       
    
      




    
      APPENDIX TO BOOK IV
    
      The two following accounts are subjoined, in order to illustrate and
      confirm what is said in the fifth chapter of the fourth book, concerning
      the Tonnage Bounty to the Whit-herring Fishery. The reader, I believe, may
      depend upon the accuracy of both accounts.
    
      An account of Busses fitted out in Scotland for eleven Years, with the
      Number of empty Barrels carried out, and the Number of Barrels of Herrings
      caught; also the Bounty, at a Medium, on each Barrel of Sea-sricks, and on
      each Barrel when fully packed.
    

  Years   Number of  Empty Barrels  Barrels of Her-  Bounty paid on
           Busses     carried out    rings caught      the Busses
                                                          £.  s.  d.
  1771          29        5,948        2,832          2,885   0   0
  1772         168       41,316       22,237         11,055   7   6
  1773         190       42,333       42,055         12,510   8   6
  1774         240       59,303       56,365         26,932   2   6
  1775         275       69,144       52,879         19,315  15   0
  1776         294       76,329       51,863         21,290   7   6
  1777         240       62,679       43,313         17,592   2   6
  1778         220       56,390       40,958         16,316   2   6
  1779         206       55,194       29,367         15,287   0   0
  1780         181       48,315       19,885         13,445  12   6
  1781         135       33,992       16,593          9,613  15   6

      Totals 2,186      550,943      378,347       £165,463  14   0

  Sea-sticks     378,347  Bounty, at a medium, for each
                          barrel of sea-sticks,         £ 0   8   2¼
                          But a barrel of sea-sticks
                          being only reckoned two thirds
                          of a barrel fully packed, one
                          third to be deducted, which
  ¹/³deducted    126,115  brings the bounty to          £ 0  12   3¾
  Barrels fully
  packed         252,231

  And if the herrings are exported, there is besides a
                                           premium of   £ 0   2   8
  So the bounty paid by government in money for each
                                           barrel is    £ 0  14  11¾

  But if to this, the duty of the salt usually taken
  credit for as expended in curing each barrel, which
  at a medium, is, of foreign, one bushel and one-
  fourth of a bushel, at 10s. a-bushel, be added, viz     0  12   6
  the bounty on each barrel would amount to             £ 1   7   5¾

  If the herrings are cured with British salt, it will
  stand thus, viz.
  Bounty as before                                      £ 0  14  11¾
  But if to this bounty, the duty on two bushels of
  Scotch salt, at 1s.6d. per bushel, supposed to be
  the quantity, at a medium, used in curing each
  barrel is added, viz.                                   0   3   0
  The bounty on each barrel will amount to              £ 0  17  11¾

  And when buss herrings are entered for home
  consumption in Scotland, and pay the shilling a
  barrel of duty, the bounty stands thus, to wit,
                                           as before    £ 0  12   3¾
  From which the shilling a barrel is to be deducted      0   1   0
                                                        £ 0  11   3¾

  But to that there is to be added again, the duty of
  the foreign salt used curing a barrel of herring viz    0  12   6
  So that the premium allowed for each barrel of her-
  rings entered for home consumption is                 £ 1   3   9¾

  If the herrings are cured in British salt, it will
  stand as follows viz.
  Bounty on each barrel brought in by the busses, as
  above                                                 £ 0  12   3¾
  From which deduct 1s. a-barrel, paid at the time
  they are entered for home consumption                   0   1   0
                                                        £ 0  11   3¾

  But if to the bounty, the the duty on two bushel
  of Scotch salt, at 1s.6d. per bushel supposed to
  be the quantity, at a medium, used in curing each
  barrel, is added, viz                                   0   3   0
  the premium for each barrel entered for home
  consumption will be                                   £ 1  14   3¾

    

      Though the loss of duties upon herrings exported cannot, perhaps, properly
      be considered as bounty, that upon herrings entered for home consumption
      certainly may.
    
      An account of the Quantity of Foreign Salt imported into Scotland, and of
      Scotch Salt delivered Duty-free from the Works there, for the Fishery,
      from the 5th. of April 1771 to the 5th. of April 1782 with the Medium of
      both for one Year.
    

                                Foreign Salt      Scotch Salt delivered
           PERIOD                 imported        from the Works
                                  Bushels              Bushels

  From 5th. April 1771 to
      5th. April 1782             936,974              168,226
  Medium for one year              85,159½              15,293¼

    

      It is to be observed, that the bushel of foreign salt weighs 48lbs., that
      of British weighs 56lbs. only.
    


BOOK V.
OF THE REVENUE OF THE SOVEREIGN OR COMMONWEALTH
    


CHAPTER I.
OF THE EXPENSES OF THE SOVEREIGN OR COMMONWEALTH.


    
      PART I. Of the Expense of Defence.
    
      The first duty of the sovereign, that of protecting the society from the
      violence and invasion of other independent societies, can be performed
      only by means of a military force. But the expense both of preparing this
      military force in time of peace, and of employing it in time of war, is
      very different in the different states of society, in the different
      periods of improvement.
    
      Among nations of hunters, the lowest and rudest state of society, such as
      we find it among the native tribes of North America, every man is a
      warrior, as well as a hunter. When he goes to war, either to defend his
      society, or to revenge the injuries which have been done to it by other
      societies, he maintains himself by his own labour, in the same manner as
      when he lives at home. His society (for in this state of things there is
      properly neither sovereign nor commonwealth) is at no sort of expense,
      either to prepare him for the field, or to maintain him while he is in it.
    
      Among nations of shepherds, a more advanced state of society, such as we
      find it among the Tartars and Arabs, every man is, in the same manner, a
      warrior. Such nations have commonly no fixed habitation, but live either
      in tents, or in a sort of covered waggons, which are easily transported
      from place to place. The whole tribe, or nation, changes its situation
      according to the different seasons of the year, as well as according to
      other accidents. When its herds and flocks have consumed the forage of one
      part of the country, it removes to another, and from that to a third. In
      the dry season, it comes down to the banks of the rivers; in the wet
      season, it retires to the upper country. When such a nation goes to war,
      the warriors will not trust their herds and flocks to the feeble defence
      of their old men, their women and children; and their old men, their women
      and children, will not be left behind without defence, and without
      subsistence. The whole nation, besides, being accustomed to a wandering
      life, even in time of peace, easily takes the field in time of war.
      Whether it marches as an army, or moves about as a company of herdsmen,
      the way of life is nearly the same, though the object proposed by it be
      very different. They all go to war together, therefore, and everyone does
      as well as he can. Among the Tartars, even the women have been frequently
      known to engage in battle. If they conquer, whatever belongs to the
      hostile tribe is the recompence of the victory; but if they are
      vanquished, all is lost; and not only their herds and flocks, but their
      women and children become the booty of the conqueror. Even the greater
      part of those who survive the action are obliged to submit to him for the
      sake of immediate subsistence. The rest are commonly dissipated and
      dispersed in the desert.
    
      The ordinary life, the ordinary exercise of a Tartar or Arab, prepares him
      sufficiently for war. Running, wrestling, cudgel-playing, throwing the
      javelin, drawing the bow, etc. are the common pastimes of those who live
      in the open air, and are all of them the images of war. When a Tartar or
      Arab actually goes to war, he is maintained by his own herds and flocks,
      which he carries with him, in the same manner as in peace. His chief or
      sovereign (for those nations have all chiefs or sovereigns) is at no sort
      of expense in preparing him for the field; and when he is in it, the
      chance of plunder is the only pay which he either expects or requires.
    
      An army of hunters can seldom exceed two or three hundred men. The
      precarious subsistence which the chace affords, could seldom allow a
      greater number to keep together for any considerable time. An army of
      shepherds, on the contrary, may sometimes amount to two or three hundred
      thousand. As long as nothing stops their progress, as long as they can go
      on from one district, of which they have consumed the forage, to another,
      which is yet entire; there seems to be scarce any limit to the number who
      can march on together. A nation of hunters can never be formidable to the
      civilized nations in their neighbourhood; a nation of shepherds may.
      Nothing can be more contemptible than an Indian war in North America;
      nothing, on the contrary, can be more dreadful than a Tartar invasion has
      frequently been in Asia. The judgment of Thucydides, that both Europe and
      Asia could not resist the Scythians united, has been verified by the
      experience of all ages. The inhabitants of the extensive, but defenceless
      plains of Scythia or Tartary, have been frequently united under the
      dominion of the chief of some conquering horde or clan; and the havock and
      devastation of Asia have always signalized their union. The inhabitants of
      the inhospitable deserts of Arabia, the other great nation of shepherds,
      have never been united but once, under Mahomet and his immediate
      successors. Their union, which was more the effect of religious enthusiasm
      than of conquest, was signalized in the same manner. If the hunting
      nations of America should ever become shepherds, their neighbourhood would
      be much more dangerous to the European colonies than it is at present.
    
      In a yet more advanced state of society, among those nations of husbandmen
      who have little foreign commerce, and no other manufactures but those
      coarse and household ones, which almost every private family prepares for
      its own use, every man, in the same manner, either is a warrior, or easily
      becomes such. Those who live by agriculture generally pass the whole day
      in the open air, exposed to all the inclemencies of the seasons. The
      hardiness of their ordinary life prepares them for the fatigues of war, to
      some of which their necessary occupations bear a great analogy. The
      necessary occupation of a ditcher prepares him to work in the trenches,
      and to fortify a camp, as well as to inclose a field. The ordinary
      pastimes of such husbandmen are the same as those of shepherds, and are in
      the same manner the images of war. But as husbandmen have less leisure
      than shepherds, they are not so frequently employed in those pastimes.
      They are soldiers but soldiers not quite so much masters of their
      exercise. Such as they are, however, it seldom costs the sovereign or
      commonwealth any expense to prepare them for the field.
    
      Agriculture, even in its rudest and lowest state, supposes a settlement,
      some sort of fixed habitation, which cannot be abandoned without great
      loss. When a nation of mere husbandmen, therefore, goes to war, the whole
      people cannot take the field together. The old men, the women and
      children, at least, must remain at home, to take care of the habitation.
      All the men of the military age, however, may take the field, and in small
      nations of this kind, have frequently done so. In every nation, the men of
      the military age are supposed to amount to about a fourth or a fifth part
      of the whole body of the people. If the campaign, too, should begin after
      seedtime, and end before harvest, both the husbandman and his principal
      labourers can be spared from the farm without much loss. He trusts that
      the work which must be done in the mean time, can be well enough executed
      by the old men, the women, and the children. He is not unwilling,
      therefore, to serve without pay during a short campaign; and it frequently
      costs the sovereign or commonwealth as little to maintain him in the field
      as to prepare him for it. The citizens of all the different states of
      ancient Greece seem to have served in this manner till after the second
      Persian war; and the people of Peloponnesus till after the Peloponnesian
      war. The Peloponnesians, Thucydides observes, generally left the field in
      the summer, and returned home to reap the harvest. The Roman people, under
      their kings, and during the first ages of the republic, served in the same
      manner. It was not till the seige of Veii, that they who staid at home
      began to contribute something towards maintaining those who went to war.
      In the European monarchies, which were founded upon the ruins of the Roman
      empire, both before, and for some time after, the establishment of what is
      properly called the feudal law, the great lords, with all their immediate
      dependents, used to serve the crown at their own expense. In the field, in
      the same manner as at home, they maintained themselves by their own
      revenue, and not by any stipend or pay which they received from the king
      upon that particular occasion.
    
      In a more advanced state of society, two different causes contribute to
      render it altogether impossible that they who take the field should
      maintain themselves at their own expense. Those two causes are, the
      progress of manufactures, and the improvement in the art of war.
    
      Though a husbandman should be employed in an expedition, provided it
      begins after seedtime, and ends before harvest, the interruption of his
      business will not always occasion any considerable diminution of his
      revenue. Without the intervention of his labour, Nature does herself the
      greater part of the work which remains to be done. But the moment that an
      artificer, a smith, a carpenter, or a weaver, for example, quits his
      workhouse, the sole source of his revenue is completely dried up. Nature
      does nothing for him; he does all for himself. When he takes the field,
      therefore, in defence of the public, as he has no revenue to maintain
      himself, he must necessarily be maintained by the public. But in a
      country, of which a great part of the inhabitants are artificers and
      manufacturers, a great part of the people who go to war must be drawn from
      those classes, and must, therefore, be maintained by the public as long as
      they are employed in its service.
    
      When the art of war, too, has gradually grown up to be a very intricate
      and complicated science; when the event of war ceases to be determined, as
      in the first ages of society, by a single irregular skirmish or battle;
      but when the contest is generally spun out through several different
      campaigns, each of which lasts during the greater part of the year; it
      becomes universally necessary that the public should maintain those who
      serve the public in war, at least while they are employed in that service.
      Whatever, in time of peace, might be the ordinary occupation of those who
      go to war, so very tedious and expensive a service would otherwise be by
      far too heavy a burden upon them. After the second Persian war,
      accordingly, the armies of Athens seem to have been generally composed of
      mercenary troops, consisting, indeed, partly of citizens, but partly, too,
      of foreigners; and all of them equally hired and paid at the expense of
      the state. From the time of the siege of Veii, the armies of Rome received
      pay for their service during the time which they remained in the field.
      Under the feudal governments, the military service, both of the great
      lords, and of their immediate dependents, was, after a certain period,
      universally exchanged for a payment in money, which was employed to
      maintain those who served in their stead.
    
      The number of those who can go to war, in proportion to the whole number
      of the people, is necessarily much smaller in a civilized than in a rude
      state of society. In a civilized society, as the soldiers are maintained
      altogether by the labour of those who are not soldiers, the number of the
      former can never exceed what the latter can maintain, over and above
      maintaining, in a manner suitable to their respective stations, both
      themselves and the other officers of government and law, whom they are
      obliged to maintain. In the little agrarian states of ancient Greece, a
      fourth or a fifth part of the whole body of the people considered the
      themselves as soldiers, and would sometimes, it is said, take the field.
      Among the civilized nations of modern Europe, it is commonly computed,
      that not more than the one hundredth part of the inhabitants of any
      country can be employed as soldiers, without ruin to the country which
      pays the expense of their service.
    
      The expense of preparing the army for the field seems not to have become
      considerable in any nation, till long after that of maintaining it in the
      field had devolved entirely upon the sovereign or commonwealth. In all the
      different republics of ancient Greece, to learn his military exercises,
      was a necessary part of education imposed by the state upon every free
      citizen. In every city there seems to have been a public field, in which,
      under the protection of the public magistrate, the young people were
      taught their different exercises by different masters. In this very simple
      institution consisted the whole expense which any Grecian state seems ever
      to have been at, in preparing its citizens for war. In ancient Rome, the
      exercises of the Campus Martius answered the same purpose with those of
      the Gymnasium in ancient Greece. Under the feudal governments, the many
      public ordinances, that the citizens of every district should practise
      archery, as well as several other military exercises, were intended for
      promoting the same purpose, but do not seem to have promoted it so well.
      Either from want of interest in the officers entrusted with the execution
      of those ordinances, or from some other cause, they appear to have been
      universally neglected; and in the progress of all those governments,
      military exercises seem to have gone gradually into disuse among the great
      body of the people.
    
      In the republics of ancient Greece and Rome, during the whole period of
      their existence, and under the feudal governments, for a considerable time
      after their first establishment, the trade of a soldier was not a
      separate, distinct trade, which constituted the sole or principal
      occupation of a particular class of citizens; every subject of the state,
      whatever might be the ordinary trade or occupation by which he gained his
      livelihood, considered himself, upon all ordinary occasions, as fit
      likewise to exercise the trade of a soldier, and, upon many extraordinary
      occasions, as bound to exercise it.
    
      The art of war, however, as it is certainly the noblest of all arts, so,
      in the progress of improvement, it necessarily becomes one of the most
      complicated among them. The state of the mechanical, as well as some other
      arts, with which it is necessarily connected, determines the degree of
      perfection to which it is capable of being carried at any particular time.
      But in order to carry it to this degree of perfection, it is necessary
      that it should become the sole or principal occupation of a particular
      class of citizens; and the division of labour is as necessary for the
      improvement of this, as of every other art. Into other arts, the division
      of labour is naturally introduced by the prudence of individuals, who find
      that they promote their private interest better by confining themselves to
      a particular trade, than by exercising a great number. But it is the
      wisdom of the state only, which can render the trade of a soldier a
      particular trade, separate and distinct from all others. A private
      citizen, who, in time of profound peace, and without any particular
      encouragement from the public, should spend the greater part of his time
      in military exercises, might, no doubt, both improve himself very much in
      them, and amuse himself very well; but he certainly would not promote his
      own interest. It is the wisdom of the state only, which can render it for
      his interest to give up the greater part of his time to this peculiar
      occupation; and states have not always had this wisdom, even when their
      circumstances had become such, that the preservation of their existence
      required that they should have it.
    
      A shepherd has a great deal of leisure; a husbandman, in the rude state of
      husbandry, has some; an artificer or manufacturer has none at all. The
      first may, without any loss, employ a great deal of his time in martial
      exercises; the second may employ some part of it; but the last cannot
      employ a single hour in them without some loss, and his attention to his
      own interest naturally leads him to neglect them altogether. Those
      improvements in husbandry, too, which the progress of arts and
      manufactures necessarily introduces, leave the husbandman as little
      leisure as the artificer. Military exercises come to be as much neglected
      by the inhabitants of the country as by those of the town, and the great
      body of the people becomes altogether unwarlike. That wealth, at the same
      time, which always follows the improvements of agriculture and
      manufactures, and which, in reality, is no more than the accumulated
      produce of those improvements, provokes the invasion of all their
      neighbours. An industrious, and, upon that account, a wealthy nation, is
      of all nations the most likely to be attacked; and unless the state takes
      some new measure for the public defence, the natural habits of the people
      render them altogether incapable of defending themselves.
    
      In these circumstances, there seem to be but two methods by which the
      state can make any tolerable provision for the public defence.
    
      It may either, first, by means of a very rigorous police, and in spite of
      the whole bent of the interest, genius, and inclinations of the people,
      enforce the practice of military exercises, and oblige either all the
      citizens of the military age, or a certain number of them, to join in some
      measure the trade of a soldier to whatever other trade or profession they
      may happen to carry on.
    
      Or, secondly, by maintaining and employing a certain number of citizens in
      the constant practice of military exercises, it may render the trade of a
      soldier a particular trade, separate and distinct from all others.
    
      If the state has recourse to the first of those two expedients, its
      military force is said to consist in a militia; if to the second, it is
      said to consist in a standing army. The practice of military exercises is
      the sole or principal occupation of the soldiers of a standing army, and
      the maintenance or pay which the state affords them is the principal and
      ordinary fund of their subsistence. The practice of military exercises is
      only the occasional occupation of the soldiers of a militia, and they
      derive the principal and ordinary fund of their subsistence from some
      other occupation. In a militia, the character of the labourer, artificer,
      or tradesman, predominates over that of the soldier; in a standing army,
      that of the soldier predominates over every other character; and in this
      distinction seems to consist the essential difference between those two
      different species of military force.
    
      Militias have been of several different kinds. In some countries, the
      citizens destined for defending the state seem to have been exercised
      only, without being, if I may say so, regimented; that is, without being
      divided into separate and distinct bodies of troops, each of which
      performed its exercises under its own proper and permanent officers. In
      the republics of ancient Greece and Rome, each citizen, as long as he
      remained at home, seems to have practised his exercises, either separately
      and independently, or with such of his equals as he liked best; and not to
      have been attached to any particular body of troops, till he was actually
      called upon to take the field. In other countries, the militia has not
      only been exercised, but regimented. In England, in Switzerland, and, I
      believe, in every other country of modern Europe, where any imperfect
      military force of this kind has been established, every militiaman is,
      even in time of peace, attached to a particular body of troops, which
      performs its exercises under its own proper and permanent officers.
    
      Before the invention of fire-arms, that army was superior in which the
      soldiers had, each individually, the greatest skill and dexterity in the
      use of their arms. Strength and agility of body were of the highest
      consequence, and commonly determined the fate of battles. But this skill
      and dexterity in the use of their arms could be acquired only, in the same
      manner as fencing is at present, by practising, not in great bodies, but
      each man separately, in a particular school, under a particular master, or
      with his own particular equals and companions. Since the invention of
      fire-arms, strength and agility of body, or even extraordinary dexterity
      and skill in the use of arms, though they are far from being of no
      consequence, are, however, of less consequence. The nature of the weapon,
      though it by no means puts the awkward upon a level with the skilful, puts
      him more nearly so than he ever was before. All the dexterity and skill,
      it is supposed, which are necessary for using it, can be well enough
      acquired by practising in great bodies.
    
      Regularity, order, and prompt obedience to command, are qualities which,
      in modern armies, are of more importance towards determining the fate of
      battles, than the dexterity and skill of the soldiers in the use of their
      arms. But the noise of fire-arms, the smoke, and the invisible death to
      which every man feels himself every moment exposed, as soon as he comes
      within cannon-shot, and frequently a long time before the battle can be
      well said to be engaged, must render it very difficult to maintain any
      considerable degree of this regularity, order, and prompt obedience, even
      in the beginning of a modern battle. In an ancient battle, there was no
      noise but what arose from the human voice; there was no smoke, there was
      no invisible cause of wounds or death. Every man, till some mortal weapon
      actually did approach him, saw clearly that no such weapon was near him.
      In these circumstances, and among troops who had some confidence in their
      own skill and dexterity in the use of their arms, it must have been a good
      deal less difficult to preserve some degree of regularity and order, not
      only in the beginning, but through the whole progress of an ancient
      battle, and till one of the two armies was fairly defeated. But the habits
      of regularity, order, and prompt obedience to command, can be acquired
      only by troops which are exercised in great bodies.
    
      A militia, however, in whatever manner it may be either disciplined or
      exercised, must always be much inferior to a well disciplined and well
      exercised standing army.
    
      The soldiers who are exercised only once a week, or once a-month, can
      never be so expert in the use of their arms, as those who are exercised
      every day, or every other day; and though this circumstance may not be of
      so much consequence in modern, as it was in ancient times, yet the
      acknowledged superiority of the Prussian troops, owing, it is said, very
      much to their superior expertness in their exercise, may satisfy us that
      it is, even at this day, of very considerable consequence.
    
      The soldiers, who are bound to obey their officer only once a-week, or
      once a-month, and who are at all other times at liberty to manage their
      own affairs their own way, without being, in any respect, accountable to
      him, can never be under the same awe in his presence, can never have the
      same disposition to ready obedience, with those whose whole life and
      conduct are every day directed by him, and who every day even rise and go
      to bed, or at least retire to their quarters, according to his orders. In
      what is called discipline, or in the habit of ready obedience, a militia
      must always be still more inferior to a standing army, than it may
      sometimes be in what is called the manual exercise, or in the management
      and use of its arms. But, in modern war, the habit of ready and instant
      obedience is of much greater consequence than a considerable superiority
      in the management of arms.
    
      Those militias which, like the Tartar or Arab militia, go to war under the
      same chieftains whom they are accustomed to obey in peace, are by far the
      best. In respect for their officers, in the habit of ready obedience, they
      approach nearest to standing armies. The Highland militia, when it served
      under its own chieftains, had some advantage of the same kind. As the
      Highlanders, however, were not wandering, but stationary shepherds, as
      they had all a fixed habitation, and were not, in peaceable times,
      accustomed to follow their chieftain from place to place; so, in time of
      war, they were less willing to follow him to any considerable distance, or
      to continue for any long time in the field. When they had acquired any
      booty, they were eager to return home, and his authority was seldom
      sufficient to detain them. In point of obedience, they were always much
      inferior to what is reported of the Tartars and Arabs. As the Highlanders,
      too, from their stationary life, spend less of their time in the open air,
      they were always less accustomed to military exercises, and were less
      expert in the use of their arms than the Tartars and Arabs are said to be.
    
      A militia of any kind, it must be observed, however, which has served for
      several successive campaigns in the field, becomes in every respect a
      standing army. The soldiers are every day exercised in the use of their
      arms, and, being constantly under the command of their officers, are
      habituated to the same prompt obedience which takes place in standing
      armies. What they were before they took the field, is of little
      importance. They necessarily become in every respect a standing army,
      after they have passed a few campaigns in it. Should the war in America
      drag out through another campaign, the American militia may become, in
      every respect, a match for that standing army, of which the valour
      appeared, in the last war at least, not inferior to that of the hardiest
      veterans of France and Spain.
    
      This distinction being well understood, the history of all ages, it will
      be found, hears testimony to the irresistible superiority which a well
      regulated standing army has over a militia.
    
      One of the first standing armies, of which we have any distinct account in
      any well authenticated history, is that of Philip of Macedon. His frequent
      wars with the Thracians, Illyrians, Thessalians, and some of the Greek
      cities in the neighbourhood of Macedon, gradually formed his troops, which
      in the beginning were probably militia, to the exact discipline of a
      standing army. When he was at peace, which he was very seldom, and never
      for any long time together, he was careful not to disband that army. It
      vanquished and subdued, after a long and violent struggle, indeed, the
      gallant and well exercised militias of the principal republics of ancient
      Greece; and afterwards, with very little struggle, the effeminate and ill
      exercised militia of the great Persian empire. The fall of the Greek
      republics, and of the Persian empire was the effect of the irresistible
      superiority which a standing arm has over every other sort of militia. It
      is the first great revolution in the affairs of mankind of which history
      has preserved any distinct and circumstantial account.
    
      The fall of Carthage, and the consequent elevation of Rome, is the second.
      All the varieties in the fortune of those two famous republics may very
      well be accounted for from the same cause.
    
      From the end of the first to the beginning of the second Carthaginian war,
      the armies of Carthage were continually in the field, and employed under
      three great generals, who succeeded one another in the command; Amilcar,
      his son-in-law Asdrubal, and his son Annibal: first in chastising their
      own rebellious slaves, afterwards in subduing the revolted nations of
      Africa; and lastly, in conquering the great kingdom of Spain. The army
      which Annibal led from Spain into Italy must necessarily, in those
      different wars, have been gradually formed to the exact discipline of a
      standing army. The Romans, in the meantime, though they had not been
      altogether at peace, yet they had not, during this period, been engaged in
      any war of very great consequence; and their military discipline, it is
      generally said, was a good deal relaxed. The Roman armies which Annibal
      encountered at Trebi, Thrasymenus, and Cannae, were militia opposed to a
      standing army. This circumstance, it is probable, contributed more than
      any other to determine the fate of those battles.
    
      The standing army which Annibal left behind him in Spain had the like
      superiority over the militia which the Romans sent to oppose it; and, in a
      few years, under the command of his brother, the younger Asdrubal,
      expelled them almost entirely from that country.
    
      Annibal was ill supplied from home. The Roman militia, being continually
      in the field, became, in the progress of the war, a well disciplined and
      well exercised standing army; and the superiority of Annibal grew every
      day less and less. Asdrubal judged it necessary to lead the whole, or
      almost the whole, of the standing army which he commanded in Spain, to the
      assistance of his brother in Italy. In this march, he is said to have been
      misled by his guides; and in a country which he did not know, was
      surprised and attacked, by another standing army, in every respect equal
      or superior to his own, and was entirely defeated.
    
      When Asdrubal had left Spain, the great Scipio found nothing to oppose him
      but a militia inferior to his own. He conquered and subdued that militia,
      and, in the course of the war, his own militia necessarily became a well
      disciplined and well exercised standing army. That standing army was
      afterwards carried to Africa, where it found nothing but a militia to
      oppose it. In order to defend Carthage, it became necessary to recal the
      standing army of Annibal. The disheartened and frequently defeated African
      militia joined it, and, at the battle of Zama, composed the greater part
      of the troops of Annibal. The event of that day determined the fate of the
      two rival republics.
    
      From the end of the second Carthaginian war till the fall of the Roman
      republic, the armies of Rome were in every respect standing armies. The
      standing army of Macedon made some resistance to their arms. In the height
      of their grandeur, it cost them two great wars, and three great battles,
      to subdue that little kingdom, of which the conquest would probably have
      been still more difficult, had it not been for the cowardice of its last
      king. The militias of all the civilized nations of the ancient world, of
      Greece, of Syria, and of Egypt, made but a feeble resistance to the
      standing armies of Rome. The militias of some barbarous nations defended
      themselves much better. The Scythian or Tartar militia, which Mithridates
      drew from the countries north of the Euxine and Caspian seas, were the
      most formidable enemies whom the Romans had to encounter after the second
      Carthaginian war. The Parthian and German militias, too, were always
      respectable, and upon several occasions, gained very considerable
      advantages over the Roman armies. In general, however, and when the Roman
      armies were well commanded, they appear to have been very much superior;
      and if the Romans did not pursue the final conquest either of Parthia or
      Germany, it was probably because they judged that it was not worth while
      to add those two barbarous countries to an empire which was already too
      large. The ancient Parthians appear to have been a nation of Scythian or
      Tartar extraction, and to have always retained a good deal of the manners
      of their ancestors. The ancient Germans were, like the Scythians or
      Tartars, a nation of wandering shepherds, who went to war under the same
      chiefs whom they were accustomed to follow in peace. ‘Their militia was
      exactly of the same kind with that of the Scythians or Tartars, from whom,
      too, they were probably descended.
    
      Many different causes contributed to relax the discipline of the Roman
      armies. Its extreme severity was, perhaps, one of those causes. In the
      days of their grandeur, when no enemy appeared capable of opposing them,
      their heavy armour was laid aside as unnecessarily burdensome, their
      laborious exercises were neglected, as unnecessarily toilsome. Under the
      Roman emperors, besides, the standing armies of Rome, those particularly
      which guarded the German and Pannonian frontiers, became dangerous to
      their masters, against whom they used frequently to set up their own
      generals. In order to render them less formidable, according to some
      authors, Dioclesian, according to others, Constantine, first withdrew them
      from the frontier, where they had always before been encamped in great
      bodies, generally of two or three legions each, and dispersed them in
      small bodies through the different provincial towns, from whence they were
      scarce ever removed, but when it became necessary to repel an invasion.
      Small bodies of soldiers, quartered in trading and manufacturing towns,
      and seldom removed from those quarters, became themselves trades men,
      artificers, and manufacturers. The civil came to predominate over the
      military character; and the standing armies of Rome gradually degenerated
      into a corrupt, neglected, and undisciplined militia, incapable of
      resisting the attack of the German and Scythian militias, which soon
      afterwards invaded the western empire. It was only by hiring the militia
      of some of those nations to oppose to that of others, that the emperors
      were for some time able to defend themselves. The fall of the western
      empire is the third great revolution in the affairs of mankind, of which
      ancient history has preserved any distinct or circumstantial account. It
      was brought about by the irresistible superiority which the militia of a
      barbarous has over that of a civilized nation; which the militia of a
      nation of shepherds has over that of a nation of husbandmen, artificers,
      and manufacturers. The victories which have been gained by militias have
      generally been, not over standing armies, but over other militias, in
      exercise and discipline inferior to themselves. Such were the victories
      which the Greek militia gained over that of the Persian empire; and such,
      too, were those which, in later times, the Swiss militia gained over that
      of the Austrians and Burgundians.
    
      The military force of the German and Scythian nations, who established
      themselves upon ruins of the western empire, continued for some time to be
      of the same kind in their new settlements, as it had been in their
      original country. It was a militia of shepherds and husbandmen, which, in
      time of war, took the field under the command of the same chieftains whom
      it was accustomed to obey in peace. It was, therefore, tolerably well
      exercised, and tolerably well disciplined. As arts and industry advanced,
      however, the authority of the chieftains gradually decayed, and the great
      body of the people had less time to spare for military exercises. Both the
      discipline and the exercise of the feudal militia, therefore, went
      gradually to ruin, and standing armies were gradually introduced to supply
      the place of it. When the expedient of a standing army, besides, had once
      been adopted by one civilized nation, it became necessary that all its
      neighbours should follow the example. They soon found that their safety
      depended upon their doing so, and that their own militia was altogether
      incapable of resisting the attack of such an army.
    
      The soldiers of a standing army, though they may never have seen an enemy,
      yet have frequently appeared to possess all the courage of veteran troops,
      and, the very moment that they took the field, to have been fit to face
      the hardiest and most experienced veterans. In 1756, when the Russian army
      marched into Poland, the valour of the Russian soldiers did not appear
      inferior to that of the Prussians, at that time supposed to be the
      hardiest and most experienced veterans in Europe. The Russian empire,
      however, had enjoyed a profound peace for near twenty years before, and
      could at that time have very few soldiers who had ever seen an enemy. When
      the Spanish war broke out in 1739, England had enjoyed a profound peace
      for about eight-and-twenty years. The valour of her soldiers, however, far
      from being corrupted by that long peace, was never more distinguished than
      in the attempt upon Carthagena, the first unfortunate exploit of that
      unfortunate war. In a long peace, the generals, perhaps, may sometimes
      forget their skill; but where a well regulated standing army has been kept
      up, the soldiers seem never to forget their valour.
    
      When a civilized nation depends for its defence upon a militia, it is at
      all times exposed to be conquered by any barbarous nation which happens to
      be in its neighbourhood. The frequent conquests of all the civilized
      countries in Asia by the Tartars, sufficiently demonstrates the natural
      superiority which the militia of a barbarous has over that of a civilized
      nation. A well regulated standing army is superior to every militia. Such
      an army, as it can best be maintained by an opulent and civilized nation,
      so it can alone defend such a nation against the invasion of a poor and
      barbarous neighbour. It is only by means of a standing army, therefore,
      that the civilization of any country can be perpetuated, or even
      preserved, for any considerable time.
    
      As it is only by means of a well regulated standing army, that a civilized
      country can be defended, so it is only by means of it that a barbarous
      country can be suddenly and tolerably civilized. A standing army
      establishes, with an irresistible force, the law of the sovereign through
      the remotest provinces of the empire, and maintains some degree of regular
      government in countries which could not otherwise admit of any. Whoever
      examines with attention, the improvements which Peter the Great introduced
      into the Russian empire, will find that they almost all resolve themselves
      into the establishment of a well regulated standing army. It is the
      instrument which executes and maintains all his other regulations. That
      degree of order and internal peace, which that empire has ever since
      enjoyed, is altogether owing to the influence of that army.
    
      Men of republican principles have been jealous of a standing army, as
      dangerous to liberty. It certainly is so, wherever the interest of the
      general, and that of the principal officers, are not necessarily connected
      with the support of the constitution of the state. The standing army of
      Caesar destroyed the Roman republic. The standing army of Cromwell turned
      the long parliament out of doors. But where the sovereign is himself the
      general, and the principal nobility and gentry of the country the chief
      officers of the army; where the military force is placed under the command
      of those who have the greatest interest in the support of the civil
      authority, because they have themselves the greatest share of that
      authority, a standing army can never be dangerous to liberty. On the
      contrary, it may, in some cases, be favourable to liberty. The security
      which it gives to the sovereign renders unnecessary that troublesome
      jealousy, which, in some modern republics, seems to watch over the
      minutest actions, and to be at all times ready to disturb the peace of
      every citizen. Where the security of the magistrate, though supported by
      the principal people of the country, is endangered by every popular
      discontent; where a small tumult is capable of bringing about in a few
      hours a great revolution, the whole authority of government must be
      employed to suppress and punish every murmur and complaint against it. To
      a sovereign, on the contrary, who feels himself supported, not only by the
      natural aristocracy of the country, but by a well regulated standing army,
      the rudest, the most groundless, and the most licentious remonstrances,
      can give little disturbance. He can safely pardon or neglect them, and his
      consciousness of his own superiority naturally disposes him to do so. That
      degree of liberty which approaches to licentiousness, can be tolerated
      only in countries where the sovereign is secured by a well regulated
      standing army. It is in such countries only, that the public safety does
      not require that the sovereign should be trusted with any discretionary
      power, for suppressing even the impertinent wantonness of this licentious
      liberty.
    
      The first duty of the sovereign, therefore, that of defending the society
      from the violence and injustice of other independent societies, grows
      gradually more and more expensive, as the society advances in
      civilization. The military force of the society, which originally cost the
      sovereign no expense, either in time of peace, or in time of war, must, in
      the progress of improvement, first be maintained by him in time of war,
      and afterwards even in time of peace.
    
      The great change introduced into the art of war by the invention of
      fire-arms, has enhanced still further both the expense of exercising and
      disciplining any particular number of soldiers in time of peace, and that
      of employing them in time of war. Both their arms and their ammunition are
      become more expensive. A musket is a more expensive machine than a javelin
      or a bow and arrows; a cannon or a mortar, than a balista or a catapulta.
      The powder which is spent in a modern review is lost irrecoverably, and
      occasions a very considerable expense. The javelins and arrows which were
      thrown or shot in an ancient one, could easily be picked up again, and
      were, besides, of very little value. The cannon and the mortar are not
      only much dearer, but much heavier machines than the balista or catapulta;
      and require a greater expense, not only to prepare them for the field, but
      to carry them to it. As the superiority of the modern artillery, too, over
      that of the ancients, is very great; it has become much more difficult,
      and consequently much more expensive, to fortify a town, so as to resist,
      even for a few weeks, the attack of that superior artillery. In modern
      times, many different causes contribute to render the defence of the
      society more expensive. The unavoidable effects of the natural progress of
      improvement have, in this respect, been a good deal enhanced by a great
      revolution in the art of war, to which a mere accident, the invention of
      gunpowder, seems to have given occasion.
    
      In modern war, the great expense of firearms gives an evident advantage to
      the nation which can best afford that expense; and, consequently, to an
      opulent and civilized, over a poor and barbarous nation. In ancient times,
      the opulent and civilized found it difficult to defend themselves against
      the poor and barbarous nations. In modern times, the poor and barbarous
      find it difficult to defend themselves against the opulent and civilized.
      The invention of fire-arms, an invention which at first sight appears to
      be so pernicious, is certainly favourable, both to the permanency and to
      the extension of civilization.
    


    
      PART II. Of the Expense of Justice
    
      The second duty of the sovereign, that of protecting, as far as possible,
      every member of the society from the injustice or oppression of every
      other member of it, or the duty of establishing an exact administration of
      justice, requires two very different degrees of expense in the different
      periods of society.
    
      Among nations of hunters, as there is scarce any property, or at least
      none that exceeds the value of two or three days labour; so there is
      seldom any established magistrate, or any regular administration of
      justice. Men who have no property, can injure one another only in their
      persons or reputations. But when one man kills, wounds, beats, or defames
      another, though he to whom the injury is done suffers, he who does it
      receives no benefit. It is otherwise with the injuries to property. The
      benefit of the person who does the injury is often equal to the loss of
      him who suffers it. Envy, malice, or resentment, are the only passions
      which can prompt one man to injure another in his person or reputation.
      But the greater part of men are not very frequently under the influence of
      those passions; and the very worst men are so only occasionally. As their
      gratification, too, how agreeable soever it may be to certain characters,
      is not attended with any real or permanent advantage, it is, in the
      greater part of men, commonly restrained by prudential considerations. Men
      may live together in society with some tolerable degree of security,
      though there is no civil magistrate to protect them from the injustice of
      those passions. But avarice and ambition in the rich, in the poor the
      hatred of labour and the love of present ease and enjoyment, are the
      passions which prompt to invade property; passions much more steady in
      their operation, and much more universal in their influence. Wherever
      there is a great property, there is great inequality. For one very rich
      man, there must be at least five hundred poor, and the affluence of the
      few supposes the indigence of the many. The affluence of the rich excites
      the indignation of the poor, who are often both driven by want, and
      prompted by envy to invade his possessions. It is only under the shelter
      of the civil magistrate, that the owner of that valuable property, which
      is acquired by the labour of many years, or perhaps of many successive
      generations, can sleep a single night in security. He is at all times
      surrounded by unknown enemies, whom, though he never provoked, he can
      never appease, and from whose injustice he can be protected only by the
      powerful arm of the civil magistrate, continually held up to chastise it.
      The acquisition of valuable and extensive property, therefore, necessarily
      requires the establishment of civil government. Where there is no
      property, or at least none that exceeds the value of two or three days
      labour, civil government is not so necessary.
    
      Civil government supposes a certain subordination. But as the necessity of
      civil government gradually grows up with the acquisition of valuable
      property; so the principal causes, which naturally introduce
      subordination, gradually grow up with the growth of that valuable
      property.
    
      The causes or circumstances which naturally introduce subordination, or
      which naturally and antecedent to any civil institution, give some men
      some superiority over the greater part of their brethren, seem to be four
      in number.
    
      The first of those causes or circumstances, is the superiority of personal
      qualifications, of strength, beauty, and agility of body; of wisdom and
      virtue; of prudence, justice, fortitude, and moderation of mind. The
      qualifications of the body, unless supported by those of the mind, can
      give little authority in any period of society. He is a very strong man,
      who, by mere strength of body, can force two weak ones to obey him. The
      qualifications of the mind can alone give very great authority. They are
      however, invisible qualities; always disputable, and generally disputed.
      No society, whether barbarous or civilized, has ever found it convenient
      to settle the rules of precedency of rank and subordination, according to
      those invisible qualities; but according to something that is more plain
      and palpable.
    
      The second of those causes or circumstances, is the superiority of age. An
      old man, provided his age is not so far advanced as to give suspicion of
      dotage, is everywhere more respected than a young man of equal rank,
      fortune, and abilities. Among nations of hunters, such as the native
      tribes of North America, age is the sole foundation of rank and
      precedency. Among them, father is the appellation of a superior; brother,
      of an equal; and son, of an inferior. In the most opulent and civilized
      nations, age regulates rank among those who are in every other respect
      equal; and among whom, therefore, there is nothing else to regulate it.
      Among brothers and among sisters, the eldest always takes place; and in
      the succession of the paternal estate, every thing which cannot be
      divided, but must go entire to one person, such as a title of honour, is
      in most cases given to the eldest. Age is a plain and palpable quality,
      which admits of no dispute.
    
      The third of those causes or circumstances, is the superiority of fortune.
      The authority of riches, however, though great in every age of society,
      is, perhaps, greatest in the rudest ages of society, which admits of any
      considerable inequality of fortune. A Tartar chief, the increase of whose
      flocks and herds is sufficient to maintain a thousand men, cannot well
      employ that increase in any other way than in maintaining a thousand men.
      The rude state of his society does not afford him any manufactured produce
      any trinkets or baubles of any kind, for which he can exchange that part
      of his rude produce which is over and above his own consumption. The
      thousand men whom he thus maintains, depending entirely upon him for their
      subsistence, must both obey his orders in war, and submit to his
      jurisdiction in peace. He is necessarily both their general and their
      judge, and his chieftainship is the necessary effect of the superiority of
      his fortune. In an opulent and civilized society, a man may possess a much
      greater fortune, and yet not be able to command a dozen of people. Though
      the produce of his estate may be sufficient to maintain, and may, perhaps,
      actually maintain, more than a thousand people, yet, as those people pay
      for every thing which they get from him, as he gives scarce any thing to
      any body but in exchange for an equivalent, there is scarce anybody who
      considers himself as entirely dependent upon him, and his authority
      extends only over a few menial servants. The authority of fortune,
      however, is very great, even in an opulent and civilized society. That it
      is much greater than that either of age or of personal qualities, has been
      the constant complaint of every period of society which admitted of any
      considerable inequality of fortune. The first period of society, that of
      hunters, admits of no such inequality. Universal poverty establishes their
      universal equality; and the superiority, either of age or of personal
      qualities, are the feeble, but the sole foundations of authority and
      subordination. There is, therefore, little or no authority or
      subordination in this period of society. The second period of society,
      that of shepherds, admits of very great inequalities of fortune, and there
      is no period in which the superiority of fortune gives so great authority
      to those who possess it. There is no period, accordingly, in which
      authority and subordination are more perfectly established. The authority
      of an Arabian scherif is very great; that of a Tartar khan altogether
      despotical.
    
      The fourth of those causes or circumstances, is the superiority of birth.
      Superiority of birth supposes an ancient superiority of fortune in the
      family of the person who claims it. All families are equally ancient; and
      the ancestors of the prince, though they may be better known, cannot well
      be more numerous than those of the beggar. Antiquity of family means
      everywhere the antiquity either of wealth, or of that greatness which is
      commonly either founded upon wealth, or accompanied with it. Upstart
      greatness is everywhere less respected than ancient greatness. The hatred
      of usurpers, the love of the family of an ancient monarch, are in a great
      measure founded upon the contempt which men naturally have for the former,
      and upon their veneration for the latter. As a military officer submits,
      without reluctance, to the authority of a superior by whom he has always
      been commanded, but cannot bear that his inferior should be set over his
      head; so men easily submit to a family to whom they and their ancestors
      have always submitted; but are fired with indignation when another family,
      in whom they had never acknowledged any such superiority, assumes a
      dominion over them.
    
      The distinction of birth, being subsequent to the inequality of fortune,
      can have no place in nations of hunters, among whom all men, being equal
      in fortune, must likewise be very nearly equal in birth. The son of a wise
      and brave man may, indeed, even among them, be somewhat more respected
      than a man of equal merit, who has the misfortune to be the son of a fool
      or a coward. The difference, however will not be very great; and there
      never was, I believe, a great family in the world, whose illustration was
      entirely derived from the inheritance of wisdom and virtue.
    
      The distinction of birth not only may, but always does, take place among
      nations of shepherds. Such nations are always strangers to every sort of
      luxury, and great wealth can scarce ever be dissipated among them by
      improvident profusion. There are no nations, accordingly, who abound more
      in families revered and honoured on account of their descent from a long
      race of great and illustrious ancestors; because there are no nations
      among whom wealth is likely to continue longer in the same families.
    
      Birth and fortune are evidently the two circumstances which principally
      set one man above another. They are the two great sources of personal
      distinction, and are, therefore, the principal causes which naturally
      establish authority and subordination among men. Among nations of
      shepherds, both those causes operate with their full force. The great
      shepherd or herdsman, respected on account of his great wealth, and of the
      great number of those who depend upon him for subsistence, and revered on
      account of the nobleness of his birth, and of the immemorial antiquity or
      his illustrious family, has a natural authority over all the inferior
      shepherds or herdsmen of his horde or clan. He can command the united
      force of a greater number of people than any of them. His military power
      is greater than that of any of them. In time of war, they are all of them
      naturally disposed to muster themselves under his banner, rather than
      under that of any other person; and his birth and fortune thus naturally
      procure to him some sort of executive power. By commanding, too, the
      united force of a greater number of people than any of them, he is best
      able to compel any one of them, who may have injured another, to
      compensate the wrong. He is the person, therefore, to whom all those who
      are too weak to defend themselves naturally look up for protection. It is
      to him that they naturally complain of the injuries which they imagine
      have been done to them; and his interposition, in such cases, is more
      easily submitted to, even by the person complained of, than that of any
      other person would be. His birth and fortune thus naturally procure him
      some sort of judicial authority.
    
      It is in the age of shepherds, in the second period of society, that the
      inequality of fortune first begins to take place, and introduces among men
      a degree of authority and subordination, which could not possibly exist
      before. It thereby introduces some degree of that civil government which
      is indispensably necessary for its own preservation; and it seems to do
      this naturally, and even independent of the consideration of that
      necessity. The consideration of that necessity comes, no doubt,
      afterwards, to contribute very much to maintain and secure that authority
      and subordination. The rich, in particular, are necessarily interested to
      support that order of things, which can alone secure them in the
      possession of their own advantages. Men of inferior wealth combine to
      defend those of superior wealth in the possession of their property, in
      order that men of superior wealth may combine to defend them in the
      possession of theirs. All the inferior shepherds and herdsmen feel, that
      the security of their own herds and flocks depends upon the security of
      those of the great shepherd or herdsman; that the maintenance of their
      lesser authority depends upon that of his greater authority; and that upon
      their subordination to him depends his power of keeping their inferiors in
      subordination to them. They constitute a sort of little nobility, who feel
      themselves interested to defend the property, and to support the
      authority, of their own little sovereign, in order that he may be able to
      defend their property, and to support their authority. Civil government,
      so far as it is instituted for the security of property, is, in reality,
      instituted for the defence of the rich against the poor, or of those who
      have some property against those who have none at all.
    
      The judicial authority of such a sovereign, however, far from being a
      cause of expense, was, for a long time, a source of revenue to him. The
      persons who applied to him for justice were always willing to pay for it,
      and a present never failed to accompany a petition. After the authority of
      the sovereign, too, was thoroughly established, the person found guilty,
      over and above the satisfaction which he was obliged to make to the party,
      was like-wise forced to pay an amercement to the sovereign. He had given
      trouble, he had disturbed, he had broke the peace of his lord the king,
      and for those offences an amercement was thought due. In the Tartar
      governments of Asia, in the governments of Europe which were founded by
      the German and Scythian nations who overturned the Roman empire, the
      administration of justice was a considerable source of revenue, both to
      the sovereign, and to all the lesser chiefs or lords who exercised under
      him any particular jurisdiction, either over some particular tribe or
      clan, or over some particular territory or district. Originally, both the
      sovereign and the inferior chiefs used to exercise this jurisdiction in
      their own persons. Afterwards, they universally found it convenient to
      delegate it to some substitute, bailiff, or judge. This substitute,
      however, was still obliged to account to his principal or constituent for
      the profits of the jurisdiction. Whoever reads the instructions (They are
      to be found in Tyrol’s History of England) which were given to the judges
      of the circuit in the time of Henry II will see clearly that those judges
      were a sort of itinerant factors, sent round the country for the purpose
      of levying certain branches of the king’s revenue. In those days, the
      administration of justice not only afforded a certain revenue to the
      sovereign, but, to procure this revenue, seems to have been one of the
      principal advantages which he proposed to obtain by the administration of
      justice.
    
      This scheme of making the administration of justice subservient to the
      purposes of revenue, could scarce fail to be productive of several very
      gross abuses. The person who applied for justice with a large present in
      his hand, was likely to get something more than justice; while he who
      applied for it with a small one was likely to get something less. Justice,
      too, might frequently be delayed, in order that this present might be
      repeated. The amercement, besides, of the person complained of, might
      frequently suggest a very strong reason for finding him in the wrong, even
      when he had not really been so. That such abuses were far from being
      uncommon, the ancient history of every country in Europe bears witness.
    
      When the sovereign or chief exercises his judicial authority in his own
      person, how much soever he might abuse it, it must have been scarce
      possible to get any redress; because there could seldom be any body
      powerful enough to call him to account. When he exercised it by a bailiff,
      indeed, redress might sometimes be had. If it was for his own benefit
      only, that the bailiff had been guilty of an act of injustice, the
      sovereign himself might not always be unwilling to punish him, or to
      oblige him to repair the wrong. But if it was for the benefit of his
      sovereign; if it was in order to make court to the person who appointed
      him, and who might prefer him, that he had committed any act of
      oppression; redress would, upon most occasions, be as impossible as if the
      sovereign had committed it himself. In all barbarous governments,
      accordingly, in all those ancient governments of Europe in particular,
      which were founded upon the ruins of the Roman empire, the administration
      of justice appears for a long time to have been extremely corrupt; far
      from being quite equal and impartial, even under the best monarchs, and
      altogether profligate under the worst.
    
      Among nations of shepherds, where the sovereign or chief is only the
      greatest shepherd or herdsman of the horde or clan, he is maintained in
      the same manner as any of his vassals or subjects, by the increase of his
      own herds or flocks. Among those nations of husbandmen, who are but just
      come out of the shepherd state, and who are not much advanced beyond that
      state, such as the Greek tribes appear to have been about the time of the
      Trojan war, and our German and Scythian ancestors, when they first settled
      upon the ruins of the western empire; the sovereign or chief is, in the
      same manner, only the greatest landlord of the country, and is maintained
      in the same manner as any other landlord, by a revenue derived from his
      own private estate, or from what, in modern Europe, was called the demesne
      of the crown. His subjects, upon ordinary occasions, contribute nothing to
      his support, except when, in order to protect them from the oppression of
      some of their fellow-subjects, they stand in need of his authority. The
      presents which they make him upon such occasions constitute the whole
      ordinary revenue, the whole of the emoluments which, except, perhaps, upon
      some very extraordinary emergencies, he derives from his dominion over
      them. When Agamemnon, in Homer, offers to Achilles, for his friendship,
      the sovereignty of seven Greek cities, the sole advantage which he
      mentions as likely to be derived from it was, that the people would honour
      him with presents. As long as such presents, as long as the emoluments of
      justice, or what may be called the fees of court, constituted, in this
      manner, the whole ordinary revenue which the sovereign derived from his
      sovereignty, it could not well be expected, it could not even decently be
      proposed, that he should give them up altogether. It might, and it
      frequently was proposed, that he should regulate and ascertain them. But
      after they had been so regulated and ascertained, how to hinder a person
      who was all-powerful from extending them beyond those regulations, was
      still very difficult, not to say impossible. During the continuance of
      this state of things, therefore, the corruption of justice, naturally
      resulting from the arbitrary and uncertain nature of those presents,
      scarce admitted of any effectual remedy.
    
      But when, from different causes, chiefly from the continually increasing
      expense of defending the nation against the invasion of other nations, the
      private estate of the sovereign had become altogether insufficient for
      defraying the expense of the sovereignty; and when it had become necessary
      that the people should, for their own security, contribute towards this
      expense by taxes of different kinds; it seems to have been very commonly
      stipulated, that no present for the administration of justice should,
      under any pretence, be accepted either by the sovereign, or by his
      bailiffs and substitutes, the judges. Those presents, it seems to have
      been supposed, could more easily be abolished altogether, than effectually
      regulated and ascertained. Fixed salaries were appointed to the judges,
      which were supposed to compensate to them the loss of whatever might have
      been their share of the ancient emoluments of justice; as the taxes more
      than compensated to the sovereign the loss of his. Justice was then said
      to be administered gratis.
    
      Justice, however, never was in reality administered gratis in any country.
      Lawyers and attorneys, at least, must always be paid by the parties; and
      if they were not, they would perform their duty still worse than they
      actually perform it. The fees annually paid to lawyers and attorneys,
      amount, in every court, to a much greater sum than the salaries of the
      judges. The circumstance of those salaries being paid by the crown, can
      nowhere much diminish the necessary expense of a law-suit. But it was not
      so much to diminish the expense, as to prevent the corruption of justice,
      that the judges were prohibited from receiving my present or fee from the
      parties.
    
      The office of judge is in itself so very honourable, that men are willing
      to accept of it, though accompanied with very small emoluments. The
      inferior office of justice of peace, though attended with a good deal of
      trouble, and in most cases with no emoluments at all, is an object of
      ambition to the greater part of our country gentlemen. The salaries of all
      the different judges, high and low, together with the whole expense of the
      administration and execution of justice, even where it is not managed with
      very good economy, makes, in any civilized country, but a very
      inconsiderable part of the whole expense of government.
    
      The whole expense of justice, too, might easily be defrayed by the fees of
      court; and, without exposing the administration of justice to any real
      hazard of corruption, the public revenue might thus be entirely discharged
      from a certain, though perhaps but a small incumbrance. It is difficult to
      regulate the fees of court effectually, where a person so powerful as the
      sovereign is to share in them and to derive any considerable part of his
      revenue from them. It is very easy, where the judge is the principal
      person who can reap any benefit from them. The law can very easily oblige
      the judge to respect the regulation though it might not always be able to
      make the sovereign respect it. Where the fees of court are precisely
      regulated and ascertained where they are paid all at once, at a certain
      period of every process, into the hands of a cashier or receiver, to be by
      him distributed in certain known proportions among the different judges
      after the process is decided and not till it is decided; there seems to be
      no more danger of corruption than when such fees are prohibited
      altogether. Those fees, without occasioning any considerable increase in
      the expense of a law-suit, might be rendered fully sufficient for
      defraying the whole expense of justice. But not being paid to the judges
      till the process was determined, they might be some incitement to the
      diligence of the court in examining and deciding it. In courts which
      consisted of a considerable number of judges, by proportioning the share
      of each judge to the number of hours and days which he had employed in
      examining the process, either in the court, or in a committee, by order of
      the court, those fees might give some encouragement to the diligence of
      each particular judge. Public services are never better performed, than
      when their reward comes only in consequence of their being performed, and
      is proportioned to the diligence employed in performing them. In the
      different parliaments of France, the fees of court (called epices and
      vacations) constitute the far greater part of the emoluments of the
      judges. After all deductions are made, the neat salary paid by the crown
      to a counsellor or judge in the parliament of Thoulouse, in rank and
      dignity the second parliament of the kingdom, amounts only to 150 livres,
      about £6:11s. sterling a-year. About seven years ago, that sum was in the
      same place the ordinary yearly wages of a common footman. The distribution
      of these epices, too, is according to the diligence of the judges. A
      diligent judge gains a comfortable, though moderate revenue, by his
      office; an idle one gets little more than his salary. Those parliaments
      are, perhaps, in many respects, not very convenient courts of justice; but
      they have never been accused; they seem never even to have been suspected
      of corruption.
    
      The fees of court seem originally to have been the principal support of
      the different courts of justice in England. Each court endeavoured to draw
      to itself as much business as it could, and was, upon that account,
      willing to take cognizance of many suits which were not originally
      intended to fall under its jurisdiction. The court of king’s bench,
      instituted for the trial of criminal causes only, took cognizance of civil
      suits; the plaintiff pretending that the defendant, in not doing him
      justice, had been guilty of some trespass or misdemeanour. The court of
      exchequer, instituted for the levying of the king’s revenue, and for
      enforcing the payment of such debts only as were due to the king, took
      cognizance of all other contract debts; the planitiff alleging that he
      could not pay the king, because the defendant would not pay him. In
      consequence of such fictions, it came, in many cases, to depend altogether
      upon the parties, before what court they would choose to have their cause
      tried, and each court endeavoured, by superior dispatch and impartiality,
      to draw to itself as many causes as it could. The present admirable
      constitution of the courts of justice in England was, perhaps, originally,
      in a great measure, formed by this emulation, which anciently took place
      between their respective judges: each judge endeavouring to give, in his
      own court, the speediest and most effectual remedy which the law would
      admit, for every sort of injustice. Originally, the courts of law gave
      damages only for breach of contract. The court of chancery, as a court of
      conscience, first took upon it to enforce the specific performance of
      agreements. When the breach of contract consisted in the non-payment of
      money, the damage sustained could be compensated in no other way than by
      ordering payment, which was equivalent to a specific performance of the
      agreement. In such cases, therefore, the remedy of the courts of law was
      sufficient. It was not so in others. When the tenant sued his lord for
      having unjustly outed him of his lease, the damages which he recovered
      were by no means equivalent to the possession of the land. Such causes,
      therefore, for some time, went all to the court of chancery, to the no
      small loss of the courts of law. It was to draw back such causes to
      themselves, that the courts of law are said to have invented the
      artificial and fictitious writ of ejectment, the most effectual remedy for
      an unjust outer or dispossession of land.
    
      A stamp-duty upon the law proceedings of each particular court, to be
      levied by that court, and applied towards the maintenance of the judges,
      and other officers belonging to it, might in the same manner, afford a
      revenue sufficient for defraying the expense of the administration of
      justice, without bringing any burden upon the general revenue of the
      society. The judges, indeed, might in this case, be under the temptation
      of multiplying unnecessarily the proceedings upon every cause, in order to
      increase, as much as possible, the produce of such a stamp-duty. It has
      been the custom in modern Europe to regulate, upon most occasions, the
      payment of the attorneys and clerks of court according to the number of
      pages which they had occasion to write; the court, however, requiring that
      each page should contain so many lines, and each line so many words. In
      order to increase their payment, the attorneys and clerks have contrived
      to multiply words beyond all necessity, to the corruption of the law
      language of, I believe, every court of justice in Europe. A like
      temptation might, perhaps, occasion a like corruption in the form of law
      proceedings.
    
      But whether the administration of justice be so contrived as to defray its
      own expense, or whether the judges be maintained by fixed salaries paid to
      them from some other fund, it does not seen necessary that the person or
      persons entrusted with the executive power should be charged with the
      management of that fund, or with the payment of those salaries. That fund
      might arise from the rent of landed estates, the management of each estate
      being entrusted to the particular court which was to be maintained by it.
      That fund might arise even from the interest of a sum of money, the
      lending out of which might, in the same manner, be entrusted to the court
      which was to be maintained by it. A part, though indeed but a small part
      of the salary of the judges of the court of session in Scotland, arises
      from the interest of a sum of money. The necessary instability of such a
      fund seems, however, to render it an improper one for the maintenance of
      an institution which ought to last for ever.
    
      The separation of the judicial from the executive power, seems originally
      to have arisen from the increasing business of the society, in consequence
      of its increasing improvement. The administration of justice became so
      laborious and so complicated a duty, as to require the undivided attention
      of the person to whom it was entrusted. The person entrusted with the
      executive power, not having leisure to attend to the decision of private
      causes himself, a deputy was appointed to decide them in his stead. In the
      progress of the Roman greatness, the consul was too much occupied with the
      political affairs of the state, to attend to the administration of
      justice. A praetor, therefore, was appointed to administer it in his
      stead. In the progress of the European monarchies, which were founded upon
      the ruins of the Roman empire, the sovereigns and the great lords came
      universally to consider the administration of justice as an office both
      too laborious and too ignoble for them to execute in their own persons.
      They universally, therefore, discharged themselves of it, by appointing a
      deputy, bailiff or judge.
    
      When the judicial is united to the executive power, it is scarce possible
      that justice should not frequently be sacrificed to what is vulgarly
      called politics. The persons entrusted with the great interests of the
      state may even without any corrupt views, sometimes imagine it necessary
      to sacrifice to those interests the rights of a private man. But upon the
      impartial administration of justice depends the liberty of every
      individual, the sense which he has of his own security. In order to make
      every individual feel himself perfectly secure in the possession of every
      right which belongs to him, it is not only necessary that the judicial
      should be separated from the executive power, but that it should be
      rendered as much as possible independent of that power. The judge should
      not be liable to be removed from his office according to the caprice of
      that power. The regular payment of his salary should not depend upon the
      good will, or even upon the good economy of that power.
    


    
      PART III. Of the Expense of public Works and public Institutions.
    
      The third and last duty of the sovereign or commonwealth, is that of
      erecting and maintaining those public institutions and those public works,
      which though they may be in the highest degree advantageous to a great
      society, are, however, of such a nature, that the profit could never repay
      the expense to any individual, or small number of individuals; and which
      it, therefore, cannot be expected that any individual, or small number of
      individuals, should erect or maintain. The performance of this duty
      requires, too, very different degrees of expense in the different periods
      of society.
    
      After the public institutions and public works necessary for the defence
      of the society, and for the administration of justice, both of which have
      already been mentioned, the other works and institutions of this kind are
      chiefly for facilitating the commerce of the society, and those for
      promoting the instruction of the people. The institutions for instruction
      are of two kinds: those for the education of the youth, and those for the
      instruction of people of all ages. The consideration of the manner in
      which the expense of those different sorts of public works and
      institutions may be most properly defrayed will divide this third part of
      the present chapter into three different articles.
    
      ARTICLE I.—Of the public Works and Institutions for facilitating the
      Commerce of the Society.
    
      And, first, of those which are necessary for facilitating Commerce in
      general.
    
      That the erection and maintenance of the public works which facilitate the
      commerce of any country, such as good roads, bridges, navigable canals,
      harbours, etc. must require very different degrees of expense in the
      different periods of society, is evident without any proof. The expense of
      making and maintaining the public roads of any country must evidently
      increase with the annual produce of the land and labour of that country,
      or with the quantity and weight of the goods which it becomes necessary to
      fetch and carry upon those roads. The strength of a bridge must be suited
      to the number and weight of the carriages which are likely to pass over
      it. The depth and the supply of water for a navigable canal must be
      proportioned to the number and tonnage of the lighters which are likely to
      carry goods upon it; the extent of a harbour, to the number of the
      shipping which are likely to take shelter in it.
    
      It does not seem necessary that the expense of those public works should
      be defrayed from that public revenue, as it is commonly called, of which
      the collection and application are in most countries, assigned to the
      executive power. The greater part of such public works may easily be so
      managed, as to afford a particular revenue, sufficient for defraying their
      own expense without bringing any burden upon the general revenue of the
      society.
    
      A highway, a bridge, a navigable canal, for example, may, in most cases,
      be both made add maintained by a small toll upon the carriages which make
      use of them; a harbour, by a moderate port-duty upon the tonnage of the
      shipping which load or unload in it. The coinage, another institution for
      facilitating commerce, in many countries, not only defrays its own
      expense, but affords a small revenue or a seignorage to the sovereign. The
      post-office, another institution for the same purpose, over and above
      defraying its own expense, affords, in almost all countries, a very
      considerable revenue to the sovereign.
    
      When the carriages which pass over a highway or a bridge, and the lighters
      which sail upon a navigable canal, pay toll in proportion to their weight
      or their tonnage, they pay for the maintenance of those public works
      exactly in proportion to the wear and tear which they occasion of them. It
      seems scarce possible to invent a more equitable way of maintaining such
      works. This tax or toll, too, though it is advanced by the carrier, is
      finally paid by the consumer, to whom it must always be charged in the
      price of the goods. As the expense of carriage, however, is very much
      reduced by means of such public works, the goods, notwithstanding the
      toll, come cheaper to the consumer than they could otherwise have done,
      their price not being so much raised by the toll, as it is lowered by the
      cheapness of the carriage. The person who finally pays this tax,
      therefore, gains by the application more than he loses by the payment of
      it. His payment is exactly in proportion to his gain. It is, in reality,
      no more than a part of that gain which he is obliged to give up, in order
      to get the rest. It seems impossible to imagine a more equitable method of
      raising a tax. When the toll upon carriages of luxury, upon coaches,
      post-chaises, etc. is made somewhat higher in proportion to their weight,
      than upon carriages of necessary use, such as carts, waggons, etc. the
      indolence and vanity of the rich is made to contribute, in a very easy
      manner, to the relief of the poor, by rendering cheaper the transportation
      of heavy goods to all the different parts of the country.
    
      When high-roads, bridges, canals, etc. are in this manner made and
      supported by the commerce which is carried on by means of them, they can
      be made only where that commerce requires them, and, consequently, where
      it is proper to make them. Their expense, too, their grandeur and
      magnificence, must be suited to what that commerce can afford to pay. They
      must be made, consequently, as it is proper to make them. A magnificent
      high-road cannot be made through a desert country, where there is little
      or no commerce, or merely because it happens to lead to the country villa
      of the intendant of the province, or to that of some great lord, to whom
      the intendant finds it convenient to make his court. A great bridge cannot
      be thrown over a river at a place where nobody passes, or merely to
      embellish the view from the windows of a neighbouring palace; things which
      sometimes happen in countries, where works of this kind are carried on by
      any other revenue than that which they themselves are capable of
      affording.
    
      In several different parts of Europe, the toll or lock-duty upon a canal
      is the property of private persons, whose private interest obliges them to
      keep up the canal. If it is not kept in tolerable order, the navigation
      necessarily ceases altogether, and, along with it, the whole profit which
      they can make by the tolls. If those tolls were put under the management
      of commissioners, who had themselves no interest in them, they might be
      less attentive to the maintenance of the works which produced them. The
      canal of Languedoc cost the king of France and the province upwards of
      thirteen millions of livres, which (at twenty-eight livres the mark of
      silver, the value of French money in the end of the last century) amounted
      to upwards of nine hundred thousand pounds sterling. When that great work
      was finished, the most likely method, it was found, of keeping it in
      constant repair, was to make a present of the tolls to Riquet, the
      engineer who planned and conducted the work. Those tolls constitute, at
      present, a very large estate to the different branches of the family of
      that gentleman, who have, therefore, a great interest to keep the work in
      constant repair. But had those tolls been put under the management of
      commissioners, who had no such interest, they might perhaps, have been
      dissipated in ornamental and unnecessary expenses, while the most
      essential parts of the works were allowed to go to ruin.
    
      The tolls for the maintenance of a highroad cannot, with any safety, be
      made the property of private persons. A high-road, though entirely
      neglected, does not become altogether impassable, though a canal does. The
      proprietors of the tolls upon a high-road, therefore, might neglect
      altogether the repair of the road, and yet continue to levy very nearly
      the same tolls. It is proper, therefore, that the tolls for the
      maintenance of such a work should be put under the management of
      commissioners or trustees.
    
      In Great Britain, the abuses which the trustees have committed in the
      management of those tolls, have, in many cases, been very justly
      complained of. At many turnpikes, it has been said, the money levied is
      more than double of what is necessary for executing, in the completest
      manner, the work, which is often executed in a very slovenly manner, and
      sometimes not executed at all. The system of repairing the high-roads by
      tolls of this kind, it must be observed, is not of very long standing. We
      should not wonder, therefore, if it has not yet been brought to that
      degree of perfection of which it seems capable. If mean and improper
      persons are frequently appointed trustees; and if proper courts of
      inspection and account have not yet been established for controlling their
      conduct, and for reducing the tolls to what is barely sufficient for
      executing the work to be done by them; the recency of the institution both
      accounts and apologizes for those defects, of which, by the wisdom of
      parliament, the greater part may, in due time, be gradually remedied.
    
      The money levied at the different turnpikes in Great Britain, is supposed
      to exceed so much what is necessary for repairing the roads, that the
      savings which, with proper economy, might be made from it, have been
      considered, even by some ministers, as a very great resource, which might,
      at some time or another, be applied to the exigencies of the state.
      Government, it has been said, by taking the management of the turnpikes
      into its own hands, and by employing the soldiers, who would work for a
      very small addition to their pay, could keep the roads in good order, at a
      much less expense than it can be done by trustees, who have no other
      workmen to employ, but such as derive their whole subsistence from their
      wages. A great revenue, half a million, perhaps {Since publishing the two
      first editions of this book, I have got good reasons to believe that all
      the turnpike tolls levied in Great Britain do not produce a neat revenue
      that amounts to half a million; a sum which, under the management of
      government, would not be sufficient to keep in repair five of the
      principal roads in the kingdom}, it has been pretended, might in this
      manner be gained, without laying any new burden upon the people; and the
      turnpike roads might be made to contribute to the general expense of the
      state, in the same manner as the post-office does at present.
    
      That a considerable revenue might be gained in this manner, I have no
      doubt, though probably not near so much as the projectors of this plan
      have supposed. The plan itself, however, seems liable to several very
      important objections.
    
      First, If the tolls which are levied at the turnpikes should ever be
      considered as one of the resources for supplying the exigencies of the
      state, they would certainly be augmented as those exigencies were supposed
      to require. According to the policy of Great Britain, therefore, they
      would probably he augmented very fast. The facility with which a great
      revenue could be drawn from them, would probably encourage administration
      to recur very frequently te this resource. Though it may, perhaps, be more
      than doubtful whether half a million could by any economy be saved out of
      the present tolls, it can scarcely be doubted, but that a million might be
      saved out of them, if they were doubled; and perhaps two millions, if they
      were tripled {I have now good reason to believe that all these conjectural
      sums are by much too large.}. This great revenue, too, might be levied
      without the appointment of a single new officer to collect and receive it.
      But the turnpike tolls, being continually augmented in this manner,
      instead of facilitating the inland commerce of the country, as at present,
      would soon become a very great incumbrance upon it. The expense of
      transporting all heavy goods from one part of the country to another,
      would soon be so much increased, the market for all such goods,
      consequently, would soon be so much narrowed, that their production would
      be in a great measure discouraged, and the most important branches of the
      domestic industry of the country annihilated altogether.
    
      Secondly, A tax upon carriages, in proportion to their weight, though a
      very equal tax when applied to the sole purpose of repairing the roads, is
      a very unequal one when applied to any other purpose, or to supply the
      common exigencies of the state. When it is applied to the sole purpose
      above mentioned, each carriage is supposed to pay exactly for the wear and
      tear which that carriage occasions of the roads. But when it is applied to
      any other purpose, each carriage is supposed to pay for more than that
      wear and tear, and contributes to the supply of some other exigency of the
      state. But as the turnpike toll raises the price of goods in proportion to
      their weight and not to their value, it is chiefly paid by the consumers
      of coarse and bulky, not by those of precious and light commodities.
      Whatever exigency of the state, therefore, this tax might be intended to
      supply, that exigency would be chiefly supplied at the expense of the
      poor, not of the rich; at the expense of those who are least able to
      supply it, not of those who are most able.
    
      Thirdly, If government should at any time neglect the reparation of the
      high-roads, it would be still more difficult, than it is at present, to
      compel the proper application of any part of the turnpike tolls. A large
      revenue might thus be levied upon the people, without any part of it being
      applied to the only purpose to which a revenue levied in this manner ought
      ever to be applied. If the meanness and poverty of the trustees of
      turnpike roads render it sometimes difficult, at present, to oblige them
      to repair their wrong; their wealth and greatness would render it ten
      times more so in the case which is here supposed.
    
      In France, the funds destined for the reparation of the high-roads are
      under the immediate direction of the executive power. Those funds consist,
      partly in a certain number of days labour, which the country people are in
      most parts of Europe obliged to give to the reparation of the highways;
      and partly in such a portion of the general revenue of the state as the
      king chooses to spare from his other expenses.
    
      By the ancient law of France, as well as by that of most other parts of
      Europe, the labour of the country people was under the direction of a
      local or provincial magistracy, which had no immediate dependency upon the
      king’s council. But, by the present practice, both the labour of the
      country people, and whatever other fund the king may choose to assign for
      the reparation of the high-roads in any particular province or generality,
      are entirely under the management of the intendant; an officer who is
      appointed and removed by the king’s council who receives his orders from
      it, and is in constant correspondence with it. In the progress of
      despotism, the authority of the executive power gradually absorbs that of
      every other power in the state, and assumes to itself the management of
      every branch of revenue which is destined for any public purpose. In
      France, however, the great post-roads, the roads which make the
      communication between the principal towns of the kingdom, are in general
      kept in good order; and, in some provinces, are even a good deal superior
      to the greater part of the turnpike roads of England. But what we call the
      cross roads, that is, the far greater part of the roads in the country,
      are entirely neglected, and are in many places absolutely impassable for
      any heavy carriage. In some places it is even dangerous to travel on
      horseback, and mules are the only conveyance which can safely be trusted.
      The proud minister of an ostentatious court, may frequently take pleasure
      in executing a work of splendour and magnificence, such as a great
      highway, which is frequently seen by the principal nobility, whose
      applauses not only flatter his vanity, but even contribute to support his
      interest at court. But to execute a great number of little works, in which
      nothing that can be done can make any great appearance, or excite the
      smallest degree of admiration in any traveller, and which, in short, have
      nothing to recommend them but their extreme utility, is a business which
      appears, in every respect, too mean and paltry to merit the attention of
      so great a magistrate. Under such an administration therefore, such works
      are almost always entirely neglected.
    
      In China, and in several other governments of Asia, the executive power
      charges itself both with the reparation of the high-roads, and with the
      maintenance of the navigable canals. In the instructions which are given
      to the governor of each province, those objects, it is said, are
      constantly recommended to him, and the judgment which the court forms of
      his conduct is very much regulated by the attention which he appears to
      have paid to this part of his instructions. This branch of public police,
      accordingly, is said to be very much attended to in all those countries,
      but particularly in China, where the high-roads, and still more the
      navigable canals, it is pretended, exceed very much every thing of the
      same kind which is known in Europe. The accounts of those works, however,
      which have been transmitted to Europe, have generally been drawn up by
      weak and wondering travellers; frequently by stupid and lying
      missionaries. If they had been examined by more intelligent eyes, and if
      the accounts of them had been reported by more faithful witnesses, they
      would not, perhaps, appear to be so wonderful. The account which Bernier
      gives of some works of this kind in Indostan, falls very short of what had
      been reported of them by other travellers, more disposed to the marvellous
      than he was. It may too, perhaps, be in those countries, as it is in
      France, where the great roads, the great communications, which are likely
      to be the subjects of conversation at the court and in the capital, are
      attended to, and all the rest neglected. In China, besides, in Indostan,
      and in several other governments of Asia, the revenue of the sovereign
      arises almost altogether from a land tax or land rent, which rises or
      falls with the rise and fall of the annual produce of the land. The great
      interest of the sovereign, therefore, his revenue, is in such countries
      necessarily and immediately connected with the cultivation of the land,
      with the greatness of its produce, and with the value of its produce. But
      in order to render that produce both as great and as valuable as possible,
      it is necessary to procure to it as extensive a market as possible, and
      consequently to establish the freest, the easiest, and the least expensive
      communication between all the different parts of the country; which can be
      done only by means of the best roads and the best navigable canals. But
      the revenue of the sovereign does not, in any part of Europe, arise
      chiefly from a land tax or land rent. In all the great kingdoms of Europe,
      perhaps, the greater part of it may ultimately depend upon the produce of
      the land: but that dependency is neither so immediate nor so evident. In
      Europe, therefore, the sovereign does not feel himself so directly called
      upon to promote the increase, both in quantity and value of the produce of
      the land, or, by maintaining good roads and canals, to provide the most
      extensive market for that produce. Though it should be true, therefore,
      what I apprehend is not a little doubtful, that in some parts of Asia this
      department of the public police is very properly managed by the executive
      power, there is not the least probability that, during the present state
      of things, it could be tolerably managed by that power in any part of
      Europe.
    
      Even those public works, which are of such a nature that they cannot
      afford any revenue for maintaining themselves, but of which the
      conveniency is nearly confined to some particular place or district, are
      always better maintained by a local or provincial revenue, under the
      management of a local and provincial administration, than by the general
      revenue of the state, of which the executive power must always have the
      management. Were the streets of London to be lighted and paved at the
      expense of the treasury, is there any probability that they would be so
      well lighted and paved as they are at present, or even at so small an
      expense? The expense, besides, instead of being raised by a local tax upon
      the inhabitants of each particular street, parish, or district in London,
      would, in this case, be defrayed out of the general revenue of the state,
      and would consequently be raised by a tax upon all the inhabitants of the
      kingdom, of whom the greater part derive no sort of benefit from the
      lighting and paving of the streets of London.
    
      The abuses which sometimes creep into the local and provincial
      administration of a local and provincial revenue, how enormous soever they
      may appear, are in reality, however, almost always very trifling in
      comparison of those which commonly take place in the administration and
      expenditure of the revenue of a great empire. They are, besides, much more
      easily corrected. Under the local or provincial administration of the
      justices of the peace in Great Britain, the six days labour which the
      country people are obliged to give to the reparation of the highways, is
      not always, perhaps, very judiciously applied, but it is scarce ever
      exacted with any circumstance of cruelty or oppression. In France, under
      the administration of the intendants, the application is not always more
      judicious, and the exaction is frequently the most cruel and oppressive.
      Such corvees, as they are called, make one of the principal instruments of
      tyranny by which those officers chastise any parish or communeaute, which
      has had the misfortune to fall under their displeasure.
    
      Of the public Works and Institution which are necessary for facilitating
      particular Branches of Commerce.
    
      The object of the public works and institutions above mentioned, is to
      facilitate commerce in general. But in order to facilitate some particular
      branches of it, particular institutions are necessary, which again require
      a particular and extraordinary expense.
    
      Some particular branches of commerce which are carried on with barbarous
      and uncivilized nations, require extraordinary protection. An ordinary
      store or counting-house could give little security to the goods of the
      merchants who trade to the western coast of Africa. To defend them from
      the barbarous natives, it is necessary that the place where they are
      deposited should be in some measure fortified. The disorders in the
      government of Indostan have been supposed to render a like precaution
      necessary, even among that mild and gentle people; and it was under
      pretence of securing their persons and property from violence, that both
      the English and French East India companies were allowed to erect the
      first forts which they possessed in that country. Among other nations,
      whose vigorous government will suffer no strangers to possess any
      fortified place within their territory, it may be necessary to maintain
      some ambassador, minister, or consul, who may both decide, according to
      their own customs, the differences arising among his own countrymen, and,
      in their disputes with the natives, may by means of his public character,
      interfere with more authority and afford them a more powerful protection
      than they could expect from any private man. The interests of commerce
      have frequently made it necessary to maintain ministers in foreign
      countries, where the purposes either of war or alliance would not have
      required any. The commerce of the Turkey company first occasioned the
      establishment of an ordinary ambassador at Constantinople. The first
      English embassies to Russia arose altogether from commercial interests.
      The constant interference with those interests, necessarily occasioned
      between the subjects of the different states of Europe, has probably
      introduced the custom of keeping, in all neighbouring countries,
      ambassadors or ministers constantly resident, even in the time of peace.
      This custom, unknown to ancient times, seems not to be older than the end
      of the fifteenth, or beginning of the sixteenth century; that is, than the
      time when commerce first began to extend itself to the greater part of the
      nations of Europe, and when they first began to attend to its interests.
    
      It seems not unreasonable, that the extraordinary expense which the
      protection of any particular branch of commerce may occasion, should be
      defrayed by a moderate tax upon that particular branch; by a moderate
      fine, for example, to be paid by the traders when they first enter into
      it; or, what is more equal, by a particular duty of so much per cent. upon
      the goods which they either import into, or export out of, the particular
      countries with which it is carried on. The protection of trade, in
      general, from pirates and freebooters, is said to have given occasion to
      the first institution of the duties of customs. But, if it was thought
      reasonable to lay a general tax upon trade, in order to defray the expense
      of protecting trade in general, it should seem equally reasonable to lay a
      particular tax upon a particular branch of trade, in order to defray the
      extraordinary expense of protecting that branch.
    
      The protection of trade, in general, has always been considered as
      essential to the defence of the commonwealth, and, upon that account, a
      necessary part of the duty of the executive power. The collection and
      application of the general duties of customs, therefore, have always been
      left to that power. But the protection of any particular branch of trade
      is a part of the general protection of trade; a part, therefore, of the
      duty of that power; and if nations always acted consistently, the
      particular duties levied for the purposes of such particular protection,
      should always have been left equally to its disposal. But in this respect,
      as well as in many others, nations have not always acted consistently; and
      in the greater part of the commercial states of Europe, particular
      companies of merchants have had the address to persuade the legislature to
      entrust to them the performance of this part of the duty of the sovereign,
      together with all the powers which are necessarily connected with it.
    
      These companies, though they may, perhaps, have been useful for the first
      introduction of some branches of commerce, by making, at their own
      expense, an experiment which the state might not think it prudent to make,
      have in the long-run proved, universally, either burdensome or useless,
      and have either mismanaged or confined the trade.
    
      When those companies do not trade upon a joint stock, but are obliged to
      admit any person, properly qualified, upon paying a certain fine, and
      agreeing to submit to the regulations of the company, each member trading
      upon his own stock, and at his own risk, they are called regulated
      companies. When they trade upon a joint stock, each member sharing in the
      common profit or loss, in proportion to his share in this stock, they are
      called joint-stock companies. Such companies, whether regulated or
      joint-stock, sometimes have, and sometimes have not, exclusive privileges.
    
      Regulated companies resemble, in every respect, the corporation of trades,
      so common in the cities and towns of all the different countries of
      Europe; and are a sort of enlarged monopolies of the same kind. As no
      inhabitant of a town can exercise an incorporated trade, without first
      obtaining his freedom in the incorporation, so, in most cases, no subject
      of the state can lawfully carry on any branch of foreign trade, for which
      a regulated company is established, without first becoming a member of
      that company. The monopoly is more or less strict, according as the terms
      of admission are more or less difficult, and according as the directors of
      the company have more or less authority, or have it more or less in their
      power to manage in such a manner as to confine the greater part of the
      trade to themselves and their particular friends. In the most ancient
      regulated companies, the privileges of apprenticeship were the same as in
      other corporations, and entitled the person who had served his time to a
      member of the company, to become himself a member, either without paying
      any fine, or upon paying a much smaller one than what was exacted of other
      people. The usual corporation spirit, wherever the law does not restrain
      it, prevails in all regulated companies. When they have been allowed to
      act according to their natural genius, they have always, in order to
      confine the competition to as small a number of persons as possible,
      endeavoured to subject the trade to many burdensome regulations. When the
      law has restrained them from doing this, they have become altogether
      useless and insignificant.
    
      The regulated companies for foreign commerce which at present subsist in
      Great Britain, are the ancient merchant-adventurers company, now commonly
      called the Hamburgh company, the Russia company, the Eastland company, the
      Turkey company, and the African company.
    
      The terms of admission into the Hamburgh company are now said to be quite
      easy; and the directors either have it not in their power to subject the
      trade to any troublesome restraint or regulations, or, at least, have not
      of late exercised that power. It has not always been so. About the middle
      of the last century, the fine for admission was fifty, and at one time one
      hundred pounds, and the conduct of the company was said to be extremely
      oppressive. In 1643, in 1645, and in 1661, the clothiers and free traders
      of the west of England complained of them to parliament, as of
      monopolists, who confined the trade, and oppressed the manufactures of the
      country. Though those complaints produced no act of parliament, they had
      probably intimidated the company so far, as to oblige them to reform their
      conduct. Since that time, at least, there have been no complaints against
      them. By the 10th and 11th of William III. c.6, the fine for admission
      into the Russia company was reduced to five pounds; and by the 25th of
      Charles II. c.7, that for admission into the Eastland company to forty
      shillings; while, at the same time, Sweden, Denmark, and Norway, all the
      countries on the north side of the Baltic, were exempted from their
      exclusive charter. The conduct of those companies had probably given
      occasion to those two acts of parliament. Before that time, Sir Josiah
      Child had represented both these and the Hamburgh company as extremely
      oppressive, and imputed to their bad management the low state of the
      trade, which we at that time carried on to the countries comprehended
      within their respective charters. But though such companies may not, in
      the present times, be very oppressive, they are certainly altogether
      useless. To be merely useless, indeed, is perhaps, the highest eulogy
      which can ever justly be bestowed upon a regulated company; and all the
      three companies above mentioned seem, in their present state, to deserve
      this eulogy.
    
      The fine for admission into the Turkey company was formerly twenty-five
      pounds for all persons under twenty-six years of age, and fifty pounds for
      all persons above that age. Nobody but mere merchants could be admitted; a
      restriction which excluded all shop-keepers and retailers. By a bye-law,
      no British manufactures could be exported to Turkey but in the general
      ships of the company; and as those ships sailed always from the port of
      London, this restriction confined the trade to that expensive port, and
      the traders to those who lived in London and in its neighbourhood. By
      another bye-law, no person living within twenty miles of London, and not
      free of the city, could be admitted a member; another restriction which,
      joined to the foregoing, necessarily excluded all but the freemen of
      London. As the time for the loading and sailing of those general ships
      depended altogether upon the directors, they could easily fill them with
      their own goods, and those of their particular friends, to the exclusion
      of others, who, they might pretend, had made their proposals too late. In
      this state of things, therefore, this company was, in every respect, a
      strict and oppressive monopoly. Those abuses gave occasion to the act of
      the 26th of George II. c. 18, reducing the fine for admission to twenty
      pounds for all persons, without any distinction of ages, or any
      restriction, either to mere merchants, or to the freemen of London; and
      granting to all such persons the liberty of exporting, from all the ports
      of Great Britain, to any port in Turkey, all British goods, of which the
      exportation was not prohibited, upon paying both the general duties of
      customs, and the particular duties assessed for defraying the necessary
      expenses of the company; and submitting, at the same time, to the lawful
      authority of the British ambassador and consuls resident in Turkey, and to
      the bye-laws of the company duly enacted. To prevent any oppression by
      those bye-laws, it was by the same act ordained, that if any seven members
      of the company conceived themselves aggrieved by any bye-law which should
      be enacted after the passing of this act, they might appeal to the board
      of trade and plantations (to the authority of which a committee of the
      privy council has now succeeded), provided such appeal was brought within
      twelve months after the bye-law was enacted; and that, if any seven
      members conceived themselves aggrieved by any bye-law which had been
      enacted before the passing of this act, they might bring a like appeal,
      provided it was within twelve months after the day on which this act was
      to take place. The experience of one year, however, may not always be
      sufficient to discover to all the members of a great company the
      pernicious tendency of a particular bye-law; and if several of them should
      afterwards discover it, neither the board of trade, nor the committee of
      council, can afford them any redress. The object, besides, of the greater
      part of the bye-laws of all regulated companies, as well as of all other
      corporations, is not so much to oppress those who are already members, as
      to discourage others from becoming so; which may be done, not only by a
      high fine, but by many other contrivances. The constant view of such
      companies is always to raise the rate of their own profit as high as they
      can; to keep the market, both for the goods which they export, and for
      those which they import, as much understocked as they can; which can be
      done only by restraining the competition, or by discouraging new
      adventurers from entering into the trade. A fine, even of twenty pounds,
      besides, though it may not, perhaps, be sufficient to discourage any man
      from entering into the Turkey trade, with an intention to continue in it,
      may be enough to discourage a speculative merchant from hazarding a single
      adventure in it. In all trades, the regular established traders, even
      though not incorporated, naturally combine to raise profits, which are
      noway so likely to be kept, at all times, down to their proper level, as
      by the occasional competition of speculative adventurers. The Turkey
      trade, though in some measure laid open by this act of parliament, is
      still considered by many people as very far from being altogether free.
      The Turkey company contribute to maintain an ambassador and two or three
      consuls, who, like other public ministers, ought to be maintained
      altogether by the state, and the trade laid open to all his majesty’s
      subjects. The different taxes levied by the company, for this and other
      corporation purposes, might afford a revenue much more than sufficient to
      enable a state to maintain such ministers.
    
      Regulated companies, it was observed by Sir Josiah Child, though they had
      frequently supported public ministers, had never maintained any forts or
      garrisons in the countries to which they traded; whereas joint-stock
      companies frequently had. And, in reality, the former seem to be much more
      unfit for this sort of service than the latter. First, the directors of a
      regulated company have no particular interest in the prosperity of the
      general trade of the company, for the sake of which such forts and
      garrisons are maintained. The decay of that general trade may even
      frequently contribute to the advantage of their own private trade; as, by
      diminishing the number of their competitors, it may enable them both to
      buy cheaper, and to sell dearer. The directors of a joint-stock company,
      on the contrary, having only their share in the profits which are made
      upon the common stock committed to their management, have no private trade
      of their own, of which the interest can be separated from that of the
      general trade of the company. Their private interest is connected with the
      prosperity of the general trade of the company, and with the maintenance
      of the forts and garrisons which are necessary for its defence. They are
      more likely, therefore, to have that continual and careful attention which
      that maintenance necessarily requires. Secondly, The directors of a
      joint-stock company have always the management of a large capital, the
      joint stock of the company, a part of which they may frequently employ,
      with propriety, in building, repairing, and maintaining such necessary
      forts and garrisons. But the directors of a regulated company, having the
      management of no common capital, have no other fund to employ in this way,
      but the casual revenue arising from the admission fines, and from the
      corporation duties imposed upon the trade of the company. Though they had
      the same interest, therefore, to attend to the maintenance of such forts
      and garrisons, they can seldom have the same ability to render that
      attention effectual. The maintenance of a public minister, requiring
      scarce any attention, and but a moderate and limited expense, is a
      business much more suitable both to the temper and abilities of a
      regulated company.
    
      Long after the time of Sir Josiah Child, however, in 1750, a regulated
      company was established, the present company of merchants trading to
      Africa; which was expressly charged at first with the maintenance of all
      the British forts and garrisons that lie between Cape Blanc and the Cape
      of Good Hope, and afterwards with that of those only which lie between
      Cape Rouge and the Cape of Good Hope. The act which establishes this
      company (the 23rd of George II. c.51 ), seems to have had two distinct
      objects in view; first, to restrain effectually the oppressive and
      monopolizing spirit which is natural to the directors of a regulated
      company; and, secondly, to force them, as much as possible, to give an
      attention, which is not natural to them, towards the maintenance of forts
      and garrisons.
    
      For the first of these purposes, the fine for admission is limited to
      forty shillings. The company is prohibited from trading in their corporate
      capacity, or upon a joint stock; from borrowing money upon common seal, or
      from laying any restraints upon the trade, which may be carried on freely
      from all places, and by all persons being British subjects, and paying the
      fine. The government is in a committee of nine persons, who meet at
      London, but who are chosen annually by the freemen of the company at
      London, Bristol, and Liverpool; three from each place. No committeeman can
      be continued in office for more than three years together. Any
      committee-man might be removed by the board of trade and plantations, now
      by a committee of council, after being heard in his own defence. The
      committee are forbid to export negroes from Africa, or to import any
      African goods into Great Britain. But as they are charged with the
      maintenance of forts and garrisons, they may, for that purpose export from
      Great Britain to Africa goods and stores of different kinds. Out of the
      moneys which they shall receive from the company, they are allowed a sum,
      not exceeding eight hundred pounds, for the salaries of their clerks and
      agents at London, Bristol, and Liverpool, the house-rent of their offices
      at London, and all other expenses of management, commission, and agency,
      in England. What remains of this sum, after defraying these different
      expenses, they may divide among themselves, as compensation for their
      trouble, in what manner they think proper. By this constitution, it might
      have been expected, that the spirit of monopoly would have been
      effectually restrained, and the first of these purposes sufficiently
      answered. It would seem, however, that it had not. Though by the 4th of
      George III. c.20, the fort of Senegal, with all its dependencies, had been
      invested in the company of merchants trading to Africa, yet, in the year
      following (by the 5th of George III. c.44), not only Senegal and its
      dependencies, but the whole coast, from the port of Sallee, in South
      Barbary, to Cape Rouge, was exempted from the jurisdiction of that
      company, was vested in the crown, and the trade to it declared free to all
      his majesty’s subjects. The company had been suspected of restraining the
      trade and of establishing some sort of improper monopoly. It is not,
      however, very easy to conceive how, under the regulations of the 23d
      George II. they could do so. In the printed debates of the house of
      commons, not always the most authentic records of truth, I observe,
      however, that they have been accused of this. The members of the committee
      of nine being all merchants, and the governors and factors in their
      different forts and settlements being all dependent upon them, it is not
      unlikely that the latter might have given peculiar attention to the
      consignments and commissions of the former, which would establish a real
      monopoly.
    
      For the second of these purposes, the maintenance of the forts and
      garrisons, an annual sum has been allotted to them by parliament,
      generally about £13,000. For the proper application of this sum, the
      committee is obliged to account annually to the cursitor baron of
      exchequer; which account is afterwards to be laid before parliament. But
      parliament, which gives so little attention to the application of
      millions, is not likely to give much to that of £13,000 a-year; and the
      cursitor baron of exchequer, from his profession and education, is not
      likely to be profoundly skilled in the proper expense of forts and
      garrisons. The captains of his majesty’s navy, indeed, or any other
      commissioned officers, appointed by the board of admiralty, may inquire
      into the condition of the forts and garrisons, and report their
      observations to that board. But that board seems to have no direct
      jurisdiction over the committee, nor any authority to correct those whose
      conduct it may thus inquire into; and the captains of his majesty’s navy,
      besides, are not supposed to be always deeply learned in the science of
      fortification. Removal from an office, which can be enjoyed only for the
      term of three years, and of which the lawful emoluments, even during that
      term, are so very small, seems to be the utmost punishment to which any
      committee-man is liable, for any fault, except direct malversation, or
      embezzlement, either of the public money, or of that of the company; and
      the fear of the punishment can never be a motive of sufficient weight to
      force a continual and careful attention to a business to which he has no
      other interest to attend. The committee are accused of having sent out
      bricks and stones from England for the reparation of Cape Coast Castle, on
      the coast of Guinea; a business for which parliament had several times
      granted an extraordinary sum of money. These bricks and stones, too, which
      had thus been sent upon so long a voyage, were said to have been of so bad
      a quality, that it was necessary to rebuild, from the foundation, the
      walls which had been repaired with them. The forts and garrisons which lie
      north of Cape Rouge, are not only maintained at the expense of the state,
      but are under the immediate government of the executive power; and why
      those which lie south of that cape, and which, too, are, in part at least,
      maintained at the expense of the state, should be under a different
      government, it seems not very easy even to imagine a good reason. The
      protection of the Mediterranean trade was the original purpose or pretence
      of the garrisons of Gibraltar and Minorca; and the maintenance and
      government of those garrisons have always been, very properly, committed,
      not to the Turkey company, but to the executive power. In the extent of
      its dominion consists, in a great measure, the pride and dignity of that
      power; and it is not very likely to fail in attention to what is necessary
      for the defence of that dominion. The garrisons at Gibraltar and Minorca,
      accordingly, have never been neglected. Though Minorca has been twice
      taken, and is now probably lost for ever, that disaster has never been
      imputed to any neglect in the executive power. I would not, however, be
      understood to insinuate, that either of those expensive garrisons was
      ever, even in the smallest degree, necessary for the purpose for which
      they were originally dismembered from the Spanish monarchy. That
      dismemberment, perhaps, never served any other real purpose than to
      alienate from England her natural ally the king of Spain, and to unite the
      two principal branches of the house of Bourbon in a much stricter and more
      permanent alliance than the ties of blood could ever have united them.
    
      Joint-stock companies, established either by royal charter, or by act of
      parliament, are different in several respects, not only from regulated
      companies, but from private copartneries.
    
      First, In a private copartnery, no partner without the consent of the
      company, can transfer his share to another person, or introduce a new
      member into the company. Each member, however, may, upon proper warning,
      withdraw from the copartnery, and demand payment from them of his share of
      the common stock. In a joint-stock company, on the contrary, no member can
      demand payment of his share from the company; but each member can, without
      their consent, transfer his share to another person, and thereby introduce
      a new member. The value of a share in a joint stock is always the price
      which it will bring in the market; and this may be either greater or less
      in any proportion, than the sum which its owner stands credited for in the
      stock of the company.
    
      Secondly, In a private copartnery, each partner is bound for the debts
      contracted by the company, to the whole extent of his fortune. In a
      joint-stock company, on the contrary, each partner is bound only to the
      extent of his share.
    
      The trade of a joint-stock company is always managed by a court of
      directors. This court, indeed, is frequently subject, in many respects, to
      the control of a general court of proprietors. But the greater part of
      these proprietors seldom pretend to understand any thing of the business
      of the company; and when the spirit of faction happens not to prevail
      among them, give themselves no trouble about it, but receive contentedly
      such halfyearly or yearly dividend as the directors think proper to make
      to them. This total exemption front trouble and front risk, beyond a
      limited sum, encourages many people to become adventurers in joint-stock
      companies, who would, upon no account, hazard their fortunes in any
      private copartnery. Such companies, therefore, commonly draw to themselves
      much greater stocks, than any private copartnery can boast of. The trading
      stock of the South Sea company at one time amounted to upwards of
      thirty-three millions eight hundred thousand pounds. The divided capital
      of the Bank of England amounts, at present, to ten millions seven hundred
      and eighty thousand pounds. The directors of such companies, however,
      being the managers rather of other people’s money than of their own, it
      cannot well be expected that they should watch over it with the same
      anxious vigilance with which the partners in a private copartnery
      frequently watch over their own. Like the stewards of a rich man, they are
      apt to consider attention to small matters as not for their master’s
      honour, and very easily give themselves a dispensation from having it.
      Negligence and profusion, therefore, must always prevail, more or less, in
      the management of the affairs of such a company. It is upon this account,
      that joint-stock companies for foreign trade have seldom been able to
      maintain the competition against private adventurers. They have,
      accordingly, very seldom succeeded without an exclusive privilege; and
      frequently have not succeeded with one. Without an exclusive privilege,
      they have commonly mismanaged the trade. With an exclusive privilege, they
      have both mismanaged and confined it.
    
      The Royal African company, the predecessors of the present African
      company, had an exclusive privilege by charter; but as that charter had
      not been confirmed by act of parliament, the trade, in consequence of the
      declaration of rights, was, soon after the Revolution, laid open to all
      his majesty’s subjects. The Hudson’s Bay company are, as to their legal
      rights, in the same situation as the Royal African company. Their
      exclusive charter has not been confirmed by act of parliament. The South
      Sea company, as long as they continued to be a trading company, had an
      exclusive privilege confirmed by act of parliament; as have likewise the
      present united company of merchants trading to the East Indies.
    
      The Royal African company soon found that they could not maintain the
      competition against private adventurers, whom, notwithstanding the
      declaration of rights, they continued for some time to call interlopers,
      and to persecute as such. In 1698, however, the private adventurers were
      subjected to a duty of ten per cent. upon almost all the different
      branches of their trade, to be employed by the company in the maintenance
      of their forts and garrisons. But, notwithstanding this heavy tax, the
      company were still unable to maintain the competition. Their stock and
      credit gradually declined. In 1712, their debts had become so great, that
      a particular act of parliament was thought necessary, both for their
      security and for that of their creditors. It was enacted, that the
      resolution of two-thirds of these creditors in number and value should
      bind the rust, both with regard to the time which should be allowed to the
      company for the payment of their debts, and with regard to any other
      agreement which it might be thought proper to make with them concerning
      those debts. In 1730, their affairs were in so great disorder, that they
      were altogether incapable of maintaining their forts and garrisons, the
      sole purpose and pretext of their institution. From that year till their
      final dissolution, the parliament judged it necessary to allow the annual
      sum of £10,000 for that purpose. In 1732, after having been for many years
      losers by the trade of carrying negroes to the West Indies, they at last
      resolved to give it up altogether; to sell to the private traders to
      America the negroes which they purchased upon the coast; and to employ
      their servants in a trade to the inland parts of Africa for gold dust,
      elephants teeth, dyeing drugs, etc. But their success in this more
      confined trade was not greater than in their former extensive one. Their
      affairs continued to go gradually to decline, till at last, being in every
      respect a bankrupt company, they were dissolved by act of parliament, and
      their forts and garrisons vested in the present regulated company of
      merchants trading to Africa. Before the erection of the Royal African
      company, there had been three other joint-stock companies successively
      established, one after another, for the African trade. They were all
      equally unsuccessful. They all, however, had exclusive charters, which,
      though not confirmed by act of parliament, were in those days supposed to
      convey a real exclusive privilege.
    
      The Hudson’s Bay company, before their misfortunes in the late war, had
      been much more fortunate than the Royal African company. Their necessary
      expense is much smaller. The whole number of people whom they maintain in
      their different settlements and habitations, which they have honoured with
      the name of forts, is said not to exceed a hundred and twenty persons.
      This number, however, is sufficient to prepare beforehand the cargo of
      furs and other goods necessary for loading their ships, which, on account
      of the ice, can seldom remain above six or eight weeks in those seas. This
      advantage of having a cargo ready prepared, could not, for several years,
      be acquired by private adventurers; and without it there seems to be no
      possibility of trading to Hudson’s Bay. The moderate capital of the
      company, which, it is said, does not exceed one hundred and ten thousand
      pounds, may, besides, be sufficient to enable them to engross the whole,
      or almost the whole trade and surplus produce, of the miserable though
      extensive country comprehended within their charter. No private
      adventurers, accordingly, have ever attempted to trade to that country in
      competition with them. This company, therefore, have always enjoyed an
      exclusive trade, in fact, though they may have no right to it in law. Over
      and above all this, the moderate capital of this company is said to be
      divided among a very small number of proprietors. But a joint-stock
      company, consisting of a small number of proprietors, with a moderate
      capital, approaches very nearly to the nature of a private copartnery, and
      may be capable of nearly the same degree of vigilance and attention. It is
      not to be wondered at, therefore, if, in consequence of these different
      advantages, the Hudson’s Bay company had, before the late war, been able
      to carry on their trade with a considerable degree of success. It does not
      seem probable, however, that their profits ever approached to what the
      late Mr Dobbs imagined them. A much more sober and judicious writer, Mr
      Anderson, author of the Historical and Chronological Deduction of
      Commerce, very justly observes, that upon examining the accounts which Mr
      Dobbs himself has given for several years together, of their exports and
      imports, and upon making proper allowances for their extraordinary risk
      and expense, it does not appear that their profits deserve to be envied,
      or that they can much, if at all, exceed the ordinary profits of trade.
    
      The South Sea company never had any forts or garrisons to maintain, and
      therefore were entirely exempted from one great expense, to which other
      joint-stock companies for foreign trade are subject; but they had an
      immense capital divided among an immense number of proprietors. It was
      naturally to be expected, therefore, that folly, negligence, and
      profusion, should prevail in the whole management of their affairs. The
      knavery and extravagance of their stock-jobbing projects are sufficiently
      known, and the explication of them would be foreign to the present
      subject. Their mercantile projects were not much better conducted. The
      first trade which they engaged in, was that of supplying the Spanish West
      Indies with negroes, of which (in consequence of what was called the
      Assiento Contract granted them by the treaty of Utrecht) they had the
      exclusive privilege. But as it was not expected that much profit could be
      made by this trade, both the Portuguese and French companies, who had
      enjoyed it upon the same terms before them, having been ruined by it, they
      were allowed, as compensation, to send annually a ship of a certain
      burden, to trade directly to the Spanish West Indies. Of the ten voyages
      which this annual ship was allowed to make, they are said to have gained
      considerably by one, that of the Royal Caroline, in 1731; and to have been
      losers, more or less, by almost all the rest. Their ill success was
      imputed, by their factors and agents, to the extortion and oppression of
      the Spanish government; but was, perhaps, principally owing to the
      profusion and depredations of those very factors and agents; some of whom
      are said to have acquired great fortunes, even in one year. In 1734, the
      company petitioned the king, that they might be allowed to dispose of the
      trade and tonnage of their annual ship, on account of the little profit
      which they made by it, and to accept of such equivalent as they could
      obtain from the king of Spain.
    
      In 1724, this company had undertaken the whale fishery. Of this, indeed,
      they had no monopoly; but as long as they carried it on, no other British
      subjects appear to have engaged in it. Of the eight voyages which their
      ships made to Greenland, they were gainers by one, and losers by all the
      rest. After their eighth and last voyage, when they had sold their ships,
      stores, and utensils, they found that their whole loss upon this branch,
      capital and interest included, amounted to upwards of £237,000.
    
      In 1722, this company petitioned the parliament to be allowed to divide
      their immense capital of more than thirty-three millions eight hundred
      thousand pounds, the whole of which had been lent to government, into two
      equal parts; the one half, or upwards of £16,900,000, to be put upon the
      same footing with other government annuities, and not to be subject to the
      debts contracted, or losses incurred, by the directors of the company, in
      the prosecution of their mercantile projects; the other half to remain as
      before, a trading stock, and to be subject to those debts and losses. The
      petition was too reasonable not to be granted. In 1733, they again
      petitioned the parliament, that three-fourths of their trading stock might
      be turned into annuity stock, and only one-fourth remain as trading stock,
      or exposed to the hazards arising from the bad management of their
      directors. Both their annuity and trading stocks had, by this time, been
      reduced more than two millions each, by several different payments from
      government; so that this fourth amounted only to £3,662,784:8:6. In 1748,
      all the demands of the company upon the king of Spain, in consequence of
      the assiento contract, were, by the treaty of Aix-la-Chapelle, given up
      for what was supposed an equivalent. An end was put to their trade with
      the Spanish West Indies; the remainder of their trading stock was turned
      into an annuity stock; and the company ceased, in every respect, to be a
      trading company.
    
      It ought to be observed, that in the trade which the South Sea company
      carried on by means of their annual ship, the only trade by which it ever
      was expected that they could make any considerable profit, they were not
      without competitors, either in the foreign or in the home market. At
      Carthagena, Porto Bello, and La Vera Cruz, they had to encounter the
      competition of the Spanish merchants, who brought from Cadiz to those
      markets European goods, of the same kind with the outward cargo of their
      ship; and in England they had to encounter that of the English merchants,
      who imported from Cadiz goods of the Spanish West Indies, of the same kind
      with the inward cargo. The goods, both of the Spanish and English
      merchants, indeed, were, perhaps, subject to higher duties. But the loss
      occasioned by the negligence, profusion, and malversation of the servants
      of the company, had probably been a tax much heavier than all those
      duties. That a joint-stock company should be able to carry on successfully
      any branch of foreign trade, when private adventurers can come into any
      sort of open and fair competition with them, seems contrary to all
      experience.
    
      The old English East India company was established in 1600, by a charter
      from Queen Elizabeth. In the first twelve voyages which they fitted out
      for India, they appear to have traded as a regulated company, with
      separate stocks, though only in the general ships of the company. In 1612,
      they united into a joint stock. Their charter was exclusive, and, though
      not confirmed by act of parliament, was in those days supposed to convey a
      real exclusive privilege. For many years, therefore, they were not much
      disturbed by interlopers. Their capital, which never exceeded £744,000,
      and of which £50 was a share, was not so exorbitant, nor their dealings so
      extensive, as to afford either a pretext for gross negligence and
      profusion, or a cover to gross malversation. Notwithstanding some
      extraordinary losses, occasioned partly by the malice of the Dutch East
      India company, and partly by other accidents, they carried on for many
      years a successful trade. But in process of time, when the principles of
      liberty were better understood, it became every day more and more
      doubtful, how far a royal charter, not confirmed by act of parliament,
      could convey an exclusive privilege. Upon this question the decisions of
      the courts of justice were not uniform, but varied with the authority of
      government, and the humours of the times. Interlopers multiplied upon
      them; and towards the end of the reign of Charles II., through the whole
      of that of James II., and during a part of that of William III., reduced
      them to great distress. In 1698, a proposal was made to parliament, of
      advancing two millions to government, at eight per cent. provided the
      subscribers were erected into a new East India company, with exclusive
      privileges. The old East India company offered seven hundred thousand
      pounds, nearly the amount of their capital, at four per cent. upon the
      same conditions. But such was at that time the state of public credit,
      that it was more convenient for government to borrow two millions at eight
      per cent. than seven hundred thousand pounds at four. The proposal of the
      new subscribers was accepted, and a new East India company established in
      consequence. The old East India company, however, had a right to continue
      their trade till 1701. They had, at the same time, in the name of their
      treasurer, subscribed very artfully three hundred and fifteen thousand
      pounds into the stock of the new. By a negligence in the expression of the
      act of parliament, which vested the East India trade in the subscribers to
      this loan of two millions, it did not appear evident that they were all
      obliged to unite into a joint stock. A few private traders, whose
      subscriptions amounted only to seven thousand two hundred pounds, insisted
      upon the privilege of trading separately upon their own stocks, and at
      their own risks. The old East India company had a right to a separate
      trade upon their own stock till 1701; and they had likewise, both before
      and after that period, a right, like that or other private traders, to a
      separate trade upon the £315,000, which they had subscribed into the stock
      of the new company. The competition of the two companies with the private
      traders, and with one another, is said to have well nigh ruined both. Upon
      a subsequent occasion, in 1750, when a proposal was made to parliament for
      putting the trade under the management of a regulated company, and thereby
      laying it in some measure open, the East India company, in opposition to
      this proposal, represented, in very strong terms, what had been, at this
      time, the miserable effects, as they thought them, of this competition. In
      India, they said, it raised the price of goods so high, that they were not
      worth the buying; and in England, by overstocking the market, it sunk
      their price so low, that no profit could be made by them. That by a more
      plentiful supply, to the great advantage and conveniency of the public, it
      must have reduced very much the price of India goods in the English
      market, cannot well be doubted; but that it should have raised very much
      their price in the Indian market, seems not very probable, as all the
      extraordinary demand which that competition could occasion must have been
      but as a drop of water in the immense ocean of Indian commerce. The
      increase of demand, besides, though in the beginning it may sometimes
      raise the price of goods, never fails to lower it in the long-run. It
      encourages production, and thereby increases the competition of the
      producers, who, in order to undersell one another, have recourse to new
      divisions or labour and new improvements of art, which might never
      otherwise have been thought of. The miserable effects of which the company
      complained, were the cheapness of consumption, and the encouragement given
      to production; precisely the two effects which it is the great business of
      political economy to promote. The competition, however, of which they gave
      this doleful account, had not been allowed to be of long continuance. In
      1702, the two companies were, in some measure, united by an indenture
      tripartite, to which the queen was the third party; and in 1708, they were
      by act of parliament, perfectly consolidated into one company, by their
      present name of the United Company of Merchants trading to the East
      Indies. Into this act it was thought worth while to insert a clause,
      allowing the separate traders to continue their trade till Michaelmas
      1711; but at the same time empowering the directors, upon three years
      notice, to redeem their little capital of seven thousand two hundred
      pounds, and thereby to convert the whole stock of the company into a joint
      stock. By the same act, the capital of the company, in consequence of a
      new loan to government, was augmented from two millions to three millions
      two hundred thousand pounds. In 1743, the company advanced another million
      to government. But this million being raised, not by a call upon the
      proprietors, but by selling annuities and contracting bond-debts, it did
      not augment the stock upon which the proprietors could claim a dividend.
      It augmented, however, their trading stock, it being equally liable with
      the other three millions two hundred thousand pounds, to the losses
      sustained, and debts contracted by the company in prosecution of their
      mercantile projects. From 1708, or at least from 1711, this company, being
      delivered from all competitors, and fully established in the monopoly of
      the English commerce to the East Indies, carried on a successful trade,
      and from their profits, made annually a moderate dividend to their
      proprietors. During the French war, which began in 1741, the ambition of
      Mr. Dupleix, the French governor of Pondicherry, involved them in the wars
      of the Carnatic, and in the politics of the Indian princes. After many
      signal successes, and equally signal losses, they at last lost Madras, at
      that time their principal settlement in India. It was restored to them by
      the treaty of Aix-la-Chapelle; and, about this time the spirit of war and
      conquest seems to have taken possession of their servants in India, and
      never since to have left them. During the French war, which began in 1755,
      their arms partook of the general good fortune of those of Great Britain.
      They defended Madras, took Pondicherry, recovered Calcutta, and acquired
      the revenues of a rich and extensive territory, amounting, it was then
      said, to upwards of three millions a-year. They remained for several years
      in quiet possession of this revenue; but in 1767, administration laid
      claim to their territorial acquisitions, and the revenue arising from
      them, as of right belonging to the crown; and the company, in compensation
      for this claim, agreed to pay to government £400,000 a-year. They had,
      before this, gradually augmented their dividend from about six to ten per
      cent.; that is, upon their capital of three millions two hundred thousand
      pounds, they had increased it by £128,000, or had raised it from one
      hundred and ninety-two thousand to three hundred and twenty thousand
      pounds a-year. They were attempting about this time to raise it still
      further, to twelve and a-half per cent., which would have made their
      annual payments to their proprietors equal to what they had agreed to pay
      annually to government, or to £400,000 a-year. But during the two years in
      which their agreement with government was to take place, they were
      restrained from any further increase of dividend by two successive acts of
      parliament, of which the object was to enable them to make a speedier
      progress in the payment of their debts, which were at this time estimated
      at upwards of six or seven millions sterling. In 1769, they renewed their
      agreement with government for five years more, and stipulated, that during
      the course of that period, they should be allowed gradually to increase
      their dividend to twelve and a-half per cent; never increasing it,
      however, more than one per cent. in one year. This increase of dividend,
      therefore, when it had risen to its utmost height, could augment their
      annual payments, to their proprietors and government together, but by
      £680,000, beyond what they had been before their late territorial
      acquisitions. What the gross revenue of those territorial acquisitions was
      supposed to amount to, has already been mentioned; and by an account
      brought by the Cruttenden East Indiaman in 1769, the neat revenue, clear
      of all deductions and military charges, was stated at two millions
      forty-eight thousand seven hundred and forty-seven pounds. They were said,
      at the same time, to possess another revenue, arising partly from lands,
      but chiefly from the customs established at their different settlements,
      amounting to £439,000. The profits of their trade, too, according to the
      evidence of their chairman before the house of commons, amounted, at this
      time, to at least £400,000 a-year; according to that of their accountant,
      to at least £500,000; according to the lowest account, at least equal to
      the highest dividend that was to be paid to their proprietors. So great a
      revenue might certainly have afforded an augmentation of £680,000 in their
      annual payments; and, at the same time, have left a large sinking fund,
      sufficient for the speedy reduction of their debt. In 1773, however, their
      debts, instead of being reduced, were augmented by an arrear to the
      treasury in the payment of the four hundred thousand pounds; by another to
      the custom-house for duties unpaid; by a large debt to the bank, for money
      borrowed; and by a fourth, for bills drawn upon them from India, and
      wantonly accepted, to the amount of upwards of twelve hundred thousand
      pounds. The distress which these accumulated claims brought upon them,
      obliged them not only to reduce all at once their dividend to six per
      cent. but to throw themselves upon the mercy of govermnent, and to
      supplicate, first, a release from the further payment of the stipulated
      £400,000 a-year; and, secondly, a loan of fourteen hundred thousand, to
      save them from immediate bankruptcy. The great increase of their fortune
      had, it seems, only served to furnish their servants with a pretext for
      greater profusion, and a cover for greater malversation, than in
      proportion even to that increase of fortune. The conduct of their servants
      in India, and the general state of their affairs both in India and in
      Europe, became the subject of a parliamentary inquiry: in consequence of
      which, several very important alterations were made in the constitution of
      their government, both at home and abroad. In India, their principal
      settlements or Madras, Bombay, and Calcutta, which had before been
      altogether independent of one another, were subjected to a
      governor-general, assisted by a council of four assessors, parliament
      assuming to itself the first nomination of this governor and council, who
      were to reside at Calcutta; that city having now become, what Madras was
      before, the most important of the English settlements in India. The court
      of the Mayor of Calcutta, originally instituted for the trial of
      mercantile causes, which arose in the city and neighbourhood, had
      gradually extended its jurisdiction with the extension of the empire. It
      was now reduced and confined to the original purpose of its institution.
      Instead of it, a new supreme court of judicature was established,
      consisting of a chief justice and three judges, to be appointed by the
      crown. In Europe, the qualification necessary to entitle a proprietor to
      vote at their general courts was raised, from five hundred pounds, the
      original price of a share in the stock of the company, to a thousand
      pounds. In order to vote upon this qualification, too, it was declared
      necessary, that he should have possessed it, if acquired by his own
      purchase, and not by inheritance, for at least one year, instead of six
      months, the term requisite before. The court of twenty-four directors had
      before been chosen annually; but it was now enacted, that each director
      should, for the future, be chosen for four years; six of them, however, to
      go out of office by rotation every year, and not be capable of being
      re-chosen at the election of the six new directors for the ensuing year.
      In consequence of these alterations, the courts, both of the proprietors
      and directors, it was expected, would be likely to act with more dignity
      and steadiness than they had usually done before. But it seems impossible,
      by any alterations, to render those courts, in any respect, fit to govern,
      or even to share in the government of a great empire; because the greater
      part of their members must always have too little interest in the
      prosperity of that empire, to give any serious attention to what may
      promote it. Frequently a man of great, sometimes even a man of small
      fortune, is willing to purchase a thousand pounds share in India stock,
      merely for the influence which he expects to aquire by a vote in the court
      of proprietors. It gives him a share, though not in the plunder, yet in
      the appointment of the plunderers of India; the court of directors, though
      they make that appointment, being necessarily more or less under the
      influence of the proprietors, who not only elect those directors, but
      sometimes over-rule the appointments of their servants in India. Provided
      he can enjoy this influence for a few years, and thereby provide for a
      certain number of his friends, he frequently cares little about the
      dividend, or even about the value of the stock upon which his vote is
      founded. About the prosperity of the great empire, in the government of
      which that vote gives him a share, he seldom cares at all. No other
      sovereigns ever were, or, from the nature of things, ever could be, so
      perfectly indifferent about the happiness or misery of their subjects, the
      improvement or waste of their dominions, the glory or disgrace of their
      administration, as, from irresistible moral causes, the greater part of
      the proprietors of such a mercantile company are, and necessarily must be.
      This indifference, too, was more likely to be increased than diminished by
      some of the new regulations which were made in consequence of the
      parliamentary inquiry. By a resolution of the house of commons, for
      example, it was declared, that when the £1,400,000 lent to the company by
      government, should be paid, and their bond-debts be reduced to £1,500,000,
      they might then, and not till then, divide eight per cent. upon their
      capital; and that whatever remained of their revenues and neat profits at
      home should be divided into four parts; three of them to be paid into the
      exchequer for the use of the public, and the fourth to be reserved as a
      fund, either for the further reduction of their bond-debts, or for the
      discharge of other contingent exigencies which the company might labour
      under. But if the company were bad stewards and bad sovereigns, when the
      whole of their neat revenue and profits belonged to themselves, and were
      at their own disposal, they were surely not likely to be better when
      three-fourths of them were to belong to other people, and the other
      fourth, though to be laid out for the benefit of the company, yet to be so
      under the inspection and with the approbation of other people.
    
      It might be more agreeable to the company, that their own servants and
      dependants should have either the pleasure of wasting, or the profit of
      embezzling, whatever surplus might remain, after paying the proposed
      dividend of eight per cent. than that it should come into the hands of a
      set of people with whom those resolutions could scarce fail to set them in
      some measure at variance. The interest of those servants and dependants
      might so far predominate in the court of proprietors, as sometimes to
      dispose it to support the authors of depredations which had been committed
      in direct violation of its own authority. With the majority of
      proprietors, the support even of the authority of their own court might
      sometimes be a matter of less consequence than the support of those who
      had set that authority at defiance.
    
      The regulations of 1773, accordingly, did not put an end to the disorder
      of the company’s government in India. Notwithstanding that, during a
      momentary fit of good conduct, they had at one time collected into the
      treasury of Calcutta more than £3,000,000 sterling; notwithstanding that
      they had afterwards extended either their dominion or their depredations
      over a vast accession of some of the richest and most fertile countries in
      India, all was wasted and destroyed. They found themselves altogether
      unprepared to stop or resist the incursion of Hyder Ali; and in
      consequence of those disorders, the company is now (1784) in greater
      distress than ever; and, in order to prevent immediate bankruptcy, is once
      more reduced to supplicate the assistance of government. Different plans
      have been proposed by the different parties in parliament for the better
      management of its affairs; and all those plans seem to agree in supposing,
      what was indeed always abundantly evident, that it is altogether unfit to
      govern its territorial possessions. Even the company itself seems to be
      convinced of its own incapacity so far, and seems, upon that account
      willing to give them up to government.
    
      With the right of possessing forts and garrisons in distant and barbarous
      countries is necessarily connected the right of making peace and war in
      those countries. The joint-stock companies, which have had the one right,
      have constantly exercised the other, and have frequently had it expressly
      conferred upon them. How unjustly, how capriciously, how cruelly, they
      have commonly exercised it, is too well known from recent experience.
    
      When a company of merchants undertake, at their own risk and expense, to
      establish a new trade with some remote and barbarous nation, it may not be
      unreasonable to incorporate them into a joint-stock company, and to grant
      them, in case of their success, a monopoly of the trade for a certain
      number of years. It is the easiest and most natural way in which the state
      can recompense them for hazarding a dangerous and expensive experiment, of
      which the public is afterwards to reap the benefit. A temporary monopoly
      of this kind may be vindicated, upon the same principles upon which a like
      monopoly of a new machine is granted to its inventor, and that of a new
      book to its author. But upon the expiration of the term, the monopoly
      ought certainly to determine; the forts and garrisons, if it was found
      necessary to establish any, to be taken into the hands of government,
      their value to be paid to the company, and the trade to be laid open to
      all the subjects of the state. By a perpetual monopoly, all the other
      subjects of the state are taxed very absurdly in two different ways:
      first, by the high price of goods, which, in the case of a free trade,
      they could buy much cheaper; and, secondly, by their total exclusion from
      a branch of business which it might be both convenient and profitable for
      many of them to carry on. It is for the most worthless of all purposes,
      too, that they are taxed in this manner. It is merely to enable the
      company to support the negligence, profusion, and malversation of their
      own servants, whose disorderly conduct seldom allows the dividend of the
      company to exceed the ordinary rate of profit in trades which are
      altogether free, and very frequently makes a fall even a good deal short
      of that rate. Without a monopoly, however, a joint-stock company, it would
      appear from experience, cannot long carry on any branch of foreign trade.
      To buy in one market, in order to sell with profit in another, when there
      are many competitors in both; to watch over, not only the occasional
      variations in the demand, but the much greater and more frequent
      variations in the competition, or in the supply which that demand is
      likely to get from other people; and to suit with dexterity and judgment
      both the quantity and quality of each assortment of goods to all these
      circumstances, is a species of warfare, of which the operations are
      continually changing, and which can scarce ever be conducted successfully,
      without such an unremitting exertion of vigilance and attention as cannot
      long be expected from the directors of a joint-stock company. The East
      India company, upon the redemption of their funds, and the expiration of
      their exclusive privilege, have a right, by act of parliament, to continue
      a corporation with a joint stock, and to trade in their corporate capacity
      to the East Indies, in common with the rest of their fellow subjects. But
      in this situation, the superior vigilance and attention of a private
      adventurer would, in all probability, soon make them weary of the trade.
    
      An eminent French author, of great knowledge in matters of political
      economy, the Abbe Morellet, gives a list of fifty-five joint-stock
      companies for foreign trade, which have been established in different
      parts of Europe since the year 1600, and which, according to him, have all
      failed from mismanagement, notwithstanding they had exclusive privileges.
      He has been misinformed with regard to the history of two or three of
      them, which were not joint-stock companies and have not failed. But, in
      compensation, there have been several joint-stock companies which have
      failed, and which he has omitted.
    
      The only trades which it seems possible for a joint-stock company to carry
      on successfully, without an exclusive privilege, are those, of which all
      the operations are capable of being reduced to what is called a routine,
      or to such a uniformity of method as admits of little or no variation. Of
      this kind is, first, the banking trade; secondly, the trade of insurance
      from fire and from sea risk, and capture in time of war; thirdly, the
      trade of making and maintaining a navigable cut or canal; and, fourthly,
      the similar trade of bringing water for the supply of a great city.
    
      Though the principles of the banking trade may appear somewhat abstruse,
      the practice is capable of being reduced to strict rules. To depart upon
      any occasion from those rules, in consequence of some flattering
      speculation of extraordinary gain, is almost always extremely dangerous
      and frequently fatal to the banking company which attempts it. But the
      constitution of joint-stock companies renders them in general, more
      tenacious of established rules than any private copartnery. Such
      companies, therefore, seem extremely well fitted for this trade. The
      principal banking companies in Europe, accordingly, are joint-stock
      companies, many of which manage their trade very successfully without any
      exclusive privilege. The bank of England has no other exclusive privilege,
      except that no other banking company in England shall consist of more than
      six persons. The two banks of Edinburgh are joint-stock companies, without
      any exclusive privilege.
    
      The value of the risk, either from fire, or from loss by sea, or by
      capture, though it cannot, perhaps, be calculated very exactly, admits,
      however, of such a gross estimation, as renders it, in some degree,
      reducible to strict rule and method. The trade of insurance, therefore,
      may be carried on successfully by a joint-stock company, without any
      exclusive privilege. Neither the London Assurance, nor the Royal Exchange
      Assurance companies have any such privilege.
    
      When a navigable cut or canal has been once made, the management of it
      becomes quite simple and easy, and it is reducible to strict rule and
      method. Even the making of it is so, as it may be contracted for with
      undertakers, at so much a mile, and so much a lock. The same thing may be
      said of a canal, an aqueduct, or a great pipe for bringing water to supply
      a great city. Such under-takings, therefore, may be, and accordingly
      frequently are, very successfully managed by joint-stock companies,
      without any exclusive privilege.
    
      To establish a joint-stock company, however, for any undertaking, merely
      because such a company might be capable of managing it successfully; or,
      to exempt a particular set of dealers from some of the general laws which
      take place with regard to all their neighbours, merely because they might
      be capable of thriving, if they had such an exemption, would certainly not
      be reasonable. To render such an establishment perfectly reasonable, with
      the circumstance of being reducible to strict rule and method, two other
      circumstances ought to concur. First, it ought to appear with the clearest
      evidence, that the undertaking is of greater and more general utility than
      the greater part of common trades; and, secondly, that it requires a
      greater capital than can easily be collected into a private copartnery. If
      a moderate capital were sufficient, the great utility of the undertaking
      would not be a sufficient reason for establishing a joint-stock company;
      because, in this case, the demand for what it was to produce, would
      readily and easily be supplied by private adventurers. In the four trades
      above mentioned, both those circumstances concur.
    
      The great and general utility of the banking trade, when prudently
      managed, has been fully explained in the second book of this Inquiry. But
      a public bank, which is to support public credit, and, upon particular
      emergencies, to advance to government the whole produce of a tax, to the
      amount, perhaps, of several millions, a year or two before it comes in,
      requires a greater capital than can easily be collected into any private
      copartnery.
    
      The trade of insurance gives great security to the fortunes of private
      people, and, by dividing among a great many that loss which would ruin an
      individual, makes it fall light and easy upon the whole society. In order
      to give this security, however, it is necessary that the insurers should
      have a very large capital. Before the establishment of the two joint-stock
      companies for insurance in London, a list, it is said, was laid before the
      attorney-general, of one hundred and fifty private usurers, who had failed
      in the course of a few years.
    
      That navigable cuts and canals, and the works which are sometimes
      necessary for supplying a great city with water, are of great and general
      utility, while, at the same time, they frequently require a greater
      expense than suits the fortunes of private people, is sufficiently
      obvious.
    
      Except the four trades above mentioned, I have not been able to recollect
      any other, in which all the three circumstances requisite for rendering
      reasonable the establishment of a joint-stock company concur. The English
      copper company of London, the lead-smelting company, the glass-grinding
      company, have not even the pretext of any great or singular utility in the
      object which they pursue; nor does the pursuit of that object seem to
      require any expense unsuitable to the fortunes of many private men.
      Whether the trade which those companies carry on, is reducible to such
      strict rule and method as to render it fit for the management of a
      joint-stock company, or whether they have any reason to boast of their
      extraordinary profits, I do not pretend to know. The mine-adventurers
      company has been long ago bankrupt. A share in the stock of the British
      Linen company of Edinburgh sells, at present, very much below par, though
      less so than it did some years ago. The joint-stock companies, which are
      established for the public-spirited purpose of promoting some particular
      manufacture, over and above managing their own affairs ill, to the
      diminution of the general stock of the society, can, in other respects,
      scarce ever fail to do more harm than good. Notwithstanding the most
      upright intentions, the unavoidable partiality of their directors to
      particular branches of the manufacture, of which the undertakers mislead
      and impose upon them, is a real discouragement to the rest, and
      necessarily breaks, more or less, that natural proportion which would
      otherwise establish itself between judicious industry and profit, and
      which, to the general industry of the country, is of all encouragements
      the greatest and the most effectual.
    
      ART. II.—Of the Expense of the Institution for the Education of
      Youth.
    
      The institutions for the education of the youth may, in the same manner,
      furnish a revenue sufficient for defraying their own expense. The fee or
      honorary, which the scholar pays to the master, naturally constitutes a
      revenue of this kind.
    
      Even where the reward of the master does not arise altogether from this
      natural revenue, it still is not necessary that it should be derived from
      that general revenue of the society, of which the collection and
      application are, in most countries, assigned to the executive power.
      Through the greater part of Europe, accordingly, the endowment of schools
      and colleges makes either no charge upon that general revenue, or but a
      very small one. It everywhere arises chiefly from some local or provincial
      revenue, from the rent of some landed estate, or from the interest of some
      sum of money, allotted and put under the management of trustees for this
      particular purpose, sometimes by the sovereign himself, and sometimes by
      some private donor.
    
      Have those public endowments contributed in general, to promote the end of
      their institution? Have they contributed to encourage the diligence, and
      to improve the abilities, of the teachers? Have they directed the course
      of education towards objects more useful, both to the individual and to
      the public, than those to which it would naturally have gone of its own
      accord? It should not seem very difficult to give at least a probable
      answer to each of those questions.
    
      In every profession, the exertion of the greater part of those who
      exercise it, is always in proportion to the necessity they are under of
      making that exertion. This necessity is greatest with those to whom the
      emoluments of their profession are the only source from which they expect
      their fortune, or even their ordinary revenue and subsistence. In order to
      acquire this fortune, or even to get this subsistence, they must, in the
      course of a year, execute a certain quantity of work of a known value;
      and, where the competition is free, the rivalship of competitors, who are
      all endeavouring to justle one another out of employment, obliges every
      man to endeavour to execute his work with a certain degree of exactness.
      The greatness of the objects which are to be acquired by success in some
      particular professions may, no doubt, sometimes animate the exertions of a
      few men of extraordinary spirit and ambition. Great objects, however, are
      evidently not necessary, in order to occasion the greatest exertions.
      Rivalship and emulation render excellency, even in mean professions, an
      object of ambition, and frequently occasion the very greatest exertions.
      Great objects, on the contrary, alone and unsupported by the necessity of
      application, have seldom been sufficient to occasion any considerable
      exertion. In England, success in the profession of the law leads to some
      very great objects of ambition; and yet how few men, born to easy
      fortunes, have ever in this country been eminent in that profession?
    
      The endowments of schools and colleges have necessarily diminished, more
      or less, the necessity of application in the teachers. Their subsistence,
      so far as it arises from their salaries, is evidently derived from a fund,
      altogether independent of their success and reputation in their particular
      professions.
    
      In some universities, the salary makes but a part, and frequently but a
      small part, of the emoluments of the teacher, of which the greater part
      arises from the honoraries or fees of his pupils. The necessity of
      application, though always more or less diminished, is not, in this case,
      entirely taken away. Reputation in his profession is still of some
      importance to him, and he still has some dependency upon the affection,
      gratitude, and favourable report of those who have attended upon his
      instructions; and these favourable sentiments he is likely to gain in no
      way so well as by deserving them, that is, by the abilities and diligence
      with which he discharges every part of his duty.
    
      In other universities, the teacher is prohibited from receiving any
      honorary or fee from his pupils, and his salary constitutes the whole of
      the revenue which he derives from his office. His interest is, in this
      case, set as directly in opposition to his duty as it is possible to set
      it. It is the interest of every man to live as much at his ease as he can;
      and if his emoluments are to be precisely the same, whether he does or
      does not perform some very laborious duty, it is certainly his interest,
      at least as interest is vulgarly understood, either to neglect it
      altogether, or, if he is subject to some authority which will not suffer
      him to do this, to perform it in as careless and slovenly a manner as that
      authority will permit. If he is naturally active and a lover of labour, it
      is his interest to employ that activity in any way from which he can
      derive some advantage, rather than in the performance of his duty, from
      which he can derive none.
    
      If the authority to which he is subject resides in the body corporate, the
      college, or university, of which he himself is a member, and in which the
      greater part of the other members are, like himself, persons who either
      are, or ought to be teachers, they are likely to make a common cause, to
      be all very indulgent to one another, and every man to consent that his
      neighbour may neglect his duty, provided he himself is allowed to neglect
      his own. In the university of Oxford, the greater part of the public
      professors have, for these many years, given up altogether even the
      pretence of teaching.
    
      If the authority to which he is subject resides, not so much in the body
      corporate, of which he is a member, as in some other extraneous persons,
      in the bishop of the diocese, for example, in the governor of the
      province, or, perhaps, in some minister of state, it is not, indeed, in
      this case, very likely that he will be suffered to neglect his duty
      altogether. All that such superiors, however, can force him to do, is to
      attend upon his pupils a certain number of hours, that is, to give a
      certain number of lectures in the week, or in the year. What those
      lectures shall be, must still depend upon the diligence of the teacher;
      and that diligence is likely to be proportioned to the motives which he
      has for exerting it. An extraneous jurisdiction of this kind, besides, is
      liable to be exercised both ignorantly and capriciously. In its nature, it
      is arbitrary and discretionary; and the persons who exercise it, neither
      attending upon the lectures of the teacher themselves, nor perhaps
      understanding the sciences which it is his business to teach, are seldom
      capable of exercising it with judgment. From the insolence of office, too,
      they are frequently indifferent how they exercise it, and are very apt to
      censure or deprive him of his office wantonly and without any just cause.
      The person subject to such jurisdiction is necessarily degraded by it,
      and, instead of being one of the most respectable, is rendered one of the
      meanest and most contemptible persons in the society. It is by powerful
      protection only, that he can effectually guard himself against the bad
      usage to which he is at all times exposed; and this protection he is most
      likely to gain, not by ability or diligence in his profession, but by
      obsequiousness to the will of his superiors, and by being ready, at all
      times, to sacrifice to that will the rights, the interest, and the honour
      of the body corporate, of which he is a member. Whoever has attended for
      any considerable time to the administration of a French university, must
      have had occasion to remark the effects which naturally result from an
      arbitrary and extraneous jurisdiction of this kind.
    
      Whatever forces a certain number of students to any college or university,
      independent of the merit or reputation of the teachers, tends more or less
      to diminish the necessity of that merit or reputation.
    
      The privileges of graduates in arts, in law, physic, and divinity, when
      they can be obtained only by residing a certain number of years in certain
      universities, necessarily force a certain number of students to such
      universities, independent of the merit or reputation of the teachers. The
      privileges of graduates are a sort of statutes of apprenticeship, which
      have contributed to the improvement of education just as the other
      statutes of apprenticeship have to that of arts and manufactures.
    
      The charitable foundations of scholarships, exhibitions, bursaries, etc.
      necessarily attach a certain number of students to certain colleges,
      independent altogether of the merit of those particular colleges. Were the
      students upon such charitable foundations left free to choose what college
      they liked best, such liberty might perhaps contribute to excite some
      emulation among different colleges. A regulation, on the contrary, which
      prohibited even the independent members of every particular college from
      leaving it, and going to any other, without leave first asked and obtained
      of that which they meant to abandon, would tend very much to extinguish
      that emulation.
    
      If in each college, the tutor or teacher, who was to instruct each student
      in all arts and sciences, should not be voluntarily chosen by the student,
      but appointed by the head of the college; and if, in case of neglect,
      inability, or bad usage, the student should not be allowed to change him
      for another, without leave first asked and obtained; such a regulation
      would not only tend very much to extinguish all emulation among the
      different tutors of the same college, but to diminish very much, in all of
      them, the necessity of diligence and of attention to their respective
      pupils. Such teachers, though very well paid by their students, might be
      as much disposed to neglect them, as those who are not paid by them at all
      or who have no other recompense but their salary.
    
      If the teacher happens to be a man of sense, it must be an unpleasant
      thing to him to be conscious, while he is lecturing to his students, that
      he is either speaking or reading nonsense, or what is very little better
      than nonsense. It must, too, be unpleasant to him to observe, that the
      greater part of his students desert his lectures; or perhaps, attend upon
      them with plain enough marks of neglect, contempt, and derision. If he is
      obliged, therefore, to give a certain number of lectures, these motives
      alone, without any other interest, might dispose him to take some pains to
      give tolerably good ones. Several different expedients, however, may be
      fallen upon, which will effectually blunt the edge of all those
      incitements to diligence. The teacher, instead of explaining to his pupils
      himself the science in which he proposes to instruct them, may read some
      book upon it; and if this book is written in a foreign and dead language,
      by interpreting it to them into their own, or, what would give him still
      less trouble, by making them interpret it to him, and by now and then
      making an occasional remark upon it, he may flatter himself that he is
      giving a lecture. The slightest degree of knowledge and application will
      enable him to do this, without exposing himself to contempt or derision,
      by saying any thing that is really foolish, absurd, or ridiculous. The
      discipline of the college, at the same time, may enable him to force all
      his pupils to the most regular attendance upon his sham lecture, and to
      maintain the most decent and respectful behaviour during the whole time of
      the performance.
    
      The discipline of colleges and universities is in general contrived, not
      for the benefit of the students, but for the interest, or, more properly
      speaking, for the ease of the masters. Its object is, in all cases, to
      maintain the authority of the master, and, whether he neglects or performs
      his duty, to oblige the students in all cases to behave to him as if he
      performed it with the greatest diligence and ability. It seems to presume
      perfect wisdom and virtue in the one order, and the greatest weakness and
      folly in the other. Where the masters, however, really perform their duty,
      there are no examples, I believe, that the greater part of the students
      ever neglect theirs. No discipline is ever requisite to force attendance
      upon lectures which are really worth the attending, as is well known
      wherever any such lectures are given. Force and restraint may, no doubt,
      be in some degree requisite, in order to oblige children, or very young
      boys, to attend to those parts of education, which it is thought necessary
      for them to acquire during that early period of life; but after twelve or
      thirteen years of age, provided the master does his duty, force or
      restraint can scarce ever be necessary to carry on any part of education.
      Such is the generosity of the greater part of young men, that so far from
      being disposed to neglect or despise the instructions of their master,
      provided he shews some serious intention of being of use to them, they are
      generally inclined to pardon a great deal of incorrectness in the
      performance of his duty, and sometimes even to conceal from the public a
      good deal of gross negligence.
    
      Those parts of education, it is to be observed, for the teaching of which
      there are no public institutions, are generally the best taught. When a
      young man goes to a fencing or a dancing school, he does not, indeed,
      always learn to fence or to dance very well; but he seldom fails of
      learning to fence or to dance. The good effects of the riding school are
      not commonly so evident. The expense of a riding school is so great, that
      in most places it is a public institution. The three most essential parts
      of literary education, to read, write, and account, it still continues to
      be more common to acquire in private than in public schools; and it very
      seldom happens, that anybody fails of acquiring them to the degree in
      which it is necessary to acquire them.
    
      In England, the public schools are much less corrupted than the
      universities. In the schools, the youth are taught, or at least may be
      taught, Greek and Latin; that is, everything which the masters pretend to
      teach, or which it is expected they should teach. In the universities, the
      youth neither are taught, nor always can find any proper means of being
      taught the sciences, which it is the business of those incorporated bodies
      to teach. The reward of the schoolmaster, in most cases, depends
      principally, in some cases almost entirely, upon the fees or honoraries of
      his scholars. Schools have no exclusive privileges. In order to obtain the
      honours of graduation, it is not necessary that a person should bring a
      certificate of his having studied a certain number of years at a public
      school. If, upon examination, he appears to understand what is taught
      there, no questions are asked about the place where he learnt it.
    
      The parts of education which are commonly taught in universities, it may
      perhaps be said, are not very well taught. But had it not been for those
      institutions, they would not have been commonly taught at all; and both
      the individual and the public would have suffered a good deal from the
      want of those important parts of education.
    
      The present universities of Europe were originally, the greater part of
      them, ecclesiastical corporations, instituted for the education of
      churchmen. They were founded by the authority of the pope; and were so
      entirely under his immediate protection, that their members, whether
      masters or students, had all of them what was then called the benefit of
      clergy, that is, were exempted from the civil jurisdiction of the
      countries in which their respective universities were situated, and were
      amenable only to the ecclesiastical tribunals. What was taught in the
      greater part of those universities was suitable to the end of their
      institution, either theology, or something that was merely preparatory to
      theology.
    
      When Christianity was first established by law, a corrupted Latin had
      become the common language of all the western parts of Europe. The service
      of the church, accordingly, and the translation of the Bible which were
      read in churches, were both in that corrupted Latin; that is, in the
      common language of the country, After the irruption of the barbarous
      nations who overturned the Roman empire, Latin gradually ceased to be the
      language of any part of Europe. But the reverence of the people naturally
      preserves the established forms and ceremonies of religion long after the
      circumstances which first introduced and rendered them reasonable, are no
      more. Though Latin, therefore, was no longer understood anywhere by the
      great body of the people, the whole service of the church still continued
      to be performed in that language. Two different languages were thus
      established in Europe, in the same manner as in ancient Egypt: a language
      of the priests, and a language of the people; a sacred and a profane, a
      learned and an unlearned language. But it was necessary that the priests
      should understand something of that sacred and learned language in which
      they were to officiate; and the study of the Latin language therefore
      made, from the beginning, an essential part of university education.
    
      It was not so with that either of the Greek or of the Hebrew language. The
      infallible decrees of the church had pronounced the Latin translation of
      the Bible, commonly called the Latin Vulgate, to have been equally
      dictated by divine inspiration, and therefore of equal authority with the
      Greek and Hebrew originals. The knowledge of those two languages,
      therefore, not being indispensably requisite to a churchman, the study of
      them did not for along time make a necessary part of the common course of
      university education. There are some Spanish universities, I am assured,
      in which the study of the Greek language has never yet made any part of
      that course. The first reformers found the Greek text of the New
      Testament, and even the Hebrew text of the Old, more favourable to their
      opinions than the vulgate translation, which, as might naturally be
      supposed, had been gradually accommodated to support the doctrines of the
      Catholic Church. They set themselves, therefore, to expose the many errors
      of that translation, which the Roman catholic clergy were thus put under
      the necessity of defending or explaining. But this could not well be done
      without some knowledge of the original languages, of which the study was
      therefore gradually introduced into the greater part of universities; both
      of those which embraced, and of those which rejected, the doctrines of the
      reformation. The Greek language was connected with every part of that
      classical learning, which, though at first principally cultivated by
      catholics and Italians, happened to come into fashion much about the same
      time that the doctrines of the reformation were set on foot. In the
      greater part of universities, therefore, that language was taught previous
      to the study of philosophy, and as soon as the student had made some
      progress in the Latin. The Hebrew language having no connection with
      classical learning, and, except the Holy Scriptures, being the language of
      not a single book in any esteem the study of it did not commonly commence
      till after that of philosophy, and when the student had entered upon the
      study of theology.
    
      Originally, the first rudiments, both of the Greek and Latin languages,
      were taught in universities; and in some universities they still continue
      to be so. In others, it is expected that the student should have
      previously acquired, at least, the rudiments of one or both of those
      languages, of which the study continues to make everywhere a very
      considerable part of university education.
    
      The ancient Greek philosophy was divided into three great branches;
      physics, or natural philosophy; ethics, or moral philosophy; and logic.
      This general division seems perfectly agreeable to the nature of things.
    
      The great phenomena of nature, the revolutions of the heavenly bodies,
      eclipses, comets; thunder and lightning, and other extraordinary meteors;
      the generation, the life, growth, and dissolution of plants and animals;
      are objects which, as they necessarily excite the wonder, so they
      naturally call forth the curiosity of mankind to inquire into their
      causes. Superstition first attempted to satisfy this curiosity, by
      referring all those wonderful appearances to the immediate agency of the
      gods. Philosophy afterwards endeavoured to account for them from more
      familiar causes, or from such as mankind were better acquainted with, than
      the agency of the gods. As those great phenomena are the first objects of
      human curiosity, so the science which pretends to explain them must
      naturally have been the first branch of philosophy that was cultivated.
      The first philosophers, accordingly, of whom history has preserved any
      account, appear to have been natural philosophers.
    
      In every age and country of the world, men must have attended to the
      characters, designs, and actions of one another; and many reputable rules
      and maxims for the conduct of human life must have been laid down and
      approved of by common consent. As soon as writing came into fashion, wise
      men, or those who fancied themselves such, would naturally endeavour to
      increase the number of those established and respected maxims, and to
      express their own sense of what was either proper or improper conduct,
      sometimes in the more artificial form of apologues, like what are called
      the fables of Aesop; and sometimes in the more simple one of apophthegms
      or wise sayings, like the proverbs of Solomon, the verses of Theognis and
      Phocyllides, and some part of the works of Hesiod. They might continue in
      this manner, for a long time, merely to multiply the number of those
      maxims of prudence and morality, without even attempting to arrange them
      in any very distinct or methodical order, much less to connect them
      together by one or more general principles, from which they were all
      deducible, like effects from their natural causes. The beauty of a
      systematical arrangement of different observations, connected by a few
      common principles, was first seen in the rude essays of those ancient
      times towards a system of natural philosophy. Something of the same kind
      was afterwards attempted in morals. The maxims of common life were
      arranged in some methodical order, and connected together by a few common
      principles, in the same manner as they had attempted to arrange and
      connect the phenomena of nature. The science which pretends to investigate
      and explain those connecting principles, is what is properly called Moral
      Philosophy.
    
      Different authors gave different systems, both of natural and moral
      philosophy. But the arguments by which they supported those different
      systems, far from being always demonstrations, were frequently at best but
      very slender probabilities, and sometimes mere sophisms, which had no
      other foundation but the inaccuracy and ambiguity of common language.
      Speculative systems, have, in all ages of the world, been adopted for
      reasons too frivolous to have determined the judgment of any man of common
      sense, in a matter of the smallest pecuniary interest. Gross sophistry has
      scarce ever had any influence upon the opinions of mankind, except in
      matters of philosophy and speculation; and in these it has frequently had
      the greatest. The patrons of each system of natural and moral philosophy,
      naturally endeavoured to expose the weakness of the arguments adduced to
      support the systems which were opposite to their own. In examining those
      arguments, they were necessarily led to consider the difference between a
      probable and a demonstrative argument, between a fallacious and a
      conclusive one; and logic, or the science of the general principles of
      good and bad reasoning, necessarily arose out of the observations which a
      scrutiny of this kind gave occasion to; though, in its origin, posterior
      both to physics and to ethics, it was commonly taught, not indeed in all,
      but in the greater part of the ancient schools of philosophy, previously
      to either of those sciences. The student, it seems to have been thought,
      ought to understand well the difference between good and bad reasoning,
      before he was led to reason upon subjects of so great importance.
    
      This ancient division of philosophy into three parts was, in the greater
      part of the universities of Europe, changed for another into five.
    
      In the ancient philosophy, whatever was taught concerning the nature
      either of the human mind or of the Deity, made a part of the system of
      physics. Those beings, in whatever their essence might be supposed to
      consist, were parts of the great system of the universe, and parts, too,
      productive of the most important effects. Whatever human reason could
      either conclude or conjecture concerning them, made, as it were, two
      chapters, though no doubt two very important ones, of the science which
      pretended to give an account of the origin and revolutions of the great
      system of the universe. But in the universities of Europe, where
      philosophy was taught only as subservient to theology, it was natural to
      dwell longer upon these two chapters than upon any other of the science.
      They were gradually more and more extended, and were divided into many
      inferior chapters; till at last the doctrine of spirits, of which so
      little can be known, came to take up as much room in the system of
      philosophy as the doctrine of bodies, of which so much can be known. The
      doctrines concerning those two subjects were considered as making two
      distinct sciences. What are called metaphysics, or pneumatics, were set in
      opposition to physics, and were cultivated not only as the more sublime,
      but, for the purposes of a particular profession, as the more useful
      science of the two. The proper subject of experiment and observation, a
      subject in which a careful attention is capable of making so many useful
      discoveries, was almost entirely neglected. The subject in which, after a
      very few simple and almost obvious truths, the most careful attention can
      discover nothing but obscurity and uncertainty, and can consequently
      produce nothing but subtleties and sophisms, was greatly cultivated.
    
      When those two sciences had thus been set in opposition to one another,
      the comparison between them naturally gave birth to a third, to what was
      called ontology, or the science which treated of the qualities and
      attributes which were common to both the subjects of the other two
      sciences. But if subtleties and sophisms composed the greater part of the
      metaphysics or pneumatics of the schools, they composed the whole of this
      cobweb science of ontology, which was likewise sometimes called
      metaphysics.
    
      Wherein consisted the happiness and perfection of a man, considered not
      only as an individual, but as the member of a family, of a state, and of
      the great society of mankind, was the object which the ancient moral
      philosophy proposed to investigate. In that philosophy, the duties of
      human life were treated of as subservient to the happiness and perfection
      of human life, But when moral, as well as natural philosophy, came to be
      taught only as subservient to theology, the duties of human life were
      treated of as chiefly subservient to the happiness of a life to come. In
      the ancient philosophy, the perfection of virtue was represented as
      necessarily productive, to the person who possessed it, of the most
      perfect happiness in this life. In the modern philosophy, it was
      frequently represented as generally, or rather as almost always,
      inconsistent with any degree of happiness in this life; and heaven was to
      be earned only by penance and mortification, by the austerities and
      abasement of a monk, not by the liberal, generous, and spirited conduct of
      a man. Casuistry, and an ascetic morality, made up, in most cases, the
      greater part of the moral philosophy of the schools. By far the most
      important of all the different branches of philosophy became in this
      manner by far the most corrupted.
    
      Such, therefore, was the common course of philosophical education in the
      greater part of the universities in Europe. Logic was taught first;
      ontology came in the second place; pneumatology, comprehending the
      doctrine concerning the nature of the human soul and of the Deity, in the
      third; in the fourth followed a debased system of moral philosophy, which
      was considered as immediately connected with the doctrines of
      pneumatology, with the immortality of the human soul, and with the rewards
      and punishments which, from the justice of the Deity, were to be expected
      in a life to come: a short and superficial system of physics usually
      concluded the course.
    
      The alterations which the universities of Europe thus introduced into the
      ancient course of philosophy were all meant for the education of
      ecclesiastics, and to render it a more proper introduction to the study of
      theology. But the additional quantity of subtlety and sophistry, the
      casuistry and ascetic morality which those alterations introduced into it,
      certainly did not render it more for the education of gentlemen or men of
      the world, or more likely either to improve the understanding or to mend
      the heart.
    
      This course of philosophy is what still continues to be taught in the
      greater part of the universities of Europe, with more or less diligence,
      according as the constitution of each particular university happens to
      render diligence more or less necessary to the teachers. In some of the
      richest and best endowed universities, the tutors content themselves with
      teaching a few unconnected shreds and parcels of this corrupted course;
      and even these they commonly teach very negligently and superficially.
    
      The improvements which, in modern times have been made in several
      different branches of philosophy, have not, the greater part of them, been
      made in universities, though some, no doubt, have. The greater part of
      universities have not even been very forward to adopt those improvements
      after they were made; and several of those learned societies have chosen
      to remain, for a long time, the sanctuaries in which exploded systems and
      obsolete prejudices found shelter and protection, after they had been
      hunted out of every other corner of the world. In general, the richest and
      best endowed universities have been slowest in adopting those
      improvements, and the most averse to permit any considerable change in the
      established plan of education. Those improvements were more easily
      introduced into some of the poorer universities, in which the teachers,
      depending upon their reputation for the greater part of their subsistence,
      were obliged to pay more attention to the current opinions of the world.
    
      But though the public schools and universities of Europe were originally
      intended only for the education of a particular profession, that of
      churchmen; and though they were not always very diligent in instructing
      their pupils, even in the sciences which were supposed necessary for that
      profession; yet they gradually drew to themselves the education of almost
      all other people, particularly of almost all gentlemen and men of fortune.
      No better method, it seems, could be fallen upon, of spending, with any
      advantage, the long interval between infancy and that period of life at
      which men begin to apply in good earnest to the real business of the
      world, the business which is to employ them during the remainder of their
      days. The greater part of what is taught in schools and universities,
      however, does not seem to be the most proper preparation for that
      business.
    
      In England, it becomes every day more and more the custom to send young
      people to travel in foreign countries immediately upon their leaving
      school, and without sending them to any university. Our young people, it
      is said, generally return home much improved by their travels. A young
      man, who goes abroad at seventeen or eighteen, and returns home at
      one-and-twenty, returns three or four years older than he was when he went
      abroad; and at that age it is very difficult not to improve a good deal in
      three or four years. In the course of his travels, he generally acquires
      some knowledge of one or two foreign languages; a knowledge, however,
      which is seldom sufficient to enable him either to speak or write them
      with propriety. In other respects, he commonly returns home more
      conceited, more unprincipled, more dissipated, and more incapable of my
      serious application, either to study or to business, than he could well
      have become in so short a time had he lived at home. By travelling so very
      young, by spending in the most frivolous dissipation the most precious
      years of his life, at a distance from the inspection and control of his
      parents and relations, every useful habit, which the earlier parts of his
      education might have had some tendency to form in him, instead of being
      riveted and confirmed, is almost necessarily either weakened or effaced.
      Nothing but the discredit into which the universities are allowing
      themselves to fall, could ever have brought into repute so very absurd a
      practice as that of travelling at this early period of life. By sending
      his son abroad, a father delivers himself, at least for some time, from so
      disagreeable an object as that of a son unemployed, neglected, and going
      to ruin before his eyes.
    
      Such have been the effects of some of the modern institutions for
      education.
    
      Different plans and different institutions for education seem to have
      taken place in other ages and nations.
    
      In the republics of ancient Greece, every free citizen was instructed,
      under the direction of the public magistrate, in gymnastic exercises and
      in music. By gymnastic exercises, it was intended to harden his body, to
      sharpen his courage, and to prepare him for the fatigues and dangers of
      war; and as the Greek militia was, by all accounts, one of the best that
      ever was in the world, this part of their public education must have
      answered completely the purpose for which it was intended. By the other
      part, music, it was proposed, at least by the philosophers and historians,
      who have given us an account of those institutions, to humanize the mind,
      to soften the temper, and to dispose it for performing all the social and
      moral duties of public and private life.
    
      In ancient Rome, the exercises of the Campus Martius answered the same
      purpose as those of the Gymnasium in ancient Greece, and they seem to have
      answered it equally well. But among the Romans there was nothing which
      corresponded to the musical education of the Greeks. The morals of the
      Romans, however, both in private and public life, seem to have been, not
      only equal, but, upon the whole, a good deal superior to those of the
      Greeks. That they were superior in private life, we have the express
      testimony of Polybius, and of Dionysius of Halicarnassus, two authors well
      acquainted with both nations; and the whole tenor of the Greek and Roman
      history bears witness to the superiority of the public morals of the
      Romans. The good temper and moderation of contending factions seem to be
      the most essential circumstances in the public morals of a free people.
      But the factions of the Greeks were almost always violent and sanguinary;
      whereas, till the time of the Gracchi, no blood had ever been shed in any
      Roman faction; and from the time of the Gracchi, the Roman republic may be
      considered as in reality dissolved. Notwithstanding, therefore, the very
      respectable authority of Plato, Aristotle, and Polybius, and
      notwithstanding the very ingenious reasons by which Mr. Montesquieu
      endeavours to support that authority, it seems probable that the musical
      education of the Greeks had no great effect in mending their morals,
      since, without any such education, those of the Romans were, upon the
      whole, superior. The respect of those ancient sages for the institutions
      of their ancestors had probably disposed them to find much political
      wisdom in what was, perhaps, merely an ancient custom, continued, without
      interruption, from the earliest period of those societies, to the times in
      which they had arrived at a considerable degree of refinement. Music and
      dancing are the great amusements of almost all barbarous nations, and the
      great accomplishments which are supposed to fit any man for entertaining
      his society. It is so at this day among the negroes on the coast of
      Africa. It was so among the ancient Celtes, among the ancient
      Scandinavians, and, as we may learn from Homer, among the ancient Greeks,
      in the times preceding the Trojan war. When the Greek tribes had formed
      themselves into little republics, it was natural that the study of those
      accomplishments should for a long time make a part of the public and
      common education of the people.
    
      The masters who instructed the young people, either in music or in
      military exercises, do not seem to have been paid, or even appointed by
      the state, either in Rome or even at Athens, the Greek republic of whose
      laws and customs we are the best informed. The state required that every
      free citizen should fit himself for defending it in war, and should upon
      that account, learn his military exercises. But it left him to learn them
      of such masters as he could find; and it seems to have advanced nothing
      for this purpose, but a public field or place of exercise, in which he
      should practise and perform them.
    
      In the early ages, both of the Greek and Roman republics, the other parts
      of education seem to have consisted in learning to read, write, and
      account, according to the arithmetic of the times. These accomplishments
      the richer citizens seem frequently to have acquired at home, by the
      assistance of some domestic pedagogue, who was, generally, either a slave
      or a freedman; and the poorer citizens in the schools of such masters as
      made a trade of teaching for hire. Such parts of education, however, were
      abandoned altogether to the care of the parents or guardians of each
      individual. It does not appear that the state ever assumed any inspection
      or direction of them. By a law of Solon, indeed, the children were
      acquitted from maintaining those parents who had neglected to instruct
      them in some profitable trade or business.
    
      In the progress of refinement, when philosophy and rhetoric came into
      fashion, the better sort of people used to send their children to the
      schools of philosophers and rhetoricians, in order to be instructed in
      these fashionable sciences. But those schools were not supported by the
      public. They were, for a long time, barely tolerated by it. The demand for
      philosophy and rhetoric was, for a long time, so small, that the first
      professed teachers of either could not find constant employment in any one
      city, but were obliged to travel about from place to place. In this manner
      lived Zeno of Elea, Protagoras, Gorgias, Hippias, and many others. As the
      demand increased, the school, both of philosophy and rhetoric, became
      stationary, first in Athens, and afterwards in several other cities. The
      state, however, seems never to have encouraged them further, than by
      assigning to some of them a particular place to teach in, which was
      sometimes done, too, by private donors. The state seems to have assigned
      the Academy to Plato, the Lyceum to Aristotle, and the Portico to Zeno of
      Citta, the founder of the Stoics. But Epicurus bequeathed his gardens to
      his own school. Till about the time of Marcus Antoninus, however, no
      teacher appears to have had any salary from the public, or to have had any
      other emoluments, but what arose from the honorarius or fees of his
      scholars. The bounty which that philosophical emperor, as we learn from
      Lucian, bestowed upon one of the teachers of philosophy, probably lasted
      no longer than his own life. There was nothing equivalent to the
      privileges of graduation; and to have attended any of those schools was
      not necessary, in order to be permitted to practise any particular trade
      or profession. If the opinion of their own utility could not draw scholars
      to them, the law neither forced anybody to go to them, nor rewarded
      anybody for having gone to them. The teachers had no jurisdiction over
      their pupils, nor any other authority besides that natural authority which
      superior virtue and abilities never fail to procure from young people
      towards those who are entrusted with any part of their education.
    
      At Rome, the study of the civil law made a part of the education, not of
      the greater part of the citizens, but of some particular families. The
      young people, however, who wished to acquire knowledge in the law, had no
      public school to go to, and had no other method of studying it, than by
      frequenting the company of such of their relations and friends as were
      supposed to understand it. It is, perhaps, worth while to remark, that
      though the laws of the twelve tables were many of them copied from those
      of some ancient Greek republics, yet law never seems to have grown up to
      be a science in any republic of ancient Greece. In Rome it became a
      science very early, and gave a considerable degree of illustration to
      those citizens who had the reputation of understanding it. In the
      republics of ancient Greece, particularly in Athens, the ordinary courts
      of justice consisted of numerous, and therefore disorderly, bodies of
      people, who frequently decided almost at random, or as clamour, faction,
      and party-spirit, happened to determine. The ignominy of an unjust
      decision, when it was to be divided among five hundred, a thousand, or
      fifteen hundred people (for some of their courts were so very numerous),
      could not fall very heavy upon any individual. At Rome, on the contrary,
      the principal courts of justice consisted either of a single judge, or of
      a small number of judges, whose characters, especially as they deliberated
      always in public, could not fail to be very much affected by any rash or
      unjust decision. In doubtful cases such courts, from their anxiety to
      avoid blame, would naturally endeavour to shelter themselves under the
      example or precedent of the judges who had sat before them, either in the
      same or in some other court. This attention to practice and precedent,
      necessarily formed the Roman law into that regular and orderly system in
      which it has been delivered down to us; and the like attention has had the
      like effects upon the laws of every other country where such attention has
      taken place. The superiority of character in the Romans over that of the
      Greeks, so much remarked by Polybius and Dionysius of Halicarnassus, was
      probably more owing to the better constitution of their courts of justice,
      than to any of the circumstances to which those authors ascribe it. The
      Romans are said to have been particularly distinguished for their superior
      respect to an oath. But the people who were accustomed to make oath only
      before some diligent and well informed court of justice, would naturally
      be much more attentive to what they swore, than they who were accustomed
      to do the same thing before mobbish and disorderly assemblies.
    
      The abilities, both civil and military, of the Greeks and Romans, will
      readily be allowed to have been at least equal to those of any modern
      nation. Our prejudice is perhaps rather to overrate them. But except in
      what related to military exercises, the state seems to have been at no
      pains to form those great abilities; for I cannot be induced to believe
      that the musical education of the Greeks could be of much consequence in
      forming them. Masters, however, had been found, it seems, for instructing
      the better sort of people among those nations, in every art and science in
      which the circumstances of their society rendered it necessary or
      convenient for them to be instructed. The demand for such instruction
      produced, what it always produces, the talent for giving it; and the
      emulation which an unrestrained competition never fails to excite, appears
      to have brought that talent to a very high degree of perfection. In the
      attention which the ancient philosophers excited, in the empire which they
      acquired over the opinions and principles of their auditors, in the
      faculty which they possessed of giving a certain tone and character to the
      conduct and conversation of those auditors, they appear to have been much
      superior to any modern teachers. In modern times, the diligence of public
      teachers is more or less corrupted by the circumstances which render them
      more or less independent of their success and reputation in their
      particular professions. Their salaries, too, put the private teacher, who
      would pretend to come into competition with them, in the same state with a
      merchant who attempts to trade without a bounty, in competition with those
      who trade with a considerable one. If he sells his goods at nearly the
      same price, he cannot have the same profit; and poverty and beggary at
      least, if not bankruptcy and ruin, will infallibly be his lot. If he
      attempts to sell them much dearer, he is likely to have so few customers,
      that his circumstances will not be much mended. The privileges of
      graduation, besides, are in many countries necessary, or at least
      extremely convenient, to most men of learned professions, that is, to the
      far greater part of those who have occasion for a learned education. But
      those privileges can be obtained only by attending the lectures of the
      public teachers. The most careful attendance upon the ablest instructions
      of any private teacher cannot always give any title to demand them. It is
      from these different causes that the private teacher of any of the
      sciences, which are commonly taught in universities, is, in modern times,
      generally considered as in the very lowest order of men of letters. A man
      of real abilities can scarce find out a more humiliating or a more
      unprofitable employment to turn them to. The endowments of schools and
      colleges have in this manner not only corrupted the diligence of public
      teachers, but have rendered it almost impossible to have any good private
      ones.
    
      Were there no public institutions for education, no system, no science,
      would be taught, for which there was not some demand, or which the
      circumstances of the times did not render it either necessary or
      convenient, or at least fashionable to learn. A private teacher could
      never find his account in teaching either an exploded and antiquated
      system of a science acknowledged to be useful, or a science universally
      believed to be a mere useless and pedantic heap of sophistry and nonsense.
      Such systems, such sciences, can subsist nowhere but in those incorporated
      societies for education, whose prosperity and revenue are in a great
      measure independent of their industry. Were there no public institutions
      for education, a gentleman, after going through, with application and
      abilities, the most complete course of education which the circumstances
      of the times were supposed to afford, could not come into the world
      completely ignorant of everything which is the common subject of
      conversation among gentlemen and men of the world.
    
      There are no public institutions for the education of women, and there is
      accordingly nothing useless, absurd, or fantastical, in the common course
      of their education. They are taught what their parents or guardians judge
      it necessary or useful for them to learn, and they are taught nothing
      else. Every part of their education tends evidently to some useful
      purpose; either to improve the natural attractions of their person, or to
      form their mind to reserve, to modesty, to chastity, and to economy; to
      render them both likely to became the mistresses of a family, and to
      behave properly when they have become such. In every part of her life, a
      woman feels some conveniency or advantage from every part of her
      education. It seldom happens that a man, in any part of his life, derives
      any conveniency or advantage from some of the most laborious and
      troublesome parts of his education.
    
      Ought the public, therefore, to give no attention, it may be asked, to the
      education of the people? Or, if it ought to give any, what are the
      different parts of education which it ought to attend to in the different
      orders of the people? and in what manner ought it to attend to them?
    
      In some cases, the state of society necessarily places the greater part of
      individuals in such situations as naturally form in them, without any
      attention of government, almost all the abilities and virtues which that
      state requires, or perhaps can admit of. In other cases, the state of the
      society does not place the greater part of individuals in such situations;
      and some attention of government is necessary, in order to prevent the
      almost entire corruption and degeneracy of the great body of the people.
    
      In the progress of the division of labour, the employment of the far
      greater part of those who live by labour, that is, of the great body of
      the people, comes to be confined to a few very simple operations;
      frequently to one or two. But the understandings of the greater part of
      men are necessarily formed by their ordinary employments. The man whose
      whole life is spent in performing a few simple operations, of which the
      effects, too, are perhaps always the same, or very nearly the same, has no
      occasion to exert his understanding, or to exercise his invention, in
      finding out expedients for removing difficulties which never occur. He
      naturally loses, therefore, the habit of such exertion, and generally
      becomes as stupid and ignorant as it is possible for a human creature to
      become. The torpor of his mind renders him not only incapable of relishing
      or bearing a part in any rational conversation, but of conceiving any
      generous, noble, or tender sentiment, and consequently of forming any just
      judgment concerning many even of the ordinary duties of private life. Of
      the great and extensive interests of his country he is altogether
      incapable of judging; and unless very particular pains have been taken to
      render him otherwise, he is equally incapable of defending his country in
      war. The uniformity of his stationary life naturally corrupts the courage
      of his mind, and makes him regard, with abhorrence, the irregular,
      uncertain, and adventurous life of a soldier. It corrupts even the
      activity of his body, and renders him incapable of exerting his strength
      with vigour and perseverance in any other employment, than that to which
      he has been bred. His dexterity at his own particular trade seems, in this
      manner, to be acquired at the expense of his intellectual, social, and
      martial virtues. But in every improved and civilized society, this is the
      state into which the labouring poor, that is, the great body of the
      people, must necessarily fall, unless government takes some pains to
      prevent it.
    
      It is otherwise in the barbarous societies, as they are commonly called,
      of hunters, of shepherds, and even of husbandmen in that rude state of
      husbandry which precedes the improvement of manufactures, and the
      extension of foreign commerce. In such societies, the varied occupations
      of every man oblige every man to exert his capacity, and to invent
      expedients for removing difficulties which are continually occurring.
      Invention is kept alive, and the mind is not suffered to fall into that
      drowsy stupidity, which, in a civilized society, seems to benumb the
      understanding of almost all the inferior ranks of people. In those
      barbarous societies, as they are called, every man, it has already been
      observed, is a warrior. Every man, too, is in some measure a statesman,
      and can form a tolerable judgment concerning the interest of the society,
      and the conduct of those who govern it. How far their chiefs are good
      judges in peace, or good leaders in war, is obvious to the observation of
      almost every single man among them. In such a society, indeed, no man can
      well acquire that improved and refined understanding which a few men
      sometimes possess in a more civilized state. Though in a rude society
      there is a good deal of variety in the occupations of every individual,
      there is not a great deal in those of the whole society. Every man does,
      or is capable of doing, almost every thing which any other man does, or is
      capable of being. Every man has a considerable degree of knowledge,
      ingenuity, and invention but scarce any man has a great degree. The
      degree, however, which is commonly possessed, is generally sufficient for
      conducting the whole simple business of the society. In a civilized state,
      on the contrary, though there is little variety in the occupations of the
      greater part of individuals, there is an almost infinite variety in those
      of the whole society. These varied occupations present an almost infinite
      variety of objects to the contemplation of those few, who, being attached
      to no particular occupation themselves, have leisure and inclination to
      examine the occupations of other people. The contemplation of so great a
      variety of objects necessarily exercises their minds in endless
      comparisons and combinations, and renders their understandings, in an
      extraordinary degree, both acute and comprehensive. Unless those few,
      however, happen to be placed in some very particular situations, their
      great abilities, though honourable to themselves, may contribute very
      little to the good government or happiness of their society.
      Notwithstanding the great abilities of those few, all the nobler parts of
      the human character may be, in a great measure, obliterated and
      extinguished in the great body of the people.
    
      The education of the common people requires, perhaps, in a civilized and
      commercial society, the attention of the public, more than that of people
      of some rank and fortune. People of some rank and fortune are generally
      eighteen or nineteen years of age before they enter upon that particular
      business, profession, or trade, by which they propose to distinguish
      themselves in the world. They have, before that, full time to acquire, or
      at least to fit themselves for afterwards acquiring, every accomplishment
      which can recommend them to the public esteem, or render them worthy of
      it. Their parents or guardians are generally sufficiently anxious that
      they should be so accomplished, and are in most cases, willing enough to
      lay out the expense which is necessary for that purpose. If they are not
      always properly educated, it is seldom from the want of expense laid out
      upon their education, but from the improper application of that expense.
      It is seldom from the want of masters, but from the negligence and
      incapacity of the masters who are to be had, and from the difficulty, or
      rather from the impossibility, which there is, in the present state of
      things, of finding any better. The employments, too, in which people of
      some rank or fortune spend the greater part of their lives, are not, like
      those of the common people, simple and uniform. They are almost all of
      them extremely complicated, and such as exercise the head more than the
      hands. The understandings of those who are engaged in such employments,
      can seldom grow torpid for want of exercise. The employments of people of
      some rank and fortune, besides, are seldom such as harass them from
      morning to night. They generally have a good deal of leisure, during which
      they may perfect themselves in every branch, either of useful or
      ornamental knowledge, of which they may have laid the foundation, or for
      which they may have acquired some taste in the earlier part of life.
    
      It is otherwise with the common people. They have little time to spare for
      education. Their parents can scarce afford to maintain them, even in
      infancy. As soon as they are able to work, they must apply to some trade,
      by which they can earn their subsistence. That trade, too, is generally so
      simple and uniform, as to give little exercise to the understanding;
      while, at the same time, their labour is both so constant and so severe,
      that it leaves them little leisure and less inclination to apply to, or
      even to think of any thing else.
    
      But though the common people cannot, in any civilized society, be so well
      instructed as people of some rank and fortune; the most essential parts of
      education, however, to read, write, and account, can be acquired at so
      early a period of life, that the greater part, even of those who are to be
      bred to the lowest occupations, have time to acquire them before they can
      be employed in those occupations. For a very small expense, the public can
      facilitate, can encourage and can even impose upon almost the whole body
      of the people, the necessity of acquiring those most essential parts of
      education.
    
      The public can facilitate this acquisition, by establishing in every
      parish or district a little school, where children maybe taught for a
      reward so moderate, that even a common labourer may afford it; the master
      being partly, but not wholly, paid by the public; because, if he was
      wholly, or even principally, paid by it, he would soon learn to neglect
      his business. In Scotland, the establishment of such parish schools has
      taught almost the whole common people to read, and a very great proportion
      of them to write and account. In England, the establishment of charity
      schools has had an effect of the same kind, though not so universally,
      because the establishment is not so universal. If, in those little
      schools, the books by which the children are taught to read, were a little
      more instructive than they commonly are; and if, instead of a little
      smattering in Latin, which the children of the common people are sometimes
      taught there, and which can scarce ever be of any use to them, they were
      instructed in the elementary parts of geometry and mechanics; the literary
      education of this rank of people would, perhaps, be as complete as can be.
      There is scarce a common trade, which does not afford some opportunities
      of applying to it the principles of geometry and mechanics, and which
      would not, therefore, gradually exercise and improve the common people in
      those principles, the necessary introduction to the most sublime, as well
      as to the most useful sciences.
    
      The public can encourage the acquisition of those most essential parts of
      education, by giving small premiums, and little badges of distinction, to
      the children of the common people who excel in them.
    
      The public can impose upon almost the whole body of the people the
      necessity of acquiring the most essential parts of education, by obliging
      every man to undergo an examination or probation in them, before he can
      obtain the freedom in any corporation, or be allowed to set up any trade,
      either in a village or town corporate.
    
      It was in this manner, by facilitating the acquisition of their military
      and gymnastic exercises, by encouraging it, and even by imposing upon the
      whole body of the people the necessity of learning those exercises, that
      the Greek and Roman republics maintained the martial spirit of their
      respective citizens. They facilitated the acquisition of those exercises,
      by appointing a certain place for learning and practising them, and by
      granting to certain masters the privilege of teaching in that place. Those
      masters do not appear to have had either salaries or exclusive privileges
      of any kind. Their reward consisted altogether in what they got from their
      scholars; and a citizen, who had learnt his exercises in the public
      gymnasia, had no sort of legal advantage over one who had learnt them
      privately, provided the latter had learned them equally well. Those
      republics encouraged the acquisition of those exercises, by bestowing
      little premiums and badges of distinction upon those who excelled in them.
      To have gained a prize in the Olympic, Isthmian, or Nemaean games, gave
      illustration, not only to the person who gained it, but to his whole
      family and kindred. The obligation which every citizen was under, to serve
      a certain number of years, if called upon, in the armies of the republic,
      sufficiently imposed the necessity of learning those exercises, without
      which he could not be fit for that service.
    
      That in the progress of improvement, the practice of military exercises,
      unless government takes proper pains to support it, goes gradually to
      decay, and, together with it, the martial spirit of the great body of the
      people, the example of modern Europe sufficiently demonstrates. But the
      security of every society must always depend, more or less, upon the
      martial spirit of the great body of the people. In the present times,
      indeed, that martial spirit alone, and unsupported by a well-disciplined
      standing army, would not, perhaps, be sufficient for the defence and
      security of any society. But where every citizen had the spirit of a
      soldier, a smaller standing army would surely be requisite. That spirit,
      besides, would necessarily diminish very much the dangers to liberty,
      whether real or imaginary, which are commonly apprehended from a standing
      army. As it would very much facilitate the operations of that army against
      a foreign invader; so it would obstruct them as much, if unfortunately
      they should ever be directed against the constitution of the state.
    
      The ancient institutions of Greece and Rome seem to have been much more
      effectual for maintaining the martial spirit of the great body of the
      people, than the establishment of what are called the militias of modern
      times. They were much more simple. When they were once established, they
      executed themselves, and it required little or no attention from
      government to maintain them in the most perfect vigour. Whereas to
      maintain, even in tolerable execution, the complex regulations of any
      modern militia, requires the continual and painful attention of
      government, without which they are constantly falling into total neglect
      and disuse. The influence, besides, of the ancient institutions, was much
      more universal. By means of them, the whole body of the people was
      completely instructed in the use of arms; whereas it is but a very small
      part of them who can ever be so instructed by the regulations of any
      modern militia, except, perhaps, that of Switzerland. But a coward, a man
      incapable either of defending or of revenging himself, evidently wants one
      of the most essential parts of the character of a man. He is as much
      mutilated and deformed in his mind as another is in his body, who is
      either deprived of some of its most essential members, or has lost the use
      of them. He is evidently the more wretched and miserable of the two;
      because happiness and misery, which reside altogether in the mind, must
      necessarily depend more upon the healthful or unhealthful, the mutilated
      or entire state of the mind, than upon that of the body. Even though the
      martial spirit of the people were of no use towards the defence of the
      society, yet, to prevent that sort of mental mutilation, deformity, and
      wretchedness, which cowardice necessarily involves in it, from spreading
      themselves through the great body of the people, would still deserve the
      most serious attention of government; in the same manner as it would
      deserve its most serious attention to prevent a leprosy, or any other
      loathsome and offensive disease, though neither mortal nor dangerous, from
      spreading itself among them; though, perhaps, no other public good might
      result from such attention, besides the prevention of so great a public
      evil.
    
      The same thing may be said of the gross ignorance and stupidity which, in
      a civilized society, seem so frequently to benumb the understandings of
      all the inferior ranks of people. A man without the proper use of the
      intellectual faculties of a man, is, if possible, more contemptible than
      even a coward, and seems to be mutilated and deformed in a still more
      essential part of the character of human nature. Though the state was to
      derive no advantage from the instruction of the inferior ranks of people,
      it would still deserve its attention that they should not be altogether
      uninstructed. The state, however, derives no inconsiderable advantage from
      their instruction. The more they are instructed, the less liable they are
      to the delusions of enthusiasm and superstition, which, among ignorant
      nations frequently occasion the most dreadful disorders. An instructed and
      intelligent people, besides, are always more decent and orderly than an
      ignorant and stupid one. They feel themselves, each individually, more
      respectable, and more likely to obtain the respect of their lawful
      superiors, and they are, therefore, more disposed to respect those
      superiors. They are more disposed to examine, and more capable of seeing
      through, the interested complaints of faction and sedition; and they are,
      upon that account, less apt to be misled into any wanton or unnecessary
      opposition to the measures of government. In free countries, where the
      safety of government depends very much upon the favourable judgment which
      the people may form of its conduct, it must surely be of the highest
      importance, that they should not be disposed to judge rashly or
      capriciously concerning it.
    
      Art. III.—Of the Expense of the Institutions for the Instruction of
      People of all Ages.
    
      The institutions for the instruction of people of all ages, are chiefly
      those for religious instruction. This is a species of instruction, of
      which the object is not so much to render the people good citizens in this
      world, as to prepare them for another and a better world in the life to
      come. The teachers of the doctrine which contains this instruction, in the
      same manner as other teachers, may either depend altogether for their
      subsistence upon the voluntary contributions of their hearers; or they may
      derive it from some other fund, to which the law of their country may
      entitle them; such as a landed estate, a tythe or land tax, an established
      salary or stipend. Their exertion, their zeal and industry, are likely to
      be much greater in the former situation than in the latter. In this
      respect, the teachers of a new religion have always had a considerable
      advantage in attacking those ancient and established systems, of which the
      clergy, reposing themselves upon their benefices, had neglected to keep up
      the fervour of faith and devotion in the great body of the people; and
      having given themselves up to indolence, were become altogether incapable
      of making any vigorous exertion in defence even of their own
      establishment. The clergy of an established and well endowed religion
      frequently become men of learning and elegance, who possess all the
      virtues of gentlemen, or which can recommend them to the esteem of
      gentlemen; but they are apt gradually to lose the qualities, both good and
      bad, which gave them authority and influence with the inferior ranks of
      people, and which had perhaps been the original causes of the success and
      establishment of their religion. Such a clergy, when attacked by a set of
      popular and bold, though perhaps stupid and ignorant enthusiasts, feel
      themselves as perfectly defenceless as the indolent, effeminate, and full
      fed nations of the southern parts of Asia, when they were invaded by the
      active, hardy, and hungry Tartars of the north. Such a clergy, upon such
      an emergency, have commonly no other resource than to call upon the civil
      magistrate to persecute, destroy, or drive out their adversaries, as
      disturbers of the public peace. It was thus that the Roman catholic clergy
      called upon the civil magistrate to persecute the protestants, and the
      church of England to persecute the dissenters; and that in general every
      religious sect, when it has once enjoyed, for a century or two, the
      security of a legal establishment, has found itself incapable of making
      any vigorous defence against any new sect which chose to attack its
      doctrine or discipline. Upon such occasions, the advantage, in point of
      learning and good writing, may sometimes be on the side of the established
      church. But the arts of popularity, all the arts of gaining proselytes,
      are constantly on the side of its adversaries. In England, those arts have
      been long neglected by the well endowed clergy of the established church,
      and are at present chiefly cultivated by the dissenters and by the
      methodists. The independent provisions, however, which in many places have
      been made for dissenting teachers, by means of voluntary subscriptions, of
      trust rights, and other evasions of the law, seem very much to have abated
      the zeal and activity of those teachers. They have many of them become
      very learned, ingenious, and respectable men; but they have in general
      ceased to be very popular preachers. The methodists, without half the
      learning of the dissenters, are much more in vogue.
    
      In the church of Rome the industry and zeal of the inferior clergy are
      kept more alive by the powerful motive of self-interest, than perhaps in
      any established protestant church. The parochial clergy derive many of
      them, a very considerable part of their subsistence from the voluntary
      oblations of the people; a source of revenue, which confession gives them
      many opportunities of improving. The mendicant orders derive their whole
      subsistence from such oblations. It is with them as with the hussars and
      light infantry of some armies; no plunder, no pay. The parochial clergy
      are like those teachers whose reward depends partly upon their salary, and
      partly upon the fees or honoraries which they get from their pupils; and
      these must always depend, more or less, upon their industry and
      reputation. The mendicant orders are like those teachers whose subsistence
      depends altogether upon their industry. They are obliged, therefore, to
      use every art which can animate the devotion of the common people. The
      establishment of the two great mendicant orders of St Dominic and St.
      Francis, it is observed by Machiavel, revived, in the thirteenth and
      fourteenth centuries, the languishing faith and devotion of the catholic
      church. In Roman catholic countries, the spirit of devotion is supported
      altogether by the monks, and by the poorer parochial clergy. The great
      dignitaries of the church, with all the accomplishments of gentlemen and
      men of the world, and sometimes with those of men of learning, are careful
      to maintain the necessary discipline over their inferiors, but seldom give
      themselves any trouble about the instruction of the people.
    
      “Most of the arts and professions in a state,” says by far the most
      illustrious philosopher and historian of the present age, “are of such a
      nature, that, while they promote the interests of the society, they are
      also useful or agreeable to some individuals; and, in that case, the
      constant rule of the magistrate, except, perhaps, on the first
      introduction of any art, is, to leave the profession to itself, and trust
      its encouragement to the individuals who reap the benefit of it. The
      artizans, finding their profits to rise by the favour of their customers,
      increase, as much as possible, their skill and industry; and as matters
      are not disturbed by any injudicious tampering, the commodity is always
      sure to be at all times nearly proportioned to the demand.
    
      “But there are also some callings which, though useful and even necessary
      in a state, bring no advantage or pleasure to any individual; and the
      supreme power is obliged to alter its conduct with regard to the retainers
      of those professions. It must give them public encouragement in order to
      their subsistence; and it must provide against that negligence to which
      they will naturally be subject, either by annexing particular honours to
      profession, by establishing a long subordination of ranks, and a strict
      dependence, or by some other expedient. The persons employed in the
      finances, fleets, and magistracy, are instances of this order of men.
    
      “It may naturally be thought, at first sight, that the ecclesiastics
      belong to the first class, and that their encouragement, as well as that
      of lawyers and physicians, may safely be entrusted to the liberality of
      individuals, who are attached to their doctrines, and who find benefit or
      consolation from their spiritual ministry and assistance. Their industry
      and vigilance will, no doubt, be whetted by such an additional motive; and
      their skill in the profession, as well as their address in governing the
      minds of the people, must receive daily increase, from their increasing
      practice, study, and attention.
    
      “But if we consider the matter more closely, we shall find that this
      interested diligence of the clergy is what every wise legislator will
      study to prevent; because, in every religion except the true, it is highly
      pernicious, and it has even a natural tendency to pervert the truth, by
      infusing into it a strong mixture of superstition, folly, and delusion.
      Each ghostly practitioner, in order to render himself more precious and
      sacred in the eyes of his retainers, will inspire them with the most
      violent abhorrence of all other sects, and continually endeavour, by some
      novelty, to excite the languid devotion of his audience. No regard will be
      paid to truth, morals, or decency, in the doctrines inculcated. Every
      tenet will be adopted that best suits the disorderly affections of the
      human frame. Customers will be drawn to each conventicle by new industry
      and address, in practising on the passions and credulity of the populace.
      And, in the end, the civil magistrate will find that he has dearly paid
      for his intended frugality, in saving a fixed establishment for the
      priests; and that, in reality, the most decent and advantageous
      composition, which he can make with the spiritual guides, is to bribe
      their indolence, by assigning stated salaries to their profession, and
      rendering it superfluous for them to be farther active, than merely to
      prevent their flock from straying in quest of new pastors. And in this
      manner ecclesiastical establishments, though commonly they arose at first
      from religious views, prove in the end advantageous to the political
      interests of society.”
    
      But whatever may have been the good or bad effects of the independent
      provision of the clergy, it has, perhaps, been very seldom bestowed upon
      them from any view to those effects. Times of violent religious
      controversy have generally been times of equally violent political
      faction. Upon such occasions, each political party has either found it, or
      imagined it, for his interest, to league itself with some one or other of
      the contending religious sects. But this could be done only by adopting,
      or, at least, by favouring the tenets of that particular sect. The sect
      which had the good fortune to be leagued with the conquering party
      necessarily shared in the victory of its ally, by whose favour and
      protection it was soon enabled, in some degree, to silence and subdue all
      its adversaries. Those adversaries had generally leagued themselves with
      the enemies of the conquering party, and were, therefore the enemies of
      that party. The clergy of this particular sect having thus become complete
      masters of the field, and their influence and authority with the great
      body of the people being in its highest vigour, they were powerful enough
      to overawe the chiefs and leaders of their own party, and to oblige the
      civil magistrate to respect their opinions and inclinations. Their first
      demand was generally that he should silence and subdue all their
      adversaries; and their second, that he should bestow an independent
      provision on themselves. As they had generally contributed a good deal to
      the victory, it seemed not unreasonable that they should have some share
      in the spoil. They were weary, besides, of humouring the people, and of
      depending upon their caprice for a subsistence. In making this demand,
      therefore, they consulted their own ease and comfort, without troubling
      themselves about the effect which it might have, in future times, upon the
      influence and authority of their order. The civil magistrate, who could
      comply with their demand only by giving them something which he would have
      chosen much rather to take, or to keep to himself, was seldom very forward
      to grant it. Necessity, however, always forced him to submit at last,
      though frequently not till after many delays, evasions, and affected
      excuses.
    
      But if politics had never called in the aid of religion, had the
      conquering party never adopted the tenets of one sect more than those of
      another, when it had gained the victory, it would probably have dealt
      equally and impartially with all the different sects, and have allowed
      every man to choose his own priest, and his own religion, as he thought
      proper. There would, and, in this case, no doubt, have been, a great
      multitude of religious sects. Almost every different congregation might
      probably have had a little sect by itself, or have entertained some
      peculiar tenets of its own. Each teacher, would, no doubt, have felt
      himself under the necessity of making the utmost exertion, and of using
      every art, both to preserve and to increase the number of his disciples.
      But as every other teacher would have felt himself under the same
      necessity, the success of no one teacher, or sect of teachers, could have
      been very great. The interested and active zeal of religious teachers can
      be dangerous and troublesome only where there is either but one sect
      tolerated in the society, or where the whole of a large society is divided
      into two or three great sects; the teachers of each acting by concert, and
      under a regular discipline and subordination. But that zeal must be
      altogether innocent, where the society is divided into two or three
      hundred, or, perhaps, into as many thousand small sects, of which no one
      could be considerable enough to disturb the public tranquillity. The
      teachers of each sect, seeing themselves surrounded on all sides with more
      adversaries than friends, would be obliged to learn that candour and
      moderation which are so seldom to be found among the teachers of those
      great sects, whose tenets, being supported by the civil magistrate, are
      held in veneration by almost all the inhabitants of extensive kingdoms and
      empires, and who, therefore, see nothing round them but followers,
      disciples, and humble admirers. The teachers of each little sect, finding
      themselves almost alone, would be obliged to respect those of almost every
      other sect; and the concessions which they would mutually find in both
      convenient and agreeable to make one to another, might in time, probably
      reduce the doctrine of the greater part of them to that pure and rational
      religion, free from every mixture of absurdity, imposture, or fanaticism,
      such as wise men have, in all ages of the world, wished to see
      established; but such as positive law has, perhaps, never yet established,
      and probably never will establish in any country; because, with regard to
      religion, positive law always has been, and probably always will be, more
      or less influenced by popular superstition and enthusiasm. This plan of
      ecclesiastical government, or, more properly, of no ecclesiastical
      government, was what the sect called Independents (a sect, no doubt, of
      very wild enthusiasts), proposed to establish in England towards the end
      of the civil war. If it had been established, though of a very
      unphilosophical origin, it would probably, by this time, have been
      productive of the most philosophical good temper and moderation with
      regard to every sort of religious principle. It has been established in
      Pennsylvania, where, though the quakers happen to be the most numerous,
      the law, in reality, favours no one sect more than another; and it is
      there said to have been productive of this philosophical good temper and
      moderation.
    
      But though this equality of treatment should not be productive of this
      good temper and moderation in all, or even in the greater part of the
      religious sects of a particular country; yet, provided those sects were
      sufficiently numerous, and each of them consequently too small to disturb
      the public tranquillity, the excessive zeal of each for its particular
      tenets could not well be productive of any very hurtful effects, but, on
      the contrary, of several good ones; and if the government was perfectly
      decided, both to let them all alone, and to oblige them all to let alone
      one another, there is little danger that they would not of their own
      accord, subdivide themselves fast enough, so as soon to become
      sufficiently numerous.
    
      In every civilized society, in every society where the distinction of
      ranks has once been completely established, there have been always two
      different schemes or systems of morality current at the same time; of
      which the one may be called the strict or austere; the other the liberal,
      or, if you will, the loose system. The former is generally admired and
      revered by the common people; the latter is commonly more esteemed and
      adopted by what are called the people of fashion. The degree of
      disapprobation with which we ought to mark the vices of levity, the vices
      which are apt to arise from great prosperity, and from the excess of
      gaiety and good humour, seems to constitute the principal distinction
      between those two opposite schemes or systems. In the liberal or loose
      system, luxury, wanton, and even disorderly mirth, the pursuit of pleasure
      to some degree of intemperance, the breach of chastity, at least in one of
      the two sexes, etc. provided they are not accompanied with gross
      indecency, and do not lead to falsehood and injustice, are generally
      treated with a good deal of indulgence, and are easily either excused or
      pardoned altogether. In the austere system, on the contrary, those
      excesses are regarded with the utmost abhorrence and detestation. The
      vices of levity are always ruinous to the common people, and a single
      week’s thoughtlessness and dissipation is often sufficient to undo a poor
      workman for ever, and to drive him, through despair, upon committing the
      most enormous crimes. The wiser and better sort of the common people,
      therefore, have always the utmost abhorrence and detestation of such
      excesses, which their experience tells them are so immediately fatal to
      people of their condition. The disorder and extravagance of several years,
      on the contrary, will not always ruin a man of fashion; and people of that
      rank are very apt to consider the power of indulging in some degree of
      excess, as one of the advantages of their fortune; and the liberty of
      doing so without censure or reproach, as one of the privileges which
      belong to their station. In people of their own station, therefore, they
      regard such excesses with but a small degree of disapprobation, and
      censure them either very slightly or not at all.
    
      Almost all religious sects have begun among the common people, from whom
      they have generally drawn their earliest, as well as their most numerous
      proselytes. The austere system of morality has, accordingly, been adopted
      by those sects almost constantly, or with very few exceptions; for there
      have been some. It was the system by which they could best recommend
      themselves to that order of people, to whom they first proposed their plan
      of reformation upon what had been before established. Many of them,
      perhaps the greater part of them, have even endeavoured to gain credit by
      refining upon this austere system, and by carrying it to some degree of
      folly and extravagance; and this excessive rigour has frequently
      recommended them, more than any thing else, to the respect and veneration
      of the common people.
    
      A man of rank and fortune is, by his station, the distinguished member of
      a great society, who attend to every part of his conduct, and who thereby
      oblige him to attend to every part of it himself. His authority and
      consideration depend very much upon the respect which this society bears
      to him. He dares not do anything which would disgrace or discredit him in
      it; and he is obliged to a very strict observation of that species of
      morals, whether liberal or austere, which the general consent of this
      society prescribes to persons of his rank and fortune. A man of low
      condition, on the contrary, is far from being a distinguished member of
      any great society. While he remains in a country village, his conduct may
      be attended to, and he may be obliged to attend to it himself. In this
      situation, and in this situation only, he may have what is called a
      character to lose. But as soon as he comes into a great city, he is sunk
      in obscurity and darkness. His conduct is observed and attended to by
      nobody; and he is, therefore, very likely to neglect it himself, and to
      abandon himself to every sort of low profligacy and vice. He never emerges
      so effectually from this obscurity, his conduct never excites so much the
      attention of any respectable society, as by his becoming the member of a
      small religious sect. He from that moment acquires a degree of
      consideration which he never had before. All his brother sectaries are,
      for the credit of the sect, interested to observe his conduct; and, if he
      gives occasion to any scandal, if he deviates very much from those austere
      morals which they almost always require of one another, to punish him by
      what is always a very severe punishment, even where no evil effects attend
      it, expulsion or excommunication from the sect. In little religious sects,
      accordingly, the morals of the common people have been almost always
      remarkably regular and orderly; generally much more so than in the
      established church. The morals of those little sects, indeed, have
      frequently been rather disagreeably rigorous and unsocial.
    
      There are two very easy and effectual remedies, however, by whose joint
      operation the state might, without violence, correct whatever was unsocial
      or disagreeably rigorous in the morals of all the little sects into which
      the country was divided.
    
      The first of those remedies is the study of science and philosophy, which
      the state might render almost universal among all people of middling or
      more than middling rank and fortune; not by giving salaries to teachers in
      order to make them negligent and idle, but by instituting some sort of
      probation, even in the higher and more difficult sciences, to be undergone
      by every person before he was permitted to exercise any liberal
      profession, or before he could be received as a candidate for any
      honourable office, of trust or profit. If the state imposed upon this
      order of men the necessity of learning, it would have no occasion to give
      itself any trouble about providing them with proper teachers. They would
      soon find better teachers for themselves, than any whom the state could
      provide for them. Science is the great antidote to the poison of
      enthusiasm and superstition; and where all the superior ranks of people
      were secured from it, the inferior ranks could not be much exposed to it.
    
      The second of those remedies is the frequency and gaiety of public
      diversions. The state, by encouraging, that is, by giving entire liberty
      to all those who, from their own interest, would attempt, without scandal
      or indecency, to amuse and divert the people by painting, poetry, music,
      dancing; by all sorts of dramatic representations and exhibitions; would
      easily dissipate, in the greater part of them, that melancholy and gloomy
      humour which is almost always the nurse of popular superstition and
      enthusiasm. Public diversions have always been the objects of dread and
      hatred to all the fanatical promoters of those popular frenzies. The
      gaiety and good humour which those diversions inspire, were altogether
      inconsistent with that temper of mind which was fittest for their purpose,
      or which they could best work upon. Dramatic representations, besides,
      frequently exposing their artifices to public ridicule, and sometimes even
      to public execration, were, upon that account, more than all other
      diversions, the objects of their peculiar abhorrence.
    
      In a country where the law favoured the teachers of no one religion more
      than those of another, it would not be necessary that any of them should
      have any particular or immediate dependency upon the sovereign or
      executive power; or that he should have anything to do either in
      appointing or in dismissing them from their offices. In such a situation,
      he would have no occasion to give himself any concern about them, further
      than to keep the peace among them, in the same manner as among the rest of
      his subjects, that is, to hinder them from persecuting, abusing, or
      oppressing one another. But it is quite otherwise in countries where there
      is an established or governing religion. The sovereign can in this case
      never be secure, unless he has the means of influencing in a considerable
      degree the greater part of the teachers of that religion.
    
      The clergy of every established church constitute a great incorporation.
      They can act in concert, and pursue their interest upon one plan, and with
      one spirit as much as if they were under the direction of one man; and
      they are frequently, too, under such direction. Their interest as an
      incorporated body is never the same with that of the sovereign, and is
      sometimes directly opposite to it. Their great interest is to maintain
      their authority with the people, and this authority depends upon the
      supposed certainty and importance of the whole doctrine which they
      inculcate, and upon the supposed necessity of adopting every part of it
      with the most implicit faith, in order to avoid eternal misery. Should the
      sovereign have the imprudence to appear either to deride, or doubt himself
      of the most trifling part of their doctrine, or from humanity, attempt to
      protect those who did either the one or the other, the punctilious honour
      of a clergy, who have no sort of dependency upon him, is immediately
      provoked to proscribe him as a profane person, and to employ all the
      terrors of religion, in order to oblige the people to transfer their
      allegiance to some more orthodox and obedient prince. Should he oppose any
      of their pretensions or usurpations, the danger is equally great. The
      princes who have dared in this manner to rebel against the church, over
      and above this crime of rebellion, have generally been charged, too, with
      the additional crime of heresy, notwithstanding their solemn protestations
      of their faith, and humble submission to every tenet which she thought
      proper to prescribe to them. But the authority of religion is superior to
      every other authority. The fears which it suggests conquer all other
      fears. When the authorized teachers of religion propagate through the
      great body of the people, doctrines subversive of the authority of the
      sovereign, it is by violence only, or by the force of a standing army,
      that he can maintain his authority. Even a standing army cannot in this
      case give him any lasting security; because if the soldiers are not
      foreigners, which can seldom be the case, but drawn from the great body of
      the people, which must almost always be the case, they are likely to be
      soon corrupted by those very doctrines. The revolutions which the
      turbulence of the Greek clergy was continually occasioning at
      Constantinople, as long as the eastern empire subsisted; the convulsions
      which, during the course of several centuries, the turbulence of the Roman
      clergy was continually occasioning in every part of Europe, sufficiently
      demonstrate how precarious and insecure must always be the situation of
      the sovereign, who has no proper means of influencing the clergy of the
      established and governing religion of his country.
    
      Articles of faith, as well as all other spiritual matters, it is evident
      enough, are not within the proper department of a temporal sovereign, who,
      though he may be very well qualified for protecting, is seldom supposed to
      be so for instructing the people. With regard to such matters, therefore,
      his authority can seldom be sufficient to counterbalance the united
      authority of the clergy of the established church. The public
      tranquillity, however, and his own security, may frequently depend upon
      the doctrines which they may think proper to propagate concerning such
      matters. As he can seldom directly oppose their decision, therefore, with
      proper weight and authority, it is necessary that he should be able to
      influence it; and he can influence it only by the fears and expectations
      which he may excite in the greater part of the individuals of the order.
      Those fears and expectations may consist in the fear of deprivation or
      other punishment, and in the expectation of further preferment.
    
      In all Christian churches, the benefices of the clergy are a sort of
      freeholds, which they enjoy, not during pleasure, but during life or good
      behaviour. If they held them by a more precarious tenure, and were liable
      to be turned out upon every slight disobligation either of the sovereign
      or of his ministers, it would perhaps be impossible for them to maintain
      their authority with the people, who would then consider them as mercenary
      dependents upon the court, in the sincerity of whose instructions they
      could no longer have any confidence. But should the sovereign attempt
      irregularly, and by violence, to deprive any number of clergymen of their
      freeholds, on account, perhaps, of their having propagated, with more than
      ordinary zeal, some factious or seditious doctrine, he would only render,
      by such persecution, both them and their doctrine ten times more popular,
      and therefore ten times more troublesome and dangerous, than they had been
      before. Fear is in almost all cases a wretched instrument of govermnent,
      and ought in particular never to be employed against any order of men who
      have the smallest pretensions to independency. To attempt to terrify them,
      serves only to irritate their bad humour, and to confirm them in an
      opposition, which more gentle usage, perhaps, might easily induce them
      either to soften, or to lay aside altogether. The violence which the
      French government usually employed in order to oblige all their
      parliaments, or sovereign courts of justice, to enregister any unpopular
      edict, very seldom succeeded. The means commonly employed, however, the
      imprisonment of all the refractory members, one would think, were forcible
      enough. The princes of the house of Stuart sometimes employed the like
      means in order to influence some of the members of the parliament of
      England, and they generally found them equally intractable. The parliament
      of England is now managed in another manner; and a very small experiment,
      which the duke of Choiseul made, about twelve years ago, upon the
      parliament of Paris, demonstrated sufficiently that all the parliaments of
      France might have been managed still more easily in the same manner. That
      experiment was not pursued. For though management and persuasion are
      always the easiest and safest instruments of government as force and
      violence are the worst and the most dangerous; yet such, it seems, is the
      natural insolence of man, that he almost always disdains to use the good
      instrument, except when he cannot or dare not use the bad one. The French
      government could and durst use force, and therefore disdained to use
      management and persuasion. But there is no order of men, it appears I
      believe, from the experience of all ages, upon whom it is so dangerous or
      rather so perfectly ruinous, to employ force and violence, as upon the
      respected clergy of an established church. The rights, the privileges, the
      personal liberty of every individual ecclesiastic, who is upon good terms
      with his own order, are, even in the most despotic governments, more
      respected than those of any other person of nearly equal rank and fortune.
      It is so in every gradation of despotism, from that of the gentle and mild
      government of Paris, to that of the violent and furious government of
      Constantinople. But though this order of men can scarce ever be forced,
      they may be managed as easily as any other; and the security of the
      sovereign, as well as the public tranquillity, seems to depend very much
      upon the means which he has of managing them; and those means seem to
      consist altogether in the preferment which he has to bestow upon them.
    
      In the ancient constitution of the Christian church, the bishop of each
      diocese was elected by the joint votes of the clergy and of the people of
      the episcopal city. The people did not long retain their right of
      election; and while they did retain it, they almost always acted under the
      influence of the clergy, who, in such spiritual matters, appeared to be
      their natural guides. The clergy, however, soon grew weary of the trouble
      of managing them, and found it easier to elect their own bishops
      themselves. The abbot, in the same manner, was elected by the monks of the
      monastery, at least in the greater part of abbacies. All the inferior
      ecclesiastical benefices comprehended within the diocese were collated by
      the bishop, who bestowed them upon such ecclesiastics as he thought
      proper. All church preferments were in this manner in the disposal of the
      church. The sovereign, though he might have some indirect influence in
      those elections, and though it was sometimes usual to ask both his consent
      to elect, and his approbation of the election, yet had no direct or
      sufficient means of managing the clergy. The ambition of every clergyman
      naturally led him to pay court, not so much to his sovereign as to his own
      order, from which only he could expect preferment.
    
      Through the greater part of Europe, the pope gradually drew to himself,
      first the collation of almost all bishoprics and abbacies, or of what were
      called consistorial benefices, and afterwards, by various machinations and
      pretences, of the greater part of inferior benefices comprehended within
      each diocese, little more being left to the bishop than what was barely
      necessary to give him a decent authority with his own clergy. By this
      arrangement the condition of the sovereign was still worse than it had
      been before. The clergy of all the different countries of Europe were thus
      formed into a sort of spiritual army, dispersed in different quarters
      indeed, but of which all the movements and operations could now be
      directed by one head, and conducted upon one uniform plan. The clergy of
      each particular country might be considered as a particular detachment of
      that army, of which the operations could easily be supported and seconded
      by all the other detachments quartered in the different countries round
      about. Each detachment was not only independent of the sovereign of the
      country in which it was quartered, and by which it was maintained, but
      dependent upon a foreign sovereign, who could at any time turn its arms
      against the sovereign of that particular country, and support them by the
      arms of all the other detachments.
    
      Those arms were the most formidable that can well be imagined. In the
      ancient state of Europe, before the establishment of arts and
      manufactures, the wealth of the clergy gave them the same sort of
      influence over the common people which that of the great barons gave them
      over their respective vassals, tenants, and retainers. In the great landed
      estates, which the mistaken piety both of princes and private persons had
      bestowed upon the church, jurisdictions were established, of the same kind
      with those of the great barons, and for the same reason. In those great
      landed estates, the clergy, or their bailiffs, could easily keep the
      peace, without the support or assistance either of the king or of any
      other person; and neither the king nor any other person could keep the
      peace there without the support and assistance of the clergy. The
      jurisdictions of the clergy, therefore, in their particular baronies or
      manors, were equally independent, and equally exclusive of the authority
      of the king’s courts, as those of the great temporal lords. The tenants of
      the clergy were, like those of the great barons, almost all tenants at
      will, entirely dependent upon their immediate lords, and, therefore,
      liable to be called out at pleasure, in order to fight in any quarrel in
      which the clergy might think proper to engage them. Over and above the
      rents of those estates, the clergy possessed in the tithes a very large
      portion of the rents of all the other estates in every kingdom of Europe.
      The revenues arising from both those species of rents were, the greater
      part of them, paid in kind, in corn, wine, cattle, poultry, etc. The
      quantity exceeded greatly what the clergy could themselves consume; and
      there were neither arts nor manufactures, for the produce of which they
      could exchange the surplus. The clergy could derive advantage from this
      immense surplus in no other way than by employing it, as the great barons
      employed the like surplus of their revenues, in the most profuse
      hospitality, and in the most extensive charity. Both the hospitality and
      the charity of the ancient clergy, accordingly, are said to have been very
      great. They not only maintained almost the whole poor of every kingdom,
      but many knights and gentlemen had frequently no other means of
      subsistence than by travelling about from monastery to monastery, under
      pretence of devotion, but in reality to enjoy the hospitality of the
      clergy. The retainers of some particular prelates were often as numerous
      as those of the greatest lay-lords; and the retainers of all the clergy
      taken together were, perhaps, more numerous than those of all the
      lay-lords. There was always much more union among the clergy than among
      the lay-lords. The former were under a regular discipline and
      subordination to the papal authority. The latter were under no regular
      discipline or subordination, but almost always equally jealous of one
      another, and of the king. Though the tenants and retainers of the clergy,
      therefore, had both together been less numerous than those of the great
      lay-lords, and their tenants were probably much less numerous, yet their
      union would have rendered them more formidable. The hospitality and
      charity of the clergy, too, not only gave them the command of a great
      temporal force, but increased very much the weight of their spiritual
      weapons. Those virtues procured them the highest respect and veneration
      among all the inferior ranks of people, of whom many were constantly, and
      almost all occasionally, fed by them. Everything belonging or related to
      so popular an order, its possessions, its privileges, its doctrines,
      necessarily appeared sacred in the eyes of the common people; and every
      violation of them, whether real or pretended, the highest act of
      sacrilegious wickedness and profaneness. In this state of things, if the
      sovereign frequently found it difficult to resist the confederacy of a few
      of the great nobility, we cannot wonder that he should find it still more
      so to resist the united force of the clergy of his own dominions,
      supported by that of the clergy of all the neighbouring dominions. In such
      circumstances, the wonder is, not that he was sometimes obliged to yield,
      but that he ever was able to resist.
    
      The privileges of the clergy in those ancient times (which to us, who live
      in the present times, appear the most absurd), their total exemption from
      the secular jurisdiction, for example, or what in England was called the
      benefit of clergy, were the natural, or rather the necessary, consequences
      of this state of things. How dangerous must it have been for the sovereign
      to attempt to punish a clergyman for any crime whatever, if his order were
      disposed to protect him, and to represent either the proof as insufficient
      for convicting so holy a man, or the punishment as too severe to be
      inflicted upon one whose person had been rendered sacred by religion? The
      sovereign could, in such circumstances, do no better than leave him to be
      tried by the ecclesiastical courts, who, for the honour of their own
      order, were interested to restrain, as much as possible, every member of
      it from committing enormous crimes, or even from giving occasion to such
      gross scandal as might disgust the minds of the people.
    
      In the state in which things were, through the greater part of Europe,
      during the tenth, eleventh, twelfth, and thirteenth centuries, and for
      some time both before and after that period, the constitution of the
      church of Rome may be considered as the most formidable combination that
      ever was formed against the authority and security of civil government, as
      well as against the liberty, reason, and happiness of mankind, which can
      flourish only where civil government is able to protect them. In that
      constitution, the grossest delusions of superstition were supported in
      such a manner by the private interests of so great a number of people, as
      put them out of all danger from any assault of human reason; because,
      though human reason might, perhaps, have been able to unveil, even to the
      eyes of the common people, some of the delusions of superstition, it could
      never have dissolved the ties of private interest. Had this constitution
      been attacked by no other enemies but the feeble efforts of human reason,
      it must have endured for ever. But that immense and well-built fabric,
      which all the wisdom and virtue of man could never have shaken, much less
      have overturned, was, by the natural course of things, first weakened, and
      afterwards in part destroyed; and is now likely, in the course of a few
      centuries more, perhaps, to crumble into ruins altogether.
    
      The gradual improvements of arts, manufactures, and commerce, the same
      causes which destroyed the power of the great barons, destroyed, in the
      same manner, through the greater part of Europe, the whole temporal
      manufactures, and commerce, the clergy, like the great barons, found
      something for which they could exchange their rude produce, and thereby
      discovered the means of spending their whole revenues upon their own
      persons, without giving any considerable share of them to other people.
      Their charity became gradually less extensive, their hospitality less
      liberal, or less profuse. Their retainers became consequently less
      numerous, and, by degrees, dwindled away altogether. The clergy, too, like
      the great barons, wished to get a better rent from their landed estates,
      in order to spend it, in the same manner, upon the gratification of their
      own private vanity and folly. But this increase of rent could be got only
      by granting leases to their tenants, who thereby became, in a great
      measure, independent of them. The ties of interest, which bound the
      inferior ranks of people to the clergy, were in this manner gradually
      broken and dissolved. They were even broken and dissolved sooner than
      those which bound the same ranks of people to the great barons; because
      the benefices of the church being, the greater part of them, much smaller
      than the estates of the great barons, the possessor of each benefice was
      much sooner able to spend the whole of its revenue upon his own person.
      During the greater part of the fourteenth and fifteenth centuries, the
      power of the great barons was, through the greater part of Europe, in full
      vigour. But the temporal power of the clergy, the absolute command which
      they had once had over the great body of the people was very much decayed.
      The power of the church was, by that time, very nearly reduced, through
      the greater part of Europe, to what arose from their spiritual authority;
      and even that spiritual authority was much weakened, when it ceased to be
      supported by the charity and hospitality of the clergy. The inferior ranks
      of people no longer looked upon that order as they had done before; as the
      comforters of their distress, and the relievers of their indigence. On the
      contrary, they were provoked and disgusted by the vanity, luxury, and
      expense of the richer clergy, who appeared to spend upon their own
      pleasures what had always before been regarded as the patrimony of the
      poor.
    
      In this situation of things, the sovereigns in the different states of
      Europe endeavoured to recover the influence which they had once had in the
      disposal of the great benefices of the church; by procuring to the deans
      and chapters of each diocese the restoration of their ancient right of
      electing the bishop; and to the monks of each abbacy that of electing the
      abbot. The re-establishing this ancient order was the object of several
      statutes enacted in England during the course of the fourteenth century,
      particularly of what is called the statute of provisors; and of the
      pragmatic sanction, established in France in the fifteenth century. In
      order to render the election valid, it was necessary that the sovereign
      should both consent to it before hand, and afterwards approve of the
      person elected; and though the election was still supposed to be free, he
      had, however all the indirect means which his situation necessarily
      afforded him, of influencing the clergy in his own dominions. Other
      regulations, of a similar tendency, were established in other parts of
      Europe. But the power of the pope, in the collation of the great benefices
      of the church, seems, before the reformation, to have been nowhere so
      effectually and so universally restrained as in France and England. The
      concordat afterwards, in the sixteenth century, gave to the kings of
      France the absolute right of presenting to all the great, or what are
      called the consistorial, benefices of the Gallican church.
    
      Since the establishment of the pragmatic sanction and of the concordat,
      the clergy of France have in general shewn less respect to the decrees of
      the papal court, than the clergy of any other catholic country. In all the
      disputes which their sovereign has had with the pope, they have almost
      constantly taken part with the former. This independency of the clergy of
      France upon the court of Rome seems to be principally founded upon the
      pragmatic sanction and the concordat. In the earlier periods of the
      monarchy, the clergy of France appear to have been as much devoted to the
      pope as those of any other country. When Robert, the second prince of the
      Capetian race, was most unjustly excommunicated by the court of Rome, his
      own servants, it is said, threw the victuals which came from his table to
      the dogs, and refused to taste any thing themselves which had been
      polluted by the contact of a person in his situation. They were taught to
      do so, it may very safely be presumed, by the clergy of his own dominions.
    
      The claim of collating to the great benefices of the church, a claim in
      defence of which the court of Rome had frequently shaken, and sometimes
      overturned, the thrones of some of the greatest sovereigns in Christendom,
      was in this manner either restrained or modified, or given up altogether,
      in many different parts of Europe, even before the time of the
      reformation. As the clergy had now less influence over the people, so the
      state had more influence over the clergy. The clergy, therefore, had both
      less power, and less inclination, to disturb the state.
    
      The authority of the church of Rome was in this state of declension, when
      the disputes which gave birth to the reformation began in Germany, and
      soon spread themselves through every part of Europe. The new doctrines
      were everywhere received with a high degree of popular favour. They were
      propagated with all that enthusiastic zeal which commonly animates the
      spirit of party, when it attacks established authority. The teachers of
      those doctrines, though perhaps, in other respects, not more learned than
      many of the divines who defended the established church, seem in general
      to have been better acquainted with ecclesiastical history, and with the
      origin and progress of that system of opinions upon which the authority of
      the church was established; and they had thereby the advantage in almost
      every dispute. The austerity of their manners gave them authority with the
      common people, who contrasted the strict regularity of their conduct with
      the disorderly lives of the greater part of their own clergy. They
      possessed, too, in a much higher degree than their adversaries, all the
      arts of popularity and of gaining proselytes; arts which the lofty and
      dignified sons of the church had long neglected, as being to them in a
      great measure useless. The reason of the new doctrines recommended them to
      some, their novelty to many; the hatred and contempt of the established
      clergy to a still greater number: but the zealous, passionate, and
      fanatical, though frequently coarse and rustic eloquence, with which they
      were almost everywhere inculcated, recommended them to by far the greatest
      number.
    
      The success of the new doctrines was almost everywhere so great, that the
      princes, who at that time happened to be on bad terms with the court of
      Rome, were, by means of them, easily enabled, in their own dominions, to
      overturn the church, which having lost the respect and veneration of the
      inferior ranks of people, could make scarce any resistance. The court of
      Rome had disobliged some of the smaller princes in the northern parts of
      Germany, whom it had probably considered as too insignificant to be worth
      the managing. They universally, therefore, established the reformation in
      their own dominions. The tyranny of Christiern II., and of Troll
      archbishop of Upsal, enabled Gustavus Vasa to expel them both from Sweden.
      The pope favoured the tyrant and the archbishop, and Gustavus Vasa found
      no difficulty in establishing the reformation in Sweden. Christiern II.
      was afterwards deposed from the throne of Denmark, where his conduct had
      rendered him as odious as in Sweden. The pope, however, was still disposed
      to favour him; and Frederic of Holstein, who had mounted the throne in his
      stead, revenged himself, by following the example of Gustavus Vasa. The
      magistrates of Berne and Zurich, who had no particular quarrel with the
      pope, established with great ease the reformation in their respective
      cantons, where just before some of the clergy had, by an imposture
      somewhat grosser than ordinary, rendered the whole order both odious and
      contemptible.
    
      In this critical situation of its affairs the papal court was at
      sufficient pains to cultivate the friendship of the powerful sovereigns of
      France and Spain, of whom the latter was at that time emperor of Germany.
      With their assistance, it was enabled, though not without great
      difficulty, and much bloodshed, either to suppress altogether, or to
      obstruct very much, the progress of the reformation in their dominions. It
      was well enough inclined, too, to be complaisant to the king of England.
      But from the circumstances of the times, it could not be so without giving
      offence to a still greater sovereign, Charles V., king of Spain and
      emperor of Germany. Henry VIII., accordingly, though he did not embrace
      himself the greater part of the doctrines of the reformation, was yet
      enabled, by their general prevalence, to suppress all the monasteries, and
      to abolish the authority of the church of Rome in his dominions. That he
      should go so far, though he went no further, gave some satisfaction to the
      patrons of the reformation, who, having got possession of the government
      in the reign of his son and successor completed, without any difficulty,
      the work which Henry VIII. had begun.
    
      In some countries, as in Scotland, where the government was weak,
      unpopular, and not very firmly established, the reformation was strong
      enough to overturn, not only the church, but the state likewise, for
      attempting to support the church.
    
      Among the followers of the reformation, dispersed in all the different
      countries of Europe, there was no general tribunal, which, like that of
      the court of Rome, or an oecumenical council, could settle all disputes
      among them, and, with irresistible authority, prescribe to all of them the
      precise limits of orthodoxy. When the followers of the reformation in one
      country, therefore, happened to differ from their brethren in another, as
      they had no common judge to appeal to, the dispute could never be decided;
      and many such disputes arose among them. Those concerning the government
      of the church, and the right of conferring ecclesiastical benefices, were
      perhaps the most interesting to the peace and welfare of civil society.
      They gave birth, accordingly, to the two principal parties or sects among
      the followers of the reformation, the Lutheran and Calvinistic sects, the
      only sects among them, of which the doctrine and discipline have ever yet
      been established by law in any part of Europe.
    
      The followers of Luther, together with what is called the church of
      England, preserved more or less of the episcopal government, established
      subordination among the clergy, gave the sovereign the disposal of all the
      bishoprics, and other consistorial benefices within his dominions, and
      thereby rendered him the real head of the church; and without depriving
      the bishop of the right of collating to the smaller benefices within his
      diocese, they, even to those benefices, not only admitted, but favoured
      the right of presentation, both in the sovereign and in all other lay
      patrons. This system of church government was, from the beginning,
      favourable to peace and good order, and to submission to the civil
      sovereign. It has never, accordingly, been the occasion of any tumult or
      civil commotion in any country in which it has once been established. The
      church of England, in particular, has always valued herself, with great
      reason, upon the unexceptionable loyalty of her principles. Under such a
      government, the clergy naturally endeavour to recommend themselves to the
      sovereign, to the court, and to the nobility and gentry of the country, by
      whose influence they chiefly expect to obtain preferment. They pay court
      to those patrons, sometimes, no doubt, by the vilest flattery and
      assentation; but frequently, too, by cultivating all those arts which best
      deserve, and which are therefore most likely to gain them, the esteem of
      people of rank and fortune; by their knowledge in all the different
      branches of useful and ornamental learning, by the decent liberality of
      their manners, by the social good humour of their conversation, and by
      their avowed contempt of those absurd and hypocritical austerities which
      fanatics inculcate and pretend to practise, in order to draw upon
      themselves the veneration, and upon the greater part of men of rank and
      fortune, who avow that they do not practise them, the abhorrence of the
      common people. Such a clergy, however, while they pay their court in this
      manner to the higher ranks of life, are very apt to neglect altogether the
      means of maintaining their influence and authority with the lower. They
      are listened to, esteemed, and respected by their superiors; but before
      their inferiors they are frequently incapable of defending, effectually,
      and to the conviction of such hearers, their own sober and moderate
      doctrines, against the most ignorant enthusiast who chooses to attack
      them.
    
      The followers of Zuinglius, or more properly those of Calvin, on the
      contrary, bestowed upon the people of each parish, whenever the church
      became vacant, the right of electing their own pastor; and established, at
      the same time, the most perfect equality among the clergy. The former part
      of this institution, as long as it remained in vigour, seems to have been
      productive of nothing but disorder and confusion, and to have tended
      equally to corrupt the morals both of the clergy and of the people. The
      latter part seems never to have had any effects but what were perfectly
      agreeable.
    
      As long as the people of each parish preserved the right of electing their
      own pastors, they acted almost always under the influence of the clergy,
      and generally of the most factious and fanatical of the order. The clergy,
      in order to preserve their influence in those popular elections, became,
      or affected to become, many of them, fanatics themselves, encouraged
      fanaticism among the people, and gave the preference almost always to the
      most fanatical candidate. So small a matter as the appointment of a parish
      priest, occasioned almost always a violent contest, not only in one
      parish, but in all the neighbouring parishes who seldom failed to take
      part in the quarrel. When the parish happened to be situated in a great
      city, it divided all the inhabitants into two parties; and when that city
      happened, either to constitute itself a little republic, or to be the head
      and capital of a little republic, as in the case with many of the
      considerable cities in Switzerland and Holland, every paltry dispute of
      this kind, over and above exasperating the animosity of all their other
      factions, threatened to leave behind it, both a new schism in the church,
      and a new faction in the state. In those small republics, therefore, the
      magistrate very soon found it necessary, for the sake of preserving the
      public peace, to assume to himself the right of presenting to all vacant
      benefices. In Scotland, the most extensive country in which this
      presbyterian form of church government has ever been established, the
      rights of patronage were in effect abolished by the act which established
      presbytery in the beginning of the reign of William III. That act, at
      least, put in the power of certain classes of people in each parish to
      purchase, for a very small price, the right of electing their own pastor.
      The constitution which this act established, was allowed to subsist for
      about two-and-twenty years, but was abolished by the 10th of queen Anne,
      ch.12, on account of the confusions and disorders which this more popular
      mode of election had almost everywhere occasioned. In so extensive a
      country as Scotland, however, a tumult in a remote parish was not so
      likely to give disturbance to government as in a smaller state. The 10th
      of queen Anne restored the rights of patronage. But though, in Scotland,
      the law gives the benefice, without any exception to the person presented
      by the patron; yet the church requires sometimes (for she has not in this
      respect been very uniform in her decisions) a certain concurrence of the
      people, before she will confer upon the presentee what is called the cure
      of souls, or the ecclesiastical jurisdiction in the parish. She sometimes,
      at least, from an affected concern for the peace of the parish, delays the
      settlement till this concurrence can be procured. The private tampering of
      some of the neighbouring clergy, sometimes to procure, but more frequently
      to prevent this concurrence, and the popular arts which they cultivate, in
      order to enable them upon such occasions to tamper more effectually, are
      perhaps the causes which principally keep up whatever remains of the old
      fanatical spirit, either in the clergy or in the people of Scotland.
    
      The equality which the presbyterian form of church government establishes
      among the clergy, consists, first, in the equality of authority or
      ecclesiastical jurisdiction; and, secondly, in the equality of benefice.
      In all presbyterian churches, the equality of authority is perfect; that
      of benefice is not so. The difference, however, between one benefice and
      another, is seldom so considerable, as commonly to tempt the possessor
      even of the small one to pay court to his patron, by the vile arts of
      flattery and assentation, in order to get a better. In all the
      presbyterian churches, where the rights of patronage are thoroughly
      established, it is by nobler and better arts, that the established clergy
      in general endeavour to gain the favour of their superiors; by their
      learning, by the irreproachable regularity of their life, and by the
      faithful and diligent discharge of their duty. Their patrons even
      frequently complain of the independency of their spirit, which they are
      apt to construe into ingratitude for past favours, but which, at worse,
      perhaps, is seldom anymore than that indifference which naturally arises
      from the consciousness that no further favours of the kind are ever to be
      expected. There is scarce, perhaps, to be found anywhere in Europe, a more
      learned, decent, independent, and respectable set of men, than the greater
      part of the presbyterian clergy of Holland, Geneva, Switzerland, and
      Scotland.
    
      Where the church benefices are all nearly equal, none of them can be very
      great; and this mediocrity of benefice, though it may be, no doubt,
      carried too far, has, however, some very agreeable effects. Nothing but
      exemplary morals can give dignity to a man of small fortune. The vices of
      levity and vanity necessarily render him ridiculous, and are, besides,
      almost as ruinous to him as they are to the common people. In his own
      conduct, therefore, he is obliged to follow that system of morals which
      the common people respect the most. He gains their esteem and affection,
      by that plan of life which his own interest and situation would lead him
      to follow. The common people look upon him with that kindness with which
      we naturally regard one who approaches somewhat to our own condition, but
      who, we think, ought to be in a higher. Their kindness naturally provokes
      his kindness. He becomes careful to instruct them, and attentive to assist
      and relieve them. He does not even despise the prejudices of people who
      are disposed to be so favourable to him, and never treats them with those
      contemptuous and arrogant airs, which we so often meet with in the proud
      dignitaries of opulent and well endowed churches. The presbyterian clergy,
      accordingly, have more influence over the minds of the common people, than
      perhaps the clergy of any other established church. It is, accordingly, in
      presbyterian countries only, that we ever find the common people
      converted, without persecution completely, and almost to a man, to the
      established church.
    
      In countries where church benefices are, the greater part of them, very
      moderate, a chair in a university is generally a better establishment than
      a church benefice. The universities have, in this case, the picking and
      chusing of their members from all the churchmen of the country, who, in
      every country, constitute by far the most numerous class of men of
      letters. Where church benefices, on the contrary, are many of them very
      considerable, the church naturally draws from the universities the greater
      part of their eminent men of letters; who generally find some patron, who
      does himself honour by procuring them church preferment. In the former
      situation, we are likely to find the universities filled with the most
      eminent men of letters that are to be found in the country. In the latter,
      we are likely to find few eminent men among them, and those few among the
      youngest members of the society, who are likely, too, to be drained away
      from it, before they can have acquired experience and knowledge enough to
      be of much use to it. It is observed by Mr. de Voltaire, that father
      Porée, a jesuit of no great eminence in the republic of letters, was the
      only professor they had ever had in France, whose works were worth the
      reading. In a country which has produced so many eminent men of letters,
      it must appear somewhat singular, that scarce one of them should have been
      a professor in a university. The famous Cassendi was, in the beginning of
      his life, a professor in the university of Aix. Upon the first dawning of
      his genius, it was represented to him, that by going into the church he
      could easily find a much more quiet and comfortable subsistence, as well
      as a better situation for pursuing his studies; and he immediately
      followed the advice. The observation of Mr. de Voltaire may be applied, I
      believe, not only to France, but to all other Roman Catholic countries. We
      very rarely find in any of them an eminent man of letters, who is a
      professor in a university, except, perhaps, in the professions of law and
      physic; professions from which the church is not so likely to draw them.
      After the church of Rome, that of England is by far the richest and best
      endowed church in Christendom. In England, accordingly, the church is
      continually draining the universities of all their best and ablest
      members; and an old college tutor who is known and distinguished in Europe
      as an eminent man of letters, is as rarely to be found there as in any
      Roman catholic country, In Geneva, on the contrary, in the protestant
      cantons of Switzerland, in the protestant countries of Germany, in
      Holland, in Scotland, in Sweden, and Denmark, the most eminent men of
      letters whom those countries have produced, have, not all indeed, but the
      far greater part of them, been professors in universities. In those
      countries, the universities are continually draining the church of all its
      most eminent men of letters.
    
      It may, perhaps, be worth while to remark, that, if we except the poets, a
      few orators, and a few historians, the far greater part of the other
      eminent men of letters, both of Greece and Rome, appear to have been
      either public or private teachers; generally either of philosophy or of
      rhetoric. This remark will be found to hold true, from the days of Lysias
      and Isocrates, of Plato and Aristotle, down to those of Plutarch and
      Epictetus, Suetonius, and Quintilian. To impose upon any man the necessity
      of teaching, year after year, in any particular branch of science seems in
      reality to be the most effectual method for rendering him completely
      master of it himself. By being obliged to go every year over the same
      ground, if he is good for any thing, he necessarily becomes, in a few
      years, well acquainted with every part of it, and if, upon any particular
      point, he should form too hasty an opinion one year, when he comes, in the
      course of his lectures to reconsider the same subject the year thereafter,
      he is very likely to correct it. As to be a teacher of science is
      certainly the natural employment of a mere man of letters; so is it
      likewise, perhaps, the education which is most likely to render him a man
      of solid learning and knowledge. The mediocrity of church benefices
      naturally tends to draw the greater part of men of letters in the country
      where it takes place, to the employment in which they can be the most
      useful to the public, and at the same time to give them the best
      education, perhaps, they are capable of receiving. It tends to render
      their learning both as solid as possible, and as useful as possible.
    
      The revenue of every established church, such parts of it excepted as may
      arise from particular lands or manors, is a branch, it ought to be
      observed, of the general revenue of the state, which is thus diverted to a
      purpose very different from the defence of the state. The tithe, for
      example, is a real land tax, which puts it out of the power of the
      proprietors of land to contribute so largely towards the defence of the
      state as they otherwise might be able to do. The rent of land, however,
      is, according to some, the sole fund; and, according to others, the
      principal fund, from which, in all great monarchies, the exigencies of the
      state must be ultimately supplied. The more of this fund that is given to
      the church, the less, it is evident, can be spared to the state. It may be
      laid down as a certain maxim, that all other things being supposed equal,
      the richer the church, the poorer must necessarily be, either the
      sovereign on the one hand, or the people on the other; and, in all cases,
      the less able must the state be to defend itself. In several protestant
      countries, particularly in all the protestant cantons of Switzerland, the
      revenue which anciently belonged to the Roman catholic church, the tithes
      and church lands, has been found a fund sufficient, not only to afford
      competent salaries to the established clergy, but to defray, with little
      or no addition, all the other expenses of the state. The magistrates of
      the powerful canton of Berne, in particular, have accumulated, out of the
      savings from this fund, a very large sum, supposed to amount to several
      millions; part of which is deposited in a public treasure, and part is
      placed at interest in what are called the public funds of the different
      indebted nations of Europe; chiefly in those of France and Great Britain.
      What may be the amount of the whole expense which the church, either of
      Berne, or of any other protestant canton, costs the state, I do not
      pretend to know. By a very exact account it appears, that, in 1755, the
      whole revenue of the clergy of the church of Scotland, including their
      glebe or church lands, and the rent of their manses or dwelling-houses,
      estimated according to a reasonable valuation, amounted only to
      £68,514:1:5 1/12d. This very moderate revenue affords a decent subsistence
      to nine hundred and forty-four ministers. The whole expense of the church,
      including what is occasionally laid out for the building and reparation of
      churches, and of the manses of ministers, cannot well be supposed to
      exceed eighty or eighty-five thousand pounds a-year. The most opulent
      church in Christendom does not maintain better the uniformity of faith,
      the fervour of devotion, the spirit of order, regularity, and austere
      morals, in the great body of the people, than this very poorly endowed
      church of Scotland. All the good effects, both civil and religious, which
      an established church can be supposed to produce, are produced by it as
      completely as by any other. The greater part of the protestant churches of
      Switzerland, which, in general, are not better endowed than the church of
      Scotland, produce those effects in a still higher degree. In the greater
      part of the protestant cantons, there is not a single person to be found,
      who does not profess himself to be of the established church. If he
      professes himself to be of any other, indeed, the law obliges him to leave
      the canton. But so severe, or, rather, indeed, so oppressive a law, could
      never have been executed in such free countries, had not the diligence of
      the clergy beforehand converted to the established church the whole body
      of the people, with the exception of, perhaps, a few individuals only. In
      some parts of Switzerland, accordingly, where, from the accidental union
      of a protestant and Roman catholic country, the conversion has not been so
      complete, both religions are not only tolerated, but established by law.
    
      The proper performance of every service seems to require, that its pay or
      recompence should be, as exactly as possible, proportioned to the nature
      of the service. If any service is very much underpaid, it is very apt to
      suffer by the meanness and incapacity of the greater part of those who are
      employed in it. If it is very much overpaid, it is apt to suffer, perhaps
      still more, by their negligence and idleness. A man of a large revenue,
      whatever may be his profession, thinks he ought to live like other men of
      large revenues; and to spend a great part of his time in festivity, in
      vanity, and in dissipation. But in a clergyman, this train of life not
      only consumes the time which ought to be employed in the duties of his
      function, but in the eyes of the common people, destroys almost entirely
      that sanctity of character, which can alone enable him to perform those
      duties with proper weight and authority.
    


    
      PART IV. Of the Expense of supporting the Dignity of the Sovereign.
    
      Over and above the expenses necessary for enabling the sovereign to
      perform his several duties, a certain expense is requisite for the support
      of his dignity. This expense varies, both with the different periods of
      improvement, and with the different forms of government.
    
      In an opulent and improved society, where all the different orders of
      people are growing every day more expensive in their houses, in their
      furniture, in their tables, in their dress, and in their equipage; it
      cannot well be expected that the sovereign should alone hold out against
      the fashion. He naturally, therefore, or rather necessarily, becomes more
      expensive in all those different articles too. His dignity even seems to
      require that he should become so.
    
      As, in point of dignity, a monarch is more raised above his subjects than
      the chief magistrate of any republic is ever supposed to be above his
      fellow-citizens; so a greater expense is necessary for supporting that
      higher dignity. We naturally expect more splendour in the court of a king,
      than in the mansion-house of a doge or burgo-master.
    


    
      CONCLUSION.
    
      The expense of defending the society, and that of supporting the dignity
      of the chief magistrate, are both laid out for the general benefit of the
      whole society. It is reasonable, therefore, that they should be defrayed
      by the general contribution of the whole society; all the different
      members contributing, as nearly as possible, in proportion to their
      respective abilities.
    
      The expense of the administration of justice, too, may no doubt be
      considered as laid out for the benefit of the whole society. There is no
      impropriety, therefore, in its being defrayed by the general contribution
      of the whole society. The persons, however, who give occasion to this
      expense, are those who, by their injustice in one way or another, make it
      necessary to seek redress or protection from the courts of justice. The
      persons, again, most immediately benefited by this expense, are those whom
      the courts of justice either restore to their rights, or maintain in their
      rights. The expense of the administration of justice, therefore, may very
      properly be defrayed by the particular contribution of one or other, or
      both, of those two different sets of persons, according as different
      occasions may require, that is, by the fees of court. It cannot be
      necessary to have recourse to the general contribution of the whole
      society, except for the conviction of those criminals who have not
      themselves any estate or fund sufficient for paying those fees.
    
      Those local or provincial expenses, of which the benefit is local or
      provincial (what is laid out, for example, upon the police of a particular
      town or district), ought to be defrayed by a local or provincial revenue,
      and ought to be no burden upon the general revenue of the society. It is
      unjust that the whole society should contribute towards an expense, of
      which the benefit is confined to a part of the society.
    
      The expense of maintaining good roads and communications is, no doubt,
      beneficial to the whole society, and may, therefore, without any
      injustice, be defrayed by the general contributions of the whole society.
      This expense, however, is most immediately and directly beneficial to
      those who travel or carry goods from one place to another, and to those
      who consume such goods. The turnpike tolls in England, and the duties
      called peages in other countries, lay it altogether upon those two
      different sets of people, and thereby discharge the general revenue of the
      society from a very considerable burden.
    
      The expense of the institutions for education and religious instruction,
      is likewise, no doubt, beneficial to the whole society, and may,
      therefore, without injustice, be defrayed by the general contribution of
      the whole society. This expense, however, might, perhaps, with equal
      propriety, and even with some advantage, be defrayed altogether by those
      who receive the immediate benefit of such education and instruction, or by
      the voluntary contribution of those who think they have occasion for
      either the one or the other.
    
      When the institutions, or public works, which are beneficial to the whole
      society, either cannot be maintained altogether, or are not maintained
      altogether, by the contribution of such particular members of the society
      as are most immediately benefited by them; the deficiency must, in most
      cases, be made up by the general contribution of the whole society. The
      general revenue of the society, over and above defraying the expense of
      defending the society, and of supporting the dignity of the chief
      magistrate, must make up for the deficiency of many particular branches of
      revenue. The sources of this general or public revenue, I shall endeavour
      to explain in the following chapter.
    


CHAPTER II.
OF THE SOURCES OF THE GENERAL OR PUBLIC
REVENUE OF THE SOCIETY.


    
      The revenue which must defray, not only the expense of defending the
      society and of supporting the dignity of the chief magistrate, but all the
      other necessary expenses of government, for which the constitution of the
      state has not provided any particular revenue may be drawn, either, first,
      from some fund which peculiarly belongs to the sovereign or commonwealth,
      and which is independent of the revenue of the people; or, secondly, from
      the revenue of the people.
    


    
      PART I. Of the Funds, or Sources, of Revenue, which may peculiarly belong
      to the Sovereign or Commonwealth.
    
      The funds, or sources, of revenue, which may peculiarly belong to the
      sovereign or commonwealth, must consist, either in stock, or in land.
    
      The sovereign, like, any other owner of stock, may derive a revenue from
      it, either by employing it himself, or by lending it. His revenue is, in
      the one case, profit, in the other interest.
    
      The revenue of a Tartar or Arabian chief consists in profit. It arises
      principally from the milk and increase of his own herds and flocks, of
      which he himself superintends the management, and is the principal
      shepherd or herdsman of his own horde or tribe. It is, however, in this
      earliest and rudest state of civil government only, that profit has ever
      made the principal part of the public revenue of a monarchical state.
    
      Small republics have sometimes derived a considerable revenue from the
      profit of mercantile projects. The republic of Hamburgh is said to do so
      from the profits of a public wine-cellar and apothecary’s shop. {See
      Memoires concernant les Droits et Impositions en Europe, tome i. page 73.
      This work was compiled by the order of the court, for the use of a
      commission employed for some years past in considering the proper means
      for reforming the finances of France. The account of the French taxes,
      which takes up three volumes in quarto, may be regarded as perfectly
      authentic. That of those of other European nations was compiled from such
      information as the French ministers at the different courts could procure.
      It is much shorter, and probably not quite so exact as that of the French
      taxes.} That state cannot be very great, of which the sovereign has
      leisure to carry on the trade of a wine-merchant or an apothecary. The
      profit of a public bank has been a source of revenue to more considerable
      states. It has been so, not only to Hamburgh, but to Venice and Amsterdam.
      A revenue of this kind has even by some people been thought not below the
      attention of so great an empire as that of Great Britain. Reckoning the
      ordinary dividend of the bank of England at five and a-half per cent., and
      its capital at ten millions seven hundred and eighty thousand pounds, the
      neat annual profit, after paying the expense of management, must amount,
      it is said, to five hundred and ninety-two thousand nine hundred pounds.
      Government, it is pretended, could borrow this capital at three per cent.
      interest, and, by taking the management of the bank into its own hands,
      might make a clear profit of two hundred and sixty-nine thousand five
      hundred pounds a-year. The orderly, vigilant, and parsimonious
      administration of such aristocracies as those of Venice and Amsterdam, is
      extremely proper, it appears from experience, for the management of a
      mercantile project of this kind. But whether such a government as that of
      England, which, whatever may be its virtues, has never been famous for
      good economy; which, in time of peace, has generally conducted itself with
      the slothful and negligent profusion that is, perhaps, natural to
      monarchies; and, in time of war, has constantly acted with all the
      thoughtless extravagance that democracies are apt to fall into, could be
      safely trusted with the management of such a project, must at least be a
      good deal more doubtful.
    
      The post-office is properly a mercantile project. The government advances
      the expense of establishing the different offices, and of buying or hiring
      the necessary horses or carriages, and is repaid, with a large profit, by
      the duties upon what is carried. It is, perhaps, the only mercantile
      project which has been successfully managed by, I believe, every sort of
      government. The capital to be advanced is not very considerable. There is
      no mystery in the business. The returns are not only certain but
      immediate.
    
      Princes, however, have frequently engaged in many other mercantile
      projects, and have been willing, like private persons, to mend their
      fortunes, by becoming adventurers in the common branches of trade. They
      have scarce ever succeeded. The profusion with which the affairs of
      princes are always managed, renders it almost impossible that they should.
      The agents of a prince regard the wealth of their master as inexhaustible;
      are careless at what price they buy, are careless at what price they sell,
      are careless at what expense they transport his goods from one place to
      another. Those agents frequently live with the profusion of princes; and
      sometimes, too, in spite of that profusion, and by a proper method of
      making up their accounts, acquire the fortunes of princes. It was thus, as
      we are told by Machiavel, that the agents of Lorenzo of Medicis, not a
      prince of mean abilities, carried on his trade. The republic of Florence
      was several times obliged to pay the debt into which their extravagance
      had involved him. He found it convenient, accordingly to give up the
      business of merchant, the business to which his family had originally owed
      their fortune, and, in the latter part of his life, to employ both what
      remained of that fortune, and the revenue of the state, of which he had
      the disposal, in projects and expenses more suitable to his station.
    
      No two characters seem more inconsistent than those of trader and
      sovereign. If the trading spirit of the English East India company renders
      them very bad sovereigns, the spirit of sovereignty seems to have rendered
      them equally bad traders. While they were traders only, they managed their
      trade successfully, and were able to pay from their profits a moderate
      dividend to the proprietors of their stock. Since they became sovereigns,
      with a revenue which, it is said, was originally more than three millions
      sterling, they have been obliged to beg the ordinary assistance of
      government, in order to avoid immediate bankruptcy. In their former
      situation, their servants in India considered themselves as the clerks of
      merchants; in their present situation, those servants consider themselves
      as the ministers of sovereigns.
    
      A state may sometimes derive some part of its public revenue from the
      interest of money, as well as from the profits of stock. If it has amassed
      a treasure, it may lend a part of that treasure, either to foreign states,
      or to its own subjects.
    
      The canton of Berne derives a considerable revenue by lending a part of
      its treasure to foreign states, that is, by placing it in the public funds
      of the different indebted nations of Europe, chiefly in those of France
      and England. The security of this revenue must depend, first, upon the
      security of the funds in which it is placed, or upon the good faith of the
      government which has the management of them; and, secondly, upon the
      certainty or probability of the continuance of peace with the debtor
      nation. In the case of a war, the very first act of hostility on the part
      of the debtor nation might be the forfeiture of the funds of its credit.
      This policy of lending money to foreign states is, so far as I know
      peculiar to the canton of Berne.
    
      The city of Hamburgh {See Memoire concernant les Droites et Impositions en
      Europe tome i p. 73.}has established a sort of public pawn-shop, which
      lends money to the subjects of the state, upon pledges, at six per cent.
      interest. This pawn-shop, or lombard, as it is called, affords a revenue,
      it is pretended, to the state, of a hundred and fifty thousand crowns,
      which, at four and sixpence the crown, amounts to £33,750 sterling.
    
      The government of Pennsylvania, without amassing any treasure, invented a
      method of lending, not money, indeed, but what is equivalent to money, to
      its subjects. By advancing to private people, at interest, and upon land
      security to double the value, paper bills of credit, to be redeemed
      fifteen years after their date; and, in the mean time, made transferable
      from hand to hand, like banknotes, and declared by act of assembly to be a
      legal tender in all payments from one inhabitant of the province to
      another, it raised a moderate revenue, which went a considerable way
      towards defraying an annual expense of about £4,500, the whole ordinary
      expense of that frugal and orderly government. The success of an expedient
      of this kind must have depended upon three different circumstances: first,
      upon the demand for some other instrument of commerce, besides gold and
      silver money, or upon the demand for such a quantity of consumable stock
      as could not be had without sending abroad the greater part of their gold
      and silver money, in order to purchase it; secondly, upon the good credit
      of the government which made use of this expedient; and, thirdly, upon the
      moderation with which it was used, the whole value of the paper bills of
      credit never exceeding that of the gold and silver money which would have
      been necessary for carrying on their circulation, had there been no paper
      bills of credit. The same expedient was, upon different occasions, adopted
      by several other American colonies; but, from want of this moderation, it
      produced, in the greater part of them, much more disorder than
      conveniency.
    
      The unstable and perishable nature of stock and credit, however, renders
      them unfit to be trusted to as the principal funds of that sure, steady,
      and permanent revenue, which can alone give security and dignity to
      government. The government of no great nation, that was advanced beyond
      the shepherd state, seems ever to have derived the greater part of its
      public revenue from such sources.
    
      Land is a fund of more stable and permanent nature; and the rent of public
      lands, accordingly, has been the principal source of the public revenue of
      many a great nation that was much advanced beyond the shepherd state. From
      the produce or rent of the public lands, the ancient republics of Greece
      and Italy derived for a long time the greater part of that revenue which
      defrayed the necessary expenses of the commonwealth. The rent of the crown
      lands constituted for a long time the greater part of the revenue of the
      ancient sovereigns of Europe.
    
      War, and the preparation for war, are the two circumstances which, in
      modern times, occasion the greater part of the necessary expense or all
      great states. But in the ancient republics of Greece and Italy, every
      citizen was a soldier, and both served, and prepared himself for service,
      at his own expense. Neither of those two circumstances, therefore, could
      occasion any very considerable expense to the state. The rent of a very
      moderate landed estate might be fully sufficient for defraying all the
      other necessary expenses of government.
    
      In the ancient monarchies of Europe, the manners and customs of the time
      sufficiently prepared the great body of the people for war; and when they
      took the field, they were, by the condition of their feudal tenures, to be
      maintained either at their own expense, or at that of their immediate
      lords, without bringing any new charge upon the sovereign. The other
      expenses of government were, the greater part of them, very moderate. The
      administration of justice, it has been shewn, instead of being a cause of
      expense was a source of revenue. The labour of the country people, for
      three days before, and for three days after, harvest, was thought a fund
      sufficient for making and maintaining all the bridges, highways, and other
      public works, which the commerce of the country was supposed to require.
      In those days the principal expense of the sovereign seems to have
      consisted in the maintenance of his own family and household. The officers
      of his household, accordingly, were then the great officers of state. The
      lord treasurer received his rents. The lord steward and lord chamberlain
      looked after the expense of his family. The care of his stables was
      committed to the lord constable and the lord marshal. His houses were all
      built in the form of castles, and seem to have been the principal
      fortresses which he possessed. The keepers of those houses or castles
      might be considered as a sort of military governors. They seem to have
      been the only military officers whom it was necessary to maintain in time
      of peace. In these circumstances, the rent of a great landed estate might,
      upon ordinary occasions, very well defray all the necessary expenses of
      government.
    
      In the present state of the greater part of the civilized monarchies of
      Europe, the rent of all the lands in the country, managed as they probably
      would be, if they all belonged to one proprietor, would scarce, perhaps,
      amount to the ordinary revenue which they levy upon the people even in
      peaceable times. The ordinary revenue of Great Britain, for example,
      including not only what is necessary for defraying the current expense of
      the year, but for paying the interest of the public debts, and for sinking
      a part of the capital of those debts, amounts to upwards of ten millions
      a-year. But the land tax, at four shillings in the pound, falls short of
      two millions a-year. This land tax, as it is called however, is supposed
      to be one-fifth, not only of the rent of all the land, but of that of all
      the houses, and of the interest of all the capital stock of Great Britain,
      that part of it only excepted which is either lent to the public, or
      employed as farming stock in the cultivation of land. A very considerable
      part of the produce of this tax arises from the rent of houses and the
      interest of capital stock. The land tax of the city of London, for
      example, at four shillings in the pound, amounts to £123,399: 6: 7; that
      of the city of Westminster to £63,092: 1: 5; that of the palaces of
      Whitehall and St. James’s, to £30,754: 6: 3. A certain proportion of the
      land tax is, in the same manner, assessed upon all the other cities and
      towns corporate in the kingdom; and arises almost altogether, either from
      the rent of houses, or from what is supposed to be the interest of trading
      and capital stock. According to the estimation, therefore, by which Great
      Britain is rated to the land tax, the whole mass of revenue arising from
      the rent of all the lands, from that of all the houses, and from the
      interest of all the capital stock, that part of it only excepted which is
      either lent to the public, or employed in the cultivation of land, does
      not exceed ten millions sterling a-year, the ordinary revenue which
      government levies upon the people, even in peaceable times. The estimation
      by which Great Britain is rated to the land tax is, no doubt, taking the
      whole kingdom at an average, very much below the real value; though in
      several particular counties and districts it is said to be nearly equal to
      that value. The rent of the lands alone, exclusive of that of houses and
      of the interest of stock, has by many people been estimated at twenty
      millions; an estimation made in a great measure at random, and which, I
      apprehend, is as likely to be above as below the truth. But if the lands
      of Great Britain, in the present state of their cultivation, do not afford
      a rent of more than twenty millions a-year, they could not well afford the
      half, most probably not the fourth part of that rent, if they all belonged
      to a single proprietor, and were put under the negligent, expensive, and
      oppressive management of his factors and agents. The crown lands of Great
      Britain do not at present afford the fourth part of the rent which could
      probably be drawn from them if they were the property of private persons.
      If the crown lands were more extensive, it is probable, they would be
      still worse managed.
    
      The revenue which the great body of the people derives from land is, in
      proportion, not to the rent, but to the produce of the land. The whole
      annual produce of the land of every country, if we except what is reserved
      for seed, is either annually consumed by the great body of the people, or
      exchanged for something else that is consumed by them. Whatever keeps down
      the produce of the land below what it would otherwise rise to, keeps down
      the revenue of the great body of the people, still more than it does that
      of the proprietors of land. The rent of land, that portion of the produce
      which belongs to the proprietors, is scarce anywhere in Great Britain
      supposed to be more than a third part of the whole produce. If the land
      which, in one state of cultivation, affords a revenue of ten millions
      sterling a-year, would in another afford a rent of twenty millions; the
      rent being, in both cases, supposed a third part of the produce, the
      revenue of the proprietors would be less than it otherwise might be, by
      ten millions a-year only; but the revenue of the great body of the people
      would be less than it otherwise might be, by thirty millions a-year,
      deducting only what would be necessary for seed. The population of the
      country would be less by the number of people which thirty millions
      a-year, deducting always the seed, could maintain, according to the
      particular mode of living, and expense which might take place in the
      different ranks of men, among whom the remainder was distributed.
    
      Though there is not at present in Europe, any civilized state of any kind
      which derives the greater part of its public revenue from the rent of
      lands which are the property of the state; yet, in all the great
      monarchies of Europe, there are still many large tracts of land which
      belong to the crown. They are generally forest, and sometimes forests
      where, after travelling several miles, you will scarce find a single tree;
      a mere waste and loss of country, in respect both of produce and
      population. In every great monarchy of Europe, the sale of the crown lands
      would produce a very large sum of money, which, if applied to the payment
      of the public debts, would deliver from mortgage a much greater revenue
      than any which those lands have ever afforded to the crown. In countries
      where lands, improved and cultivated very highly, and yielding, at the
      time of sale, as great a rent as can easily be got from them, commonly
      sell at thirty years purchase; the unimproved, uncultivated, and
      low-rented crown lands, might well be expected to sell at forty, fifty, or
      sixty years purchase. The crown might immediately enjoy the revenue which
      this great price would redeem from mortgage. In the course of a few years,
      it would probably enjoy another revenue. When the crown lands had become
      private property, they would, in the course of a few years, become well
      improved and well cultivated. The increase of their produce would increase
      the population of the country, by augmenting the revenue and consumption
      of the people. But the revenue which the crown derives from the duties or
      custom and excise, would necessarily increase with the revenue and
      consumption of the people.
    
      The revenue which, in any civilized monarchy, the crown derives from the
      crown lands, though it appears to cost nothing to individuals, in reality
      costs more to the society than perhaps any other equal revenue which the
      crown enjoys. It would, in all cases, be for the interest of the society,
      to replace this revenue to the crown by some other equal revenue, and to
      divide the lands among the people, which could not well be done better,
      perhaps, than by exposing them to public sale.
    
      Lands, for the purposes of pleasure and magnificence, parks, gardens,
      public walks, etc. possessions which are everywhere considered as causes
      of expense, not as sources of revenue, seem to be the only lands which, in
      a great and civilized monarchy, ought to belong to the crown.
    
      Public stock and public lands, therefore, the two sources of revenue which
      may peculiarly belong to the sovereign or commonwealth, being both
      improper and insufficient funds for defraying the necessary expense of any
      great and civilized state; it remains that this expense must, the greater
      part of it, be defrayed by taxes of one kind or another; the people
      contributing a part of their own private revenue, in order to make up a
      public revenue to the sovereign or commonwealth.
    


    
      PART II. Of Taxes.
    
      The private revenue of individuals, it has been shown in the first book of
      this Inquiry, arises, ultimately from three different sources; rent,
      profit, and wages. Every tax must finally be paid from some one or other
      of those three different sources of revenue, or from all of them
      indifferently. I shall endeavour to give the best account I can, first, of
      those taxes which, it is intended should fall upon rent; secondly, of
      those which, it is intended should fall upon profit; thirdly, of those
      which, it is intended should fall upon wages; and fourthly, of those
      which, it is intended should fall indifferently upon all those three
      different sources of private revenue. The particular consideration of each
      of these four different sorts of taxes will divide the second part of the
      present chapter into four articles, three of which will require several
      other subdivisions. Many of these taxes, it will appear from the following
      review, are not finally paid from the fund, or source of revenue, upon
      which it is intended they should fall.
    
      Before I enter upon the examination of particular taxes, it is necessary
      to premise the four following maxims with regard to taxes in general.
    
      1. The subjects of every state ought to contribute towards the support of
      the government, as nearly as possible, in proportion to their respective
      abilities; that is, in proportion to the revenue which they respectively
      enjoy under the protection of the state. The expense of government to the
      individuals of a great nation, is like the expense of management to the
      joint tenants of a great estate, who are all obliged to contribute in
      proportion to their respective interests in the estate. In the observation
      or neglect of this maxim, consists what is called the equality or
      inequality of taxation. Every tax, it must be observed once for all, which
      falls finally upon one only of the three sorts of revenue above mentioned,
      is necessarily unequal, in so far as it does not affect the other two. In
      the following examination of different taxes, I shall seldom take much
      farther notice of this sort of inequality; but shall, in most cases,
      confine my observations to that inequality which is occasioned by a
      particular tax falling unequally upon that particular sort of private
      revenue which is affected by it.
    
      2. The tax which each individual is bound to pay, ought to be certain and
      not arbitrary. The time of payment, the manner of payment, the quantity to
      be paid, ought all to be clear and plain to the contributor, and to every
      other person. Where it is otherwise, every person subject to the tax is
      put more or less in the power of the tax-gatherer, who can either
      aggravate the tax upon any obnoxious contributor, or extort, by the terror
      of such aggravation, some present or perquisite to himself. The
      uncertainty of taxation encourages the insolence, and favours the
      corruption, of an order of men who are naturally unpopular, even where
      they are neither insolent nor corrupt. The certainty of what each
      individual ought to pay is, in taxation, a matter of so great importance,
      that a very considerable degree of inequality, it appears, I believe, from
      the experience of all nations, is not near so great an evil as a very
      small degree of uncertainty.
    
      3. Every tax ought to be levied at the time, or in the manner, in which it
      is most likely to be convenient for the contributor to pay it. A tax upon
      the rent of land or of houses, payable at the same term at which such
      rents are usually paid, is levied at the time when it is most likely to be
      convenient for the contributor to pay; or when he is most likely to have
      wherewithall to pay. Taxes upon such consumable goods as are articles of
      luxury, are all finally paid by the consumer, and generally in a manner
      that is very convenient for him. He pays them by little and little, as he
      has occasion to buy the goods. As he is at liberty too, either to buy or
      not to buy, as he pleases, it must be his own fault if he ever suffers any
      considerable inconveniency from such taxes.
    
      4. Every tax ought to be so contrived, as both to take out and to keep out
      of the pockets of the people as little as possible, over and above what it
      brings into the public treasury of the state. A tax may either take out or
      keep out of the pockets of the people a great deal more than it brings
      into the public treasury, in the four following ways. First, the levying
      of it may require a great number of officers, whose salaries may eat up
      the greater part of the produce of the tax, and whose perquisites may
      impose another additional tax upon the people. Secondly, it may obstruct
      the industry of the people, and discourage them from applying to certain
      branches of business which might give maintenance and employment to great
      multitudes. While it obliges the people to pay, it may thus diminish, or
      perhaps destroy, some of the funds which might enable them more easily to
      do so. Thirdly, by the forfeitures and other penalties which those
      unfortunate individuals incur, who attempt unsuccessfully to evade the
      tax, it may frequently ruin them, and thereby put an end to the benefit
      which the community might have received from the employment of their
      capitals. An injudicious tax offers a great temptation to smuggling. But
      the penalties of smuggling must arise in proportion to the temptation. The
      law, contrary to all the ordinary principles of justice, first creates the
      temptation, and then punishes those who yield to it; and it commonly
      enhances the punishment, too, in proportion to the very circumstance which
      ought certainly to alleviate it, the temptation to commit the crime. {See
      Sketches of the History of Man page 474, and Seq.} Fourthly, by subjecting
      the people to the frequent visits and the odious examination of the
      tax-gatherers, it may expose them to much unnecessary trouble, vexation,
      and oppression; and though vexation is not, strictly speaking, expense, it
      is certainly equivalent to the expense at which every man would be willing
      to redeem himself from it. It is in some one or other of these four
      different ways, that taxes are frequently so much more burdensome to the
      people than they are beneficial to the sovereign.
    
      The evident justice and utility of the foregoing maxims have recommended
      them, more or less, to the attention of all nations. All nations have
      endeavoured, to the best of their judgment, to render their taxes as equal
      as they could contrive; as certain, as convenient to the contributor, both
      the time and the mode of payment, and in proportion to the revenue which
      they brought to the prince, as little burdensome to the people. The
      following short review of some of the principal taxes which have taken
      place in different ages and countries, will show, that the endeavours of
      all nations have not in this respect been equally successful.
    
      ARTICLE I.—Taxes upon Rent—Taxes upon the Rent of Land.
    
      A tax upon the rent of land may either be imposed according to a certain
      canon, every district being valued at a curtain rent, which valuation is
      not afterwards to be altered; or it may be imposed in such a manner, as to
      vary with every variation in the real rent of the land, and to rise or
      fall with the improvement or declension of its cultivation.
    
      A land tax which, like that of Great Britain, is assessed upon each
      district according to a certain invariable canon, though it should be
      equal at the time of its first establishment, necessarily becomes unequal
      in process of time, according to the unequal degrees of improvement or
      neglect in the cultivation of the different parts of the country. In
      England, the valuation, according to which the different counties and
      parishes were assessed to the land tax by the 4th of William and Mary, was
      very unequal even at its first establishment. This tax, therefore, so far
      offends against the first of the four maxims above mentioned. It is
      perfectly agreeable to the other three. It is perfectly certain. The time
      of payment for the tax, being the same as that for the rent, is as
      convenient as it can be to the contributor. Though the landlord is, in all
      cases, the real contributor, the tax is commonly advanced by the tenant,
      to whom the landlord is obliged to allow it in the payment of the rent.
      This tax is levied by a much smaller number of officers than any other
      which affords nearly the same revenue. As the tax upon each district does
      not rise with the rise of the rent, the sovereign does not share in the
      profits of the landlord’s improvements. Those improvements sometimes
      contribute, indeed, to the discharge of the other landlords of the
      district. But the aggravation of the tax, which this may sometimes
      occasion upon a particular estate, is always so very small, that it never
      can discourage those improvements, nor keep down the produce of the land
      below what it would otherwise rise to. As it has no tendency to diminish
      the quantity, it can have none to raise the price of that produce. It does
      not obstruct the industry of the people; it subjects the landlord to no
      other inconveniency besides the unavoidable one of paying the tax. The
      advantage, however, which the land-lord has derived from the invariable
      constancy of the valuation, by which all the lands of Great Britain are
      rated to the land-tax, has been principally owing to some circumstances
      altogether extraneous to the nature of the tax.
    
      It has been owing in part, to the great prosperity of almost every part of
      the country, the rents of almost all the estates of Great Britain having,
      since the time when this valuation was first established, been continually
      rising, and scarce any of them having fallen. The landlords, therefore,
      have almost all gained the difference between the tax which they would
      have paid, according to the present rent of their estates, and that which
      they actually pay according to the ancient valuation. Had the state of the
      country been different, had rents been gradually falling in consequence of
      the declension of cultivation, the landlords would almost all have lost
      this difference. In the state of things which has happened to take place
      since the revolution, the constancy of the valuation has been advantageous
      to the landlord and hurtful to the sovereign. In a different state of
      things it might have been advantageous to the sovereign and hurtful to the
      landlord.
    
      As the tax is made payable in money, so the valuation of the land is
      expressed in money. Since the establishment of this valuation, the value
      of silver has been pretty uniform, and there has been no alteration in the
      standard of the coin, either as to weight or fineness. Had silver risen
      considerably in its value, as it seems to have done in the course of the
      two centuries which preceded the discovery of the mines of America, the
      constancy of the valuation might have proved very oppressive to the
      landlord. Had silver fallen considerably in its value, as it certainly did
      for about a century at least after the discovery of those mines, the same
      constancy of valuation would have reduced very much this branch of the
      revenue of the sovereign. Had any considerable alteration been made in the
      standard of the money, either by sinking the same quantity of silver to a
      lower denomination, or by raising it to a higher; had an ounce of silver,
      for example, instead of being coined into five shillings and two pence,
      been coined either into pieces which bore so low a denomination as two
      shillings and seven pence, or into pieces which bore so high a one as ten
      shillings and four pence, it would, in the one case, have hurt the revenue
      of the proprietor, in the other that of the sovereign.
    
      In circumstances, therefore, somewhat different from those which have
      actually taken place, this constancy of valuation might have been a very
      great inconveniency, either to the contributors or to the commonwealth. In
      the course of ages, such circumstances, however, must at some time or
      other happen. But though empires, like all the other works of men, have
      all hitherto proved mortal, yet every empire aims at immortality. Every
      constitution, therefore, which it is meant should be as permanent as the
      empire itself, ought to be convenient, not in certain circumstances only,
      but in all circumstances; or ought to be suited, not to those
      circumstances which are transitory, occasional, or accidental, but to
      those which are necessary, and therefore always the same.
    
      A tax upon the rent of land, which varies with every variation of the
      rent, or which rises and falls according to the improvement or neglect of
      cultivation, is recommended by that sect of men of letters in France, who
      call themselves the economists, as the most equitable of all taxes. All
      taxes, they pretend, fall ultimately upon the rent of land, and ought,
      therefore, to be imposed equally upon the fund which must finally pay
      them. That all taxes ought to fall as equally as possible upon the fund
      which must finally pay them, is certainly true. But without entering into
      the disagreeable discussion of the metaphysical arguments by which they
      support their very ingenious theory, it will sufficiently appear, from the
      following review, what are the taxes which fall finally upon the rent of
      the land, and what are those which fall finally upon some other fund.
    
      In the Venetian territory, all the arable lands which are given in lease
      to farmers are taxed at a tenth of the rent. {Memoires concernant les
      Droits, p. 240, 241.} The leases are recorded in a public register, which
      is kept by the officers of revenue in each province or district. When the
      proprietor cultivates his own lands, they are valued according to an
      equitable estimation, and he is allowed a deduction of one-fifth of the
      tax; so that for such land he pays only eight instead of ten per cent. of
      the supposed rent.
    
      A land-tax of this kind is certainly more equal than the land-tax of
      England. It might not, perhaps, be altogether so certain, and the
      assessment of the tax might frequently occasion a good deal more trouble
      to the landlord. It might, too, be a good deal more expensive in the
      levying.
    
      Such a system of administration, however, might, perhaps, be contrived, as
      would in a great measure both prevent this uncertainty, and moderate this
      expense.
    
      The landlord and tenant, for example, might jointly be obliged to record
      their lease in a public register. Proper penalties might be enacted
      against concealing or misrepresenting any of the conditions; and if part
      of those penalties were to be paid to either of the two parties who
      informed against and convicted the other of such concealment or
      misrepresentation, it would effectually deter them from combining together
      in order to defraud the public revenue. All the conditions of the lease
      might be sufficiently known from such a record.
    
      Some landlords, instead of raising the rent, take a fine for the renewal
      of the lease. This practice is, in most cases, the expedient of a
      spendthrift, who, for a sum of ready money sells a future revenue of much
      greater value. It is, in most cases, therefore, hurtful to the landlord;
      it is frequently hurtful to the tenant; and it is always hurtful to the
      community. It frequently takes from the tenant so great a part of his
      capital, and thereby diminishes so much his ability to cultivate the land,
      that he finds it more difficult to pay a small rent than it would
      otherwise have been to pay a great one. Whatever diminishes his ability to
      cultivate, necessarily keeps down, below what it would otherwise have
      been, the most important part of the revenue of the community. By
      rendering the tax upon such fines a good deal heavier than upon the
      ordinary rent, this hurtful practice might be discouraged, to the no small
      advantage of all the different parties concerned, of the landlord, of the
      tenant, of the sovereign, and of the whole community.
    
      Some leases prescribe to the tenant a certain mode of cultivation, and a
      certain succession of crops, during the whole continuance of the lease.
      This condition, which is generally the effect of the landlord’s conceit of
      his own superior knowledge (a conceit in most cases very ill-founded),
      ought always to be considered as an additional rent, as a rent in service,
      instead of a rent in money. In order to discourage the practice, which is
      generally a foolish one, this species of rent might be valued rather high,
      and consequently taxed somewhat higher than common money-rents.
    
      Some landlords, instead of a rent in money, require a rent in kind, in
      corn, cattle, poultry, wine, oil, etc.; others, again, require a rent in
      service. Such rents are always more hurtful to the tenant than beneficial
      to the landlord. They either take more, or keep more out of the pocket of
      the former, than they put into that of the latter. In every country where
      they take place, the tenants are poor and beggarly, pretty much according
      to the degree in which they take place. By valuing, in the same manner,
      such rents rather high, and consequently taxing them somewhat higher than
      common money-rents, a practice which is hurtful to the whole community,
      might, perhaps, be sufficiently discouraged.
    
      When the landlord chose to occupy himself a part of his own lands, the
      rent might be valued according to an equitable arbitration of the farmers
      and landlords in the neighbourhood, and a moderate abatement of the tax
      might be granted to him, in the same manner as in the Venetian territory,
      provided the rent of the lands which he occupied did not exceed a certain
      sum. It is of importance that the landlord should be encouraged to
      cultivate a part of his own land. His capital is generally greater than
      that of the tenant, and, with less skill, he can frequently raise a
      greater produce. The landlord can afford to try experiments, and is
      generally disposed to do so. His unsuccessful experiments occasion only a
      moderate loss to himself. His successful ones contribute to the
      improvement and better cultivation of the whole country. It might be of
      importance, however, that the abatement of the tax should encourage him to
      cultivate to a certain extent only. If the landlords should, the greater
      part of them, be tempted to farm the whole of their own lands, the country
      (instead of sober and industrious tenants, who are bound by their own
      interest to cultivate as well as their capital and skill will allow them)
      would be filled with idle and profligate bailiffs, whose abusive
      management would soon degrade the cultivation, and reduce the annual
      produce of the land, to the diminution, not only of the revenue of their
      masters, but of the most important part of that of the whole society.
    
      Such a system of administration might, perhaps, free a tax of this kind
      from any degree of uncertainty, which could occasion either oppression or
      inconveniency to the contributor; and might, at the same time, serve to
      introduce into the common management of land such a plan of policy as
      might contribute a good deal to the general improvement and good
      cultivation of the country.
    
      The expense of levying a land-tax, which varied with every variation of
      the rent, would, no doubt, be somewhat greater than that of levying one
      which was always rated according to a fixed valuation. Some additional
      expense would necessarily be incurred, both by the different
      register-offices which it would be proper to establish in the different
      districts of the country, and by the different valuations which might
      occasionally be made of the lands which the proprietor chose to occupy
      himself. The expense of all this, however, might be very moderate, and
      much below what is incurred in the levying of many other taxes, which
      afford a very inconsiderable revenue in comparison of what might easily be
      drawn from a tax of this kind.
    
      The discouragement which a variable land-tax of this kind might give to
      the improvement of land, seems to be the most important objection which
      can be made to it. The landlord would certainly be less disposed to
      improve, when the sovereign, who contributed nothing to the expense, was
      to share in the profit of the improvement. Even this objection might,
      perhaps, be obviated, by allowing the landlord, before he began his
      improvement, to ascertain, in conjunction with the officers of revenue,
      the actual value of his lands, according to the equitable arbitration of a
      certain number of landlords and farmers in the neighbourhood, equally
      chosen by both parties: and by rating him, according to this valuation,
      for such a number of years as might be fully sufficient for his complete
      indemnification. To draw the attention of the sovereign towards the
      improvement of the land, from a regard to the increase of his own revenue,
      is one or the principal advantages proposed by this species of land-tax.
      The term, therefore, allowed, for the indemnification of the landlord,
      ought not to be a great deal longer than what was necessary for that
      purpose, lest the remoteness of the interest should discourage too much
      this attention. It had better, however, be somewhat too long, than in any
      respect too short. No incitement to the attention of the sovereign can
      ever counterbalance the smallest discouragement to that of the landlord.
      The attention of the sovereign can be, at best, but a very general and
      vague consideration of what is likely to contribute to the better
      cultivation of the greater part of his dominions. The attention of the
      landlord is a particular and minute consideration of what is likely to be
      the most advantageous application of every inch of ground upon his estate.
      The principal attention of the sovereign ought to be, to encourage, by
      every means in his power, the attention both of the landlord and of the
      farmer, by allowing both to pursue their own interest in their own way,
      and according to their own judgment; by giving to both the most perfect
      security that they shall enjoy the full recompence of their own industry;
      and by procuring to both the most extensive market for every part of their
      produce, in consequence of establishing the easiest and safest
      communications, both by land and by water, through every part of his own
      dominions, as well as the most unbounded freedom of exportation to the
      dominions of all other princes.
    
      If, by such a system of administration, a tax of this kind could be so
      managed as to give, not only no discouragement, but, on the contrary, some
      encouragement to the improvement or land, it does not appear likely to
      occasion any other inconveniency to the landlord, except always the
      unavoidable one of being obliged to pay the tax. In all the variations of
      the state of the society, in the improvement and in the declension of
      agriculture; in all the variations in the value of silver, and in all
      those in the standard of the coin, a tax of this kind would, of its own
      accord, and without any attention of government, readily suit itself to
      the actual situation of things, and would be equally just and equitable in
      all those different changes. It would, therefore, be much more proper to
      be established as a perpetual and unalterable regulation, or as what is
      called a fundamental law of the commonwealth, than any tax which was
      always to be levied according to a certain valuation.
    
      Some states, instead of the simple and obvious expedient of a register of
      leases, have had recourse to the laborious and expensive one of an actual
      survey and valuation of all the lands in the country. They have suspected,
      probably, that the lessor and lessee, in order to defraud the public
      revenue, might combine to conceal the real terms of the lease.
      Doomsday-book seems to have been the result of a very accurate survey of
      this kind.
    
      In the ancient dominions of the king of Prussia, the land-tax is assessed
      according to an actual survey and valuation, which is reviewed and altered
      from time to time. {Memoires concernant les Droits, etc. tom, i. p. 114,
      115, 116, etc.} According to that valuation, the lay proprietors pay from
      twenty to twenty-five per cent. of their revenue; ecclesiastics from forty
      to forty-five per cent. The survey and valuation of Silesia was made by
      order of the present king, it is said, with great accuracy. According to
      that valuation, the lands belonging to the bishop of Breslaw are taxed at
      twenty-five per cent. of their rent. The other revenues of the
      ecclesiastics of both religions at fifty per cent. The commanderies of the
      Teutonic order, and of that of Malta, at forty per cent. Lands held by a
      noble tenure, at thirty-eight and one-third per cent. Lands held by a base
      tenure, at thirty-five and one-third per cent.
    
      The survey and valuation of Bohemia is said to have been the work of more
      than a hundred years. It was not perfected till after the peace of 1748,
      by the orders of the present empress queen. {Id. tom i. p.85, 84.} The
      survey of the duchy of Milan, which was begun in the time of Charles VI.,
      was not perfected till after 1760. It is esteemed one of the most
      accurate that has ever been made. The survey of Savoy and Piedmont was
      executed under the orders of the late king of Sardinia. {Id. p. 280,
      etc.; also p, 287. etc. to 316.}
    
      In the dominions of the king of Prussia, the revenue of the church is
      taxed much higher than that of lay proprietors. The revenue of the church
      is, the greater part of it, a burden upon the rent of land. It seldom
      happens that any part of it is applied towards the improvement of land; or
      is so employed as to contribute, in any respect, towards increasing the
      revenue of the great body of the people. His Prussian majesty had
      probably, upon that account, thought it reasonable that it should
      contribute a good deal more towards relieving the exigencies of the state.
      In some countries, the lands of the church are exempted from all taxes. In
      others, they are taxed more lightly than other lands. In the duchy of
      Milan, the lands which the church possessed before 1575, are rated to the
      tax at a third only or their value.
    
      In Silesia, lands held by a noble tenure are taxed three per cent. higher
      than those held by a base tenure. The honours and privileges of different
      kinds annexed to the former, his Prussian majesty had probably imagined,
      would sufficiently compensate to the proprietor a small aggravation of the
      tax; while, at the same time, the humiliating inferiority of the latter
      would be in some measure alleviated, by being taxed somewhat more lightly.
      In other countries, the system of taxation, instead of alleviating,
      aggravates this inequality. In the dominions of the king of Sardinia, and
      in those provinces of France which are subject to what is called the real
      or predial taille, the tax falls altogether upon the lands held by a base
      tenure. Those held by a noble one are exempted.
    
      A land tax assessed according to a general survey and valuation, how equal
      soever it may be at first, must, in the course of a very moderate period
      of time, become unequal. To prevent its becoming so would require the
      continual and painful attention of government to all the variations in the
      state and produce of every different farm in the country. The governments
      of Prussia, of Bohemia, of Sardinia, and of the duchy of Milan, actually
      exert an attention of this kind; an attention so unsuitable to the nature
      of government, that it is not likely to be of long continuance, and which,
      if it is continued, will probably, in the long-run, occasion much more
      trouble and vexation than it can possibly bring relief to the
      contributors.
    
      In 1666, the generality of Montauban was assessed to the real or predial
      taille, according, it is said, to a very exact survey and valuation.
      {Memoires concernant les Droits, etc. tom. ii p. 139, etc.} By 1727, this
      assessment had become altogether unequal. In order to remedy this
      inconveniency, government has found no better expedient, than to impose
      upon the whole generality an additional tax of a hundred and twenty
      thousand livres. This additional tax is rated upon all the different
      districts subject to the taille according to the old assessment. But it is
      levied only upon those which, in the actual state of things, are by that
      assessment under-taxed; and it is applied to the relief of those which, by
      the same assessment, are over-taxed. Two districts, for example, one of
      which ought, in the actual state of things, to be taxed at nine hundred,
      the other at eleven hundred livres, are, by the old assessment, both taxed
      at a thousand livres. Both these districts are, by the additional tax,
      rated at eleven hundred livres each. But this additional tax is levied
      only upon the district under-charged, and it is applied altogether to the
      relief of that overcharged, which consequently pays only nine hundred
      livres. The government neither gains nor loses by the additional tax,
      which is applied altogether to remedy the inequalities arising from the
      old assessment. The application is pretty much regulated according to the
      discretion of the intendant of the generality, and must, therefore, be in
      a great measure arbitrary.
    
      Taxes which are proportioned, not in the Rent, but to the Produce of Land.
    
      Taxes upon the produce of land are, In reality, taxes upon the rent; and
      though they may be originally advanced by the farmer, are finally paid by
      the landlord. When a certain portion of the produce is to be paid away for
      a tax, the farmer computes as well as he can, what the value of this
      portion is, one year with another, likely to amount to, and he makes a
      proportionable abatement in the rent which he agrees to pay to the
      landlord. There is no farmer who does not compute beforehand what the
      church tythe, which is a land tax of this kind, is, one year with another,
      likely to amount to.
    
      The tythe, and every other land tax of this kind, under the appearance of
      perfect equality, are very unequal taxes; a certain portion of the produce
      being in different situations, equivalent to a very different portion of
      the rent. In some very rich lands, the produce is so great, that the one
      half of it is fully sufficient to replace to the farmer his capital
      employed in cultivation, together with the ordinary profits of farming
      stock in the neighbourhood. The other half, or, what comes to the same
      thing, the value of the other half, he could afford to pay as rent to the
      landlord, if there was no tythe. But if a tenth of the produce is taken
      from him in the way of tythe, he must require an abatement of the fifth
      part of his rent, otherwise he cannot get back his capital with the
      ordinary profit. In this case, the rent of the landlord, instead of
      amounting to a half, or five-tenths of the whole produce, will amount only
      to four-tenths of it. In poorer lands, on the contrary, the produce is
      sometimes so small, and the expense of cultivation so great, that it
      requires four-fifths of the whole produce, to replace to the farmer his
      capital with the ordinary profit. In this case, though there was no tythe,
      the rent of the landlord could amount to no more than one-fifth or
      two-tenths of the whole produce. But if the farmer pays one-tenth of the
      produce in the way of tythe, he must require an equal abatement of the
      rent of the landlord, which will thus be reduced to one-tenth only of the
      whole produce. Upon the rent of rich lands the tythe may sometimes be a
      tax of no more than one-fifth part, or four shillings in the pound;
      whereas upon that of poorer lands, it may sometimes be a tax of one half,
      or of ten shillings in the pound.
    
      The tythe, as it is frequently a very unequal tax upon the rent, so it is
      always a great discouragement, both to the improvements of the landlord,
      and to the cultivation of the farmer. The one cannot venture to make the
      most important, which are generally the most expensive improvements; nor
      the other to raise the most valuable, which are generally, too, the most
      expensive crops; when the church, which lays out no part of the expense,
      is to share so very largely in the profit. The cultivation of madder was,
      for a long time, confined by the tythe to the United Provinces, which,
      being presbyterian countries, and upon that account exempted from this
      destructive tax, enjoyed a sort of monopoly of that useful dyeing drug
      against the rest of Europe. The late attempts to introduce the culture of
      this plant into England, have been made only in consequence of the
      statute, which enacted that five shillings an acre should be received in
      lieu of all manner of tythe upon madder.
    
      As through the greater part of Europe, the church, so in many different
      countries of Asia, the state, is principally supported by a land tax,
      proportioned not to the rent, but to the produce of the land. In China,
      the principal revenue of the sovereign consists in a tenth part of the
      produce of all the lands of the empire. This tenth part, however, is
      estimated so very moderately, that, in many provinces, it is said not to
      exceed a thirtieth part of the ordinary produce. The land tax or land rent
      which used to be paid to the Mahometan government of Bengal, before that
      country fell into the hands of the English East India company, is said to
      have amounted to about a fifth part of the produce. The land tax of
      ancient Egypt is said likewise to have amounted to a fifth part.
    
      In Asia, this sort of land tax is said to interest the sovereign in the
      improvement and cultivation of land. The sovereigns of China, those of
      Bengal while under the Mahometan govermnent, and those of ancient Egypt,
      are said, accordingly, to have been extremely attentive to the making and
      maintaining of good roads and navigable canals, in order to increase, as
      much as possible, both the quantity and value of every part of the produce
      of the land, by procuring to every part of it the most extensive market
      which their own dominions could afford. The tythe of the church is divided
      into such small portions that no one of its proprietors can have any
      interest of this kind. The parson of a parish could never find his
      account, in making a road or canal to a distant part of the country, in
      order to extend the market for the produce of his own particular parish.
      Such taxes, when destined for the maintenance of the state, have some
      advantages, which may serve in some measure to balance their
      inconveniency. When destined for the maintenance of the church, they are
      attended with nothing but inconveniency.
    
      Taxes upon the produce of land may be levied, either in kind, or,
      according to a certain valuation in money.
    
      The parson of a parish, or a gentleman of small fortune who lives upon his
      estate, may sometimes, perhaps find some advantage in receiving, the one
      his tythe, and the other his rent, in kind. The quantity to be collected,
      and the district within which it is to be collected, are so small, that
      they both can oversee, with their own eyes, the collection and disposal of
      every part of what is due to them. A gentleman of great fortune, who lived
      in the capital, would be in danger of suffering much by the neglect, and
      more by the fraud, of his factors and agents, if the rents of an estate in
      a distant province were to be paid to him in this manner. The loss of the
      sovereign, from the abuse and depredation of his tax-gatherers, would
      necessarily be much greater. The servants of the most careless private
      person are, perhaps, more under the eye of their master than those of the
      most careful prince; and a public revenue, which was paid in kind, would
      suffer so much from the mismanagement of the collectors, that a very small
      part of what was levied upon the people would ever arrive at the treasury
      of the prince. Some part of the public revenue of China, however, is said
      to be paid in this manner. The mandarins and other tax-gatherers will, no
      doubt, find their advantage in continuing the practice of a payment, which
      is so much more liable to abuse than any payment in money.
    
      A tax upon the produce of land, which is levied in money, may be levied,
      either according to a valuation, which varies with all the variations of
      the market price; or according to a fixed valuation, a bushel of wheat,
      for example, being always valued at one and the same money price, whatever
      may be the state of the market. The produce of a tax levied in the former
      way will vary only according to the variations in the real produce of the
      land, according to the improvement or neglect of cultivation. The produce
      of a tax levied in the latter way will vary, not only according to the
      variations in the produce of the land, but according both to those in the
      value of the precious metals, and those in the quantity of those metals
      which is at different times contained in coin of the same denomination.
      The produce of the former will always bear the same proportion to the
      value of the real produce of the land. The produce of the latter may, at
      different times, bear very different proportions to that value.
    
      When, instead either of a certain portion of the produce of land, or of
      the price of a certain portion, a certain sum of money is to be paid in
      full compensation for all tax or tythe; the tax becomes, in this case,
      exactly of the same nature with the land tax of England. It neither rises
      nor falls with the rent of the land. It neither encourages nor discourages
      improvement. The tythe in the greater part of those parishes which pay
      what is called a modus, in lieu of all other tythe is a tax of this kind.
      During the Mahometan government of Bengal, instead of the payment in kind
      of the fifth part of the produce, a modus, and, it is said, a very
      moderate one, was established in the greater part of the districts or
      zemindaries of the country. Some of the servants of the East India
      company, under pretence of restoring the public revenue to its proper
      value, have, in some provinces, exchanged this modus for a payment in
      kind. Under their management, this change is likely both to discourage
      cultivation, and to give new opportunities for abuse in the collection of
      the public revenue, which has fallen very much below what it was said to
      have been when it first fell under the management of the company. The
      servants of the company may, perhaps, have profited by the change, but at
      the expense, it is probable, both of their masters and of the country.
    
      Taxes upon the Rent of Houses.
    
      The rent of a house may be distinguished into two parts, of which the one
      may very properly be called the building-rent; the other is commonly
      called the ground-rent.
    
      The building-rent is the interest or profit of the capital expended in
      building the house. In order to put the trade of a builder upon a level
      with other trades, it is necessary that this rent should be sufficient,
      first, to pay him the same interest which he would have got for his
      capital, if he had lent it upon good security; and, secondly, to keep the
      house in constant repair, or, what comes to the same thing, to replace,
      within a certain term of years, the capital which had been employed in
      building it. The building-rent, or the ordinary profit of building, is,
      therefore, everywhere regulated by the ordinary interest of money. Where
      the market rate of interest is four per cent. the rent of a house, which,
      over and above paying the ground-rent, affords six or six and a-half per
      cent. upon the whole expense of building, may, perhaps, afford a
      sufficient profit to the builder. Where the market rate of interest is
      five per cent. it may perhaps require seven or seven and a half per cent.
      If, in proportion to the interest of money, the trade of the builders
      affords at any time much greater profit than this, it will soon draw so
      much capital from other trades as will reduce the profit to its proper
      level. If it affords at any time much less than this, other trades will
      soon draw so much capital from it as will again raise that profit.
    
      Whatever part of the whole rent of a house is over and above what is
      sufficient for affording this reasonable profit, naturally goes to the
      ground-rent; and, where the owner of the ground and the owner of the
      building are two different persons, is, in most cases, completely paid to
      the former. This surplus rent is the price which the inhabitant of the
      house pays for some real or supposed advantage of the situation. In
      country houses, at a distance from any great town, where there is plenty
      of ground to chuse upon, the ground-rent is scarce anything, or no more
      than what the ground which the house stands upon would pay, if employed in
      agriculture. In country villas, in the neighbourhood of some great town,
      it is sometimes a good deal higher; and the peculiar conveniency or beauty
      of situation is there frequently very well paid for. Ground-rents are
      generally highest in the capital, and in those particular parts of it
      where there happens to be the greatest demand for houses, whatever be the
      reason of that demand, whether for trade and business, for pleasure and
      society, or for mere vanity and fashion.
    
      A tax upon house-rent, payable by the tenant, and proportioned to the
      whole rent of each house, could not, for any considerable time at least,
      affect the building-rent. If the builder did not get his reasonable
      profit, he would be obliged to quit the trade; which, by raising the
      demand for building, would, in a short time, bring back his profit to its
      proper level with that of other trades. Neither would such a tax fall
      altogether upon the ground-rent; but it would divide itself in such a
      manner, as to fall partly upon the inhabitant of the house, and partly
      upon the owner of the ground.
    
      Let us suppose, for example, that a particular person judges that he can
      afford for house-rent all expense of sixty pounds a-year; and let us
      suppose, too, that a tax of four shillings in the pound, or of one-fifth,
      payable by the inhabitant, is laid upon house-rent. A house of sixty
      pounds rent will, in that case, cost him seventy-two pounds a-year, which
      is twelve pounds more than he thinks he can afford. He will, therefore,
      content himself with a worse house, or a house of fifty pounds rent,
      which, with the additional ten pounds that he must pay for the tax, will
      make up the sum of sixty pounds a-year, the expense which he judges he can
      afford, and, in order to pay the tax, he will give up a part of the
      additional conveniency which he might have had from a house of ten pounds
      a-year more rent. He will give up, I say, a part of this additional
      conveniency; for he will seldom be obliged to give up the whole, but will,
      in consequence of the tax, get a better house for fifty pounds a-year,
      than he could have got if there had been no tax for as a tax of this kind,
      by taking away this particular competitor, must diminish the competition
      for houses of sixty pounds rent, so it must likewise diminish it for those
      of fifty pounds rent, and in the same manner for those of all other rents,
      except the lowest rent, for which it would for some time increase the
      competition. But the rents of every class of houses for which the
      competition was diminished, would necessarily be more or less reduced. As
      no part of this reduction, however, could for any considerable time at
      least, affect the building-rent, the whole of it must, in the long-run,
      necessarily fall upon the ground-rent. The final payment of this tax,
      therefore, would fall partly upon the inhabitant of the house, who, in
      order to pay his share, would be obliged to give up a part of his
      conveniency; and partly upon the owner of the ground, who, in order to pay
      his share, would be obliged to give up a part of his revenue. In what
      proportion this final payment would be divided between them, it is not,
      perhaps, very easy to ascertain. The division would probably be very
      different in different circumstances, and a tax of this kind might,
      according to those different circumstances, affect very unequally, both
      the inhabitant of the house and the owner of the ground.
    
      The inequality with which a tax of this kind might fall upon the owners of
      different ground-rents, would arise altogether from the accidental
      inequality of this division. But the inequality with which it might fall
      upon the inhabitants of different houses, would arise, not only from this,
      but from another cause. The proportion of the expense of house-rent to the
      whole expense of living, is different in the different degrees of fortune.
      It is, perhaps, highest in the highest degree, and it diminishes gradually
      through the inferior degrees, so as in general to be lowest in the lowest
      degree. The necessaries of life occasion the great expense of the poor.
      They find it difficult to get food, and the greater part of their little
      revenue is spent in getting it. The luxuries and vanities of life occasion
      the principal expense of the rich; and a magnificent house embellishes and
      sets off to the best advantage all the other luxuries and vanities which
      they possess. A tax upon house-rents, therefore, would in general fall
      heaviest upon the rich; and in this sort of inequality there would not,
      perhaps, be any thing very unreasonable. It is not very unreasonable that
      the rich should contribute to the public expense, not only in proportion
      to their revenue, but something more than in that proportion.
    
      The rent of houses, though it in some respects resembles the rent of land,
      is in one respect essentially different from it. The rent of land is paid
      for the use of a productive subject. The land which pays it produces it.
      The rent of houses is paid for the use of an unproductive subject. Neither
      the house, nor the ground which it stands upon, produce anything. The
      person who pays the rent, therefore, must draw it from some other source
      of revenue, distinct from and independent of this subject. A tax upon the
      rent of houses, so far as it falls upon the inhabitants, must be drawn
      from the same source as the rent itself, and must be paid from their
      revenue, whether derived from the wages of labour, the profits of stock,
      or the rent of land. So far as it falls upon the inhabitants, it is one of
      those taxes which fall, not upon one only, but indifferently upon all the
      three different sources of revenue; and is, in every respect, of the same
      nature as a tax upon any other sort of consumable commodities. In general,
      there is not perhaps, any one article of expense or consumption by which
      the liberality or narrowness of a man’s whole expense can be better judged
      of than by his house-rent. A proportional tax upon this particular article
      of expense might, perhaps, produce a more considerable revenue than any
      which has hitherto been drawn from it in any part of Europe. If the tax,
      indeed, was very high, the greater part of people would endeavour to evade
      it as much as they could, by contenting themselves with smaller houses,
      and by turning the greater part of their expense into some other channel.
    
      The rent of houses might easily be ascertained with sufficient accuracy,
      by a policy of the same kind with that which would be necessary for
      ascertaining the ordinary rent of land. Houses not inhabited ought to pay
      no tax. A tax upon them would fall altogether upon the proprietor, who
      would thus be taxed for a subject which afforded him neither conveniency
      nor revenue. Houses inhabited by the proprietor ought to be rated, not
      according to the expense which they might have cost in building, but
      according to the rent which an equitable arbitration might judge them
      likely to bring if leased to a tenant. If rated according to the expense
      which they might have cost in building, a tax of three or four shillings
      in the pound, joined with other taxes, would ruin almost all the rich and
      great families of this, and, I believe, of every other civilized country.
      Whoever will examine with attention the different town and country houses
      of some of the richest and greatest families in this country, will find
      that, at the rate of only six and a-half, or seven per cent. upon the
      original expense of building, their house-rent is nearly equal to the
      whole neat rent of their estates. It is the accumulated expense of several
      successive generations, laid out upon objects of great beauty and
      magnificence, indeed, but, in proportion to what they cost, of very small
      exchangeable value. {Since the first publication of this book, a tax
      nearly upon the above-mentioned principles has been imposed.}
    
      Ground-rents are a still more proper subject of taxation than the rent of
      houses. A tax upon ground-rents would not raise the rent of houses; it
      would fall altogether upon the owner of the ground-rent, who acts always
      as a monopolist, and exacts the greatest rent which can be got for the use
      of his ground. More or less can be got for it, according as the
      competitors happen to be richer or poorer, or can afford to gratify their
      fancy for a particular spot of ground at a greater or smaller expense. In
      every country, the greatest number of rich competitors is in the capital,
      and it is there accordingly that the highest ground-rents are always to be
      found. As the wealth of those competitors would in no respect be increased
      by a tax upon ground-rents, they would not probably be disposed to pay
      more for the use of the ground. Whether the tax was to be advanced by the
      inhabitant or by the owner of the ground, would be of little importance.
      The more the inhabitant was obliged to pay for the tax, the less he would
      incline to pay for the ground; so that the final payment of the tax would
      fall altogether upon the owner of the ground-rent. The ground-rents of
      uninhabited houses ought to pay no tax. Both ground-rents, and the
      ordinary rent of land, are a species of revenue which the owner, in many
      cases, enjoys without any care or attention of his own. Though a part of
      this revenue should be taken from him in order to defray the expenses of
      the state, no discouragement will thereby be given to any sort of
      industry. The annual produce of the land and labour of the society, the
      real wealth and revenue of the great body of the people, might be the same
      after such a tax as before. Ground-rents, and the ordinary rent of land,
      are therefore, perhaps, the species of revenue which can best bear to have
      a peculiar tax imposed upon them.
    
      Ground-rents seem, in this respect, a more proper subject of peculiar
      taxation, than even the ordinary rent of land. The ordinary rent of land
      is, in many cases, owing partly, at least, to the attention and good
      management of the landlord. A very heavy tax might discourage, too much,
      this attention and good management. Ground-rents, so far as they exceed
      the ordinary rent of land, are altogether owing to the good government of
      the sovereign, which, by protecting the industry either of the whole
      people or of the inhabitants of some particular place, enables them to pay
      so much more than its real value for the ground which they build their
      houses upon; or to make to its owner so much more than compensation for
      the loss which he might sustain by this use of it. Nothing can be more
      reasonable, than that a fund, which owes its existence to the good
      government of the state, should be taxed peculiarly, or should contribute
      something more than the greater part of other funds, towards the support
      of that government.
    
      Though, in many different countries of Europe, taxes have been imposed
      upon the rent of houses, I do not know of any in which ground-rents have
      been considered as a separate subject of taxation. The contrivers of taxes
      have, probably, found some difficulty in ascertaining what part of the
      rent ought to be considered as ground-rent, and what part ought to be
      considered as building-rent. It should not, however, seem very difficult
      to distinguish those two parts of the rent from one another.
    
      In Great Britain the rent of houses is supposed to be taxed in the same
      proportion as the rent of land, by what is called the annual land tax. The
      valuation, according to which each different parish and district is
      assessed to this tax, is always the same. It was originally extremely
      unequal, and it still continues to be so. Through the greater part of the
      kingdom this tax falls still more lightly upon the rent of houses than
      upon that of land. In some few districts only, which were originally rated
      high, and in which the rents of houses have fallen considerably, the land
      tax of three or four shillings in the pound is said to amount to an equal
      proportion of the real rent of houses. Untenanted houses, though by law
      subject to the tax, are, in most districts, exempted from it by the favour
      of the assessors; and this exemption sometimes occasions some little
      variation in the rate of particular houses, though that of the district is
      always the same. Improvements of rent, by new buildings, repairs, etc. go
      to the discharge of the district, which occasions still further variations
      in the rate of particular houses.
    
      In the province of Holland, {Memoires concernant les Droits, etc. p. 223.}
      every house is taxed at two and a-half per cent. of its value, without any
      regard, either to the rent which it actually pays, or to the circumstance
      of its being tenanted or untenanted. There seems to be a hardship in
      obliging the proprietor to pay a tax for an untenanted house, from which
      he can derive no revenue, especially so very heavy a tax. In Holland,
      where the market rate of interest does not exceed three per cent., two and
      a-half per cent. upon the whole value of the house must, in most cases,
      amount to more than a third of the building-rent, perhaps of the whole
      rent. The valuation, indeed, according to which the houses are rated,
      though very unequal, is said to be always below the real value. When a
      house is rebuilt, improved, or enlarged, there is a new valuation, and the
      tax is rated accordingly.
    
      The contrivers of the several taxes which in England have, at different
      times, been imposed upon houses, seem to have imagined that there was some
      great difficulty in ascertaining, with tolerable exactness, what was the
      real rent of every house. They have regulated their taxes, therefore,
      according to some more obvious circumstance, such as they had probably
      imagined would, in most cases, bear some proportion to the rent.
    
      The first tax of this kind was hearth-money; or a tax of two shillings
      upon every hearth. In order to ascertain how many hearths were in the
      house, it was necessary that the tax-gatherer should enter every room in
      it. This odious visit rendered the tax odious. Soon after the Revolution,
      therefore, it was abolished as a badge of slavery.
    
      The next tax of this kind was a tax of two shillings upon every
      dwelling-house inhabited. A house with ten windows to pay four shillings
      more. A house with twenty windows and upwards to pay eight shillings. This
      tax was afterwards so far altered, that houses with twenty windows, and
      with less than thirty, were ordered to pay ten shillings, and those with
      thirty windows and upwards to pay twenty shillings. The number of windows
      can, in most cases, be counted from the outside, and, in all cases,
      without entering every room in the house. The visit of the tax-gatherer,
      therefore, was less offensive in this tax than in the hearth-money.
    
      This tax was afterwards repealed, and in the room of it was established
      the window-tax, which has undergone two several alterations and
      augmentations. The window tax, as it stands at present (January 1775),
      over and above the duty of three shillings upon every house in England,
      and of one shilling upon every house in Scotland, lays a duty upon every
      window, which in England augments gradually from twopence, the lowest rate
      upon houses with not more than seven windows, to two shillings, the
      highest rate upon houses with twenty-five windows and upwards.
    
      The principal objection to all such taxes is their inequality; an
      inequality of the worst kind, as they must frequently fall much heavier
      upon the poor than upon the rich. A house of ten pounds rent in a country
      town, may sometimes have more windows than a house of five hundred pounds
      rent in London; and though the inhabitant of the former is likely to be a
      much poorer man than that of the latter, yet, so far as his contribution
      is regulated by the window tax, he must contribute more to the support of
      the state. Such taxes are, therefore, directly contrary to the first of
      the four maxims above mentioned. They do not seem to offend much against
      any of the other three.
    
      The natural tendency of the window tax, and of all other taxes upon
      houses, is to lower rents. The more a man pays for the tax, the less, it
      is evident, he can afford to pay for the rent. Since the imposition of the
      window tax, however, the rents of houses have, upon the whole, risen more
      or less, in almost every town and village of Great Britain, with which I
      am acquainted. Such has been, almost everywhere, the increase of the
      demand for houses, that it has raised the rents more than the window tax
      could sink them; one of the many proofs of the great prosperity of the
      country, and of the increasing revenue of its inhabitants. Had it not been
      for the tax, rents would probably have risen still higher.
    
      ARTICLE II.—Taxes upon Profit, or upon the Revenue arising from
      Stock.
    
      The revenue or profit arising from stock naturally divides itself into two
      parts; that which pays the interest, and which belongs to the owner of the
      stock; and that surplus part which is over and above what is necessary for
      paying the interest.
    
      This latter part of profit is evidently a subject not taxable directly. It
      is the compensation, and, in most cases, it is no more than a very
      moderate compensation for the risk and trouble of employing the stock. The
      employer must have this compensation, otherwise he cannot, consistently
      with his own interest, continue the employment. If he was taxed directly,
      therefore, in proportion to the whole profit, he would be obliged either
      to raise the rate of his profit, or to charge the tax upon the interest of
      money; that is, to pay less interest. If he raised the rate of his profit
      in proportion to the tax, the whole tax, though it might be advanced by
      him, would be finally paid by one or other of two different sets of
      people, according to the different ways in which he might employ the stock
      of which he had the management. If he employed it as a farming stock, in
      the cultivation of land, he could raise the rate of his profit only by
      retaining a greater portion, or, what comes to the same thing, the price
      of a greater portion, of the produce of the land; and as this could be
      done only by a reduction of rent, the final payment of the tax would fall
      upon the landlord. If he employed it as a mercantile or manufacturing
      stock, he could raise the rate of his profit only by raising the price of
      his goods; in which case, the final payment of the tax would fall
      altogether upon the consumers of those goods. If he did not raise the rate
      of his profit, he would be obliged to charge the whole tax upon that part
      of it which was allotted for the interest of money. He could afford less
      interest for whatever stock he borrowed, and the whole weight of the tax
      would, in this case, fall ultimately upon the interest of money. So far as
      he could not relieve himself from the tax in the one way, he would be
      obliged to relieve himself in the other.
    
      The interest of money seems, at first sight, a subject equally capable of
      being taxed directly as the rent of land. Like the rent of land, it is a
      neat produce, which remains, after completely compensating the whole risk
      and trouble of employing the stock. As a tax upon the rent of land cannot
      raise rents, because the neat produce which remains, after replacing the
      stock of the farmer, together with his reasonable profit, cannot be
      greater after the tax than before it, so, for the same reason, a tax upon
      the interest of money could not raise the rate of interest; the quantity
      of stock or money in the country, like the quantity of land, being
      supposed to remain the same after the tax as before it. The ordinary rate
      of profit, it has been shewn, in the first book, is everywhere regulated
      by the quantity of stock to be employed, in proportion to the quantity of
      the employment, or of the business which must be done by it. But the
      quantity of the employment, or of the business to be done by stock, could
      neither be increased nor diminished by any tax upon the interest of money.
      If the quantity of the stock to be employed, therefore, was neither
      increased nor diminished by it, the ordinary rate of profit would
      necessarily remain the same. But the portion of this profit, necessary for
      compensating the risk and trouble of the employer, would likewise remain
      the same; that risk and trouble being in no respect altered. The residue,
      therefore, that portion which belongs to the owner of the stock, and which
      pays the interest of money, would necessarily remain the same too. At
      first sight, therefore, the interest of money seems to be a subject as fit
      to be taxed directly as the rent of land.
    
      There are, however, two different circumstances, which render the interest
      of money a much less proper subject of direct taxation than the rent of
      land.
    
      First, the quantity and value of the land which any man possesses, can
      never be a secret, and can always be ascertained with great exactness. But
      the whole amount of the capital stock which he possesses is almost always
      a secret, and can scarce ever be ascertained with tolerable exactness. It
      is liable, besides, to almost continual variations. A year seldom passes
      away, frequently not a month, sometimes scarce a single day, in which it
      does not rise or fall more or less. An inquisition into every man’s
      private circumstances, and an inquisition which, in order to accommodate
      the tax to them, watched over all the fluctuations of his fortune, would
      be a source of such continual and endless vexation as no person could
      support.
    
      Secondly, land is a subject which cannot be removed; whereas stock easily
      may. The proprietor of land is necessarily a citizen of the particular
      country in which his estate lies. The proprietor of stock is properly a
      citizen of the world, and is not necessarily attached to any particular
      country. He would be apt to abandon the country in which he was exposed to
      a vexatious inquisition, in order to be assessed to a burdensome tax; and
      would remove his stock to some other country, where he could either carry
      on his business, or enjoy his fortune more at his ease. By removing his
      stock, he would put an end to all the industry which it had maintained in
      the country which he left. Stock cultivates land; stock employs labour. A
      tax which tended to drive away stock from any particular country, would so
      far tend to dry up every source of revenue, both to the sovereign and to
      the society. Not only the profits of stock, but the rent of land, and the
      wages of labour, would necessarily be more or less diminished by its
      removal.
    
      The nations, accordingly, who have attempted to tax the revenue arising
      from stock, instead of any severe inquisition of this kind, have been
      obliged to content themselves with some very loose, and, therefore, more
      or less arbitrary estimation. The extreme inequality and uncertainty of a
      tax assessed in this manner, can be compensated only by its extreme
      moderation; in consequence of which, every man finds himself rated so very
      much below his real revenue, that he gives himself little disturbance
      though his neighbour should be rated somewhat lower.
    
      By what is called the land tax in England, it was intended that the stock
      should be taxed in the same proportion as land. When the tax upon land was
      at four shillings in the pound, or at one-fifth of the supposed rent, it
      was intended that stock should be taxed at one-fifth of the supposed
      interest. When the present annual land tax was first imposed, the legal
      rate of interest was six per cent. Every hundred pounds stock,
      accordingly, was supposed to be taxed at twenty-four shillings, the fifth
      part of six pounds. Since the legal rate of interest has been reduced to
      five per cent. every hundred pounds stock is supposed to be taxed at
      twenty shillings only. The sum to be raised, by what is called the land
      tax, was divided between the country and the principal towns. The greater
      part of it was laid upon the country; and of what was laid upon the towns,
      the greater part was assessed upon the houses. What remained to be
      assessed upon the stock or trade of the towns (for the stock upon the land
      was not meant to be taxed) was very much below the real value of that
      stock or trade. Whatever inequalities, therefore, there might be in the
      original assessment, gave little disturbance. Every parish and district
      still continues to be rated for its land, its houses, and its stock,
      according to the original assessment; and the almost universal prosperity
      of the country, which, in most places, has raised very much the value of
      all these, has rendered those inequalities of still less importance now.
      The rate, too, upon each district, continuing always the same, the
      uncertainty of this tax, so far as it might he assessed upon the stock of
      any individual, has been very much diminished, as well as rendered of much
      less consequence. If the greater part of the lands of England are not
      rated to the land tax at half their actual value, the greater part of the
      stock of England is, perhaps, scarce rated at the fiftieth part of its
      actual value. In some towns, the whole land tax is assessed upon houses;
      as in Westminster, where stock and trade are free. It is otherwise in
      London.
    
      In all countries, a severe inquisition into the circumstances of private
      persons has been carefully avoided.
    
      At Hamburg, {Memoires concernant les Droits, tom. i, p.74} every
      inhabitant is obliged to pay to the state one fourth per cent. of all that
      he possesses; and as the wealth of the people of Hamburg consists
      principally in stock, this tax maybe considered as a tax upon stock. Every
      man assesses himself, and, in the presence of the magistrate, puts
      annually into the public coffer a certain sum of money, which he declares
      upon oath, to be one fourth per cent. of all that he possesses, but
      without declaring what it amounts to, or being liable to any examination
      upon that subject. This tax is generally supposed to be paid with great
      fidelity. In a small republic, where the people have entire confidence in
      their magistrates, are convinced of the necessity of the tax for the
      support of the state, and believe that it will be faithfully applied to
      that purpose, such conscientious and voluntary payment may sometimes be
      expected. It is not peculiar to the people of Hamburg.
    
      The canton of Underwald, in Switzerland, is frequently ravaged by storms
      and inundations, and it is thereby exposed to extraordinary expenses. Upon
      such occasions the people assemble, and every one is said to declare with
      the greatest frankness what he is worth, in order to be taxed accordingly.
      At Zurich, the law orders, that in cases of necessity, every one should be
      taxed in proportion to his revenue; the amount of which he is obliged to
      declare upon oath. They have no suspicion, it is said, that any of their
      fellow citizens will deceive them. At Basil, the principal revenue of the
      state arises from a small custom upon goods exported. All the citizens
      make oath, that they will pay every three months all the taxes imposed by
      law. All merchants, and even all inn-keepers, are trusted with keeping
      themselves the account of the goods which they sell, either within or
      without the territory. At the end of every three months, they send this
      account to the treasurer, with the amount of the tax computed at the
      bottom of it. It is not suspected that the revenue suffers by this
      confidence. {Memoires concernant les Droits, tom. i p. 163, 167,171.}
    
      To oblige every citizen to declare publicly upon oath, the amount of his
      fortune, must not, it seems, in those Swiss cantons, be reckoned a
      hardship. At Hamburg it would be reckoned the greatest. Merchants engaged
      in the hazardous projects of trade, all tremble at the thoughts of being
      obliged, at all times, to expose the real state of their circumstances.
      The ruin of their credit, and the miscarriage of their projects, they
      foresee, would too often be the consequence. A sober and parsimonious
      people, who are strangers to all such projects, do not feel that they have
      occasion for any such concealment.
    
      In Holland, soon after the exaltation of the late prince of Orange to the
      stadtholdership, a tax of two per cent. or the fiftieth penny, as it was
      called, was imposed upon the whole substance of every citizen. Every
      citizen assesed himself, and paid his tax, in the same manner as at
      Hamburg, and it was in general supposed to have been paid with great
      fidelity. The people had at that time the greatest affection for their new
      government, which they had just established by a general insurrection. The
      tax was to be paid but once, in order to relieve the state in a particular
      exigency. It was, indeed, too heavy to be permanent. In a country where
      the market rate of interest seldom exceeds three per cent., a tax of two
      per cent. amounts to thirteen shillings and four pence in the pound, upon
      the highest neat revenue which is commonly drawn from stock. It is a tax
      which very few people could pay, without encroaching more or less upon
      their capitals. In a particular exigency, the people may, from great
      public zeal, make a great effort, and give up even a part of their
      capital, in order to relieve the state. But it is impossible that they
      should continue to do so for any considerable time; and if they did, the
      tax would soon ruin them so completely, as to render them altogether
      incapable of supporting the state.
    
      The tax upon stock, imposed by the land tax bill in England, though it is
      proportioned to the capital, is not intended to diminish or, take away any
      part of that capital. It is meant only to be a tax upon the interest of
      money, proportioned to that upon the rent of land; so that when the latter
      is at four shillings in the pound, the former may be at four shillings in
      the pound too. The tax at Hamburg, and the still more moderate taxes of
      Underwald and Zurich, are meant, in the same manner, to be taxes, not upon
      the capital, but upon the interest or neat revenue of stock. That of
      Holland was meant to be a tax upon the capital.
    
      Taxes upon the Profit of particular Employments.
    
      In some countries, extraordinary taxes are imposed upon the profits of
      stock; sometimes when employed in particular branches of trade, and
      sometimes when employed in agriculture.
    
      Of the former kind, are in England, the tax upon hawkers and pedlars, that
      upon hackney-coaches and chairs, and that which the keepers of ale-houses
      pay for a licence to retail ale and spiritous liquors. During the late
      war, another tax of the same kind was proposed upon shops. The war having
      been undertaken, it was said, in defence of the trade of the country, the
      merchants, who were to profit by it, ought to contribute towards the
      support of it.
    
      A tax, however, upon the profits of stock employed in any particular
      branch of trade, can never fall finally upon the dealers (who must in all
      ordinary cases have their reasonable profit, and, where the competition is
      free, can seldom have more than that profit), but always upon the
      consumers, who must be obliged to pay in the price of the goods the tax
      which the dealer advances; and generally with some overcharge.
    
      A tax of this kind, when it is proportioned to the trade of the dealer, is
      finally paid by the consumer, and occasions no oppression to the dealer.
      When it is not so proportioned, but is the same upon all dealers, though
      in this case, too, it is finally paid by the consumer, yet it favours the
      great, and occasions some oppression to the small dealer. The tax of five
      shillings a-week upon every hackney coach, and that of ten shillings
      a-year upon every hackney chair, so far as it is advanced by the different
      keepers of such coaches and chairs, is exactly enough proportioned to the
      extent of their respective dealings. It neither favours the great, nor
      oppresses the smaller dealer. The tax of twenty shillings a-year for a
      licence to sell ale; of forty shillings for a licence to sell spiritous
      liquors; and of forty shillings more for a licence to sell wine, being the
      same upon all retailers, must necessarily give some advantage to the
      great, and occasion some oppression to the small dealers. The former must
      find it more easy to get back the tax in the price of their goods than the
      latter. The moderation of the tax, however, renders this inequality of
      less importance; and it may to many people appear not improper to give
      some discouragement to the multiplication of little ale-houses. The tax
      upon shops, it was intended, should be the same upon all shops. It could
      not well have been otherwise. It would have been impossible to proportion,
      with tolerable exactness, the tax upon a shop to the extent of the trade
      carried on in it, without such an inquisition as would have been
      altogether insupportable in a free country. If the tax had been
      considerable, it would have oppressed the small, and forced almost the
      whole retail trade into the hands of the great dealers. The competition of
      the former being taken away, the latter would have enjoyed a monopoly of
      the trade; and, like all other monopolists, would soon have combined to
      raise their profits much beyond what was necessary for the payment of the
      tax. The final payment, instead of falling upon the shop-keeper, would
      have fallen upon the consumer, with a considerable overcharge to the
      profit of the shop-keeper. For these reasons, the project of a tax upon
      shops was laid aside, and in the room of it was substituted the subsidy,
      1759.
    
      What in France is called the personal taille, is perhaps, the most
      important tax upon the profits of stock employed in agriculture, that is
      levied in any part of Europe.
    
      In the disorderly state of Europe, during the prevalence of the feudal
      government, the sovereign was obliged to content himself with taxing those
      who were too weak to refuse to pay taxes. The great lords, though willing
      to assist him upon particular emergencies, refused to subject themselves
      to any constant tax, and he was not strong enough to force them. The
      occupiers of land all over Europe were, the greater part of them,
      originally bond-men. Through the greater part of Europe, they were
      gradually emancipated. Some of them acquired the property of landed
      estates, which they held by some base or ignoble tenure, sometimes under
      the king, and sometimes under some other great lord, like the ancient
      copy-holders of England. Others, without acquiring the property, obtained
      leases for terms of years, of the lands which they occupied under their
      lord, and thus became less dependent upon him. The great lords seem to
      have beheld the degree of prosperity and independency, which this inferior
      order of men had thus come to enjoy, with a malignant and contemptuous
      indignation, and willingly consented that the sovereign should tax them.
      In some countries, this tax was confined to the lands which were held in
      property by an ignoble tenure; and, in this case, the taille was said to
      be real. The land tax established by the late king of Sardinia, and the
      taille in the provinces of Languedoc, Provence, Dauphine, and Britanny; in
      the generality of Montauban, and in the elections of Agen and Condom, as
      well as in some other districts of France; are taxes upon lands held in
      property by an ignoble tenure. In other countries, the tax was laid upon
      the supposed profits of all those who held, in farm or lease, lands
      belonging to other people, whatever might be the tenure by which the
      proprietor held them; and in this case, the taille was said to be
      personal. In the greater part of those provinces of France, which are
      called the countries of elections, the taille is of this kind. The real
      taille, as it is imposed only upon a part of the lands of the country, is
      necessarily an unequal, but it is not always an arbitrary tax, though it
      is so upon some occasions. The personal taille, as it is intended to be
      proportioned to the profits of a certain class of people, which can only
      be guessed at, is necessarily both arbitrary and unequal.
    
      In France, the personal taille at present (1775) annually imposed upon the
      twenty generalities, called the countries of elections, amounts to
      40,107,239 livres, 16 sous. {Memoires concernant les Droits, etc tom. ii,
      p.17.} the proportion in which this sum is assessed upon those different
      provinces, varies from year to year, according to the reports which are
      made to the king’s council concerning the goodness or badness of the
      crops, as well as other circumstances, which may either increase or
      diminish their respective abilities to pay. Each generality is divided
      into a certain number of elections; and the proportion in which the sum
      imposed upon the whole generality is divided among those different
      elections, varies likewise from year to year, according to the reports
      made to the council concerning their respective abilities. It seems
      impossible, that the council, with the best intentions, can ever
      proportion, with tolerable exactness, either of these two assessments to
      the real abilities of the province or district upon which they are
      respectively laid. Ignorance and misinformation must always, more or less,
      mislead the most upright council. The proportion which each parish ought
      to support of what is assessed upon the whole election, and that which
      each individual ought to support of what is assessed upon his particular
      parish, are both in the same manner varied from year to year, according as
      circumstances are supposed to require. These circumstances are judged of,
      in the one case, by the officers of the election, in the other, by those
      of the parish; and both the one and the other are, more or less, under the
      direction and influence of the intendant. Not only ignorance and
      misinformation, but friendship, party animosity, and private resentment,
      are said frequently to mislead such assessors. No man subject to such a
      tax, it is evident, can ever be certain, before he is assessed, of what he
      is to pay. He cannot even be certain after he is assessed. If any person
      has been taxed who ought to have been exempted, or if any person has been
      taxed beyond his proportion, though both must pay in the mean time, yet if
      they complain, and make good their complaints, the whole parish is
      reimposed next year, in order to reimburse them. If any of the
      contributors become bankrupt or insolvent, the collector is obliged to
      advance his tax; and the whole parish is reimposed next year, in order to
      reimburse the collector. If the collector himself should become bankrupt,
      the parish which elects him must answer for his conduct to the
      receiver-general of the election. But, as it might be troublesome for the
      receiver to prosecute the whole parish, he takes at his choice five or six
      of the richest contributors, and obliges them to make good what had been
      lost by the insolvency of the collector. The parish is afterwards
      reimposed, in order to reimburse those five or six. Such reimpositions are
      always over and above the taille of the particular year in which they are
      laid on.
    
      When a tax is imposed upon the profits of stock in a particular branch of
      trade, the traders are all careful to bring no more goods to market than
      what they can sell at a price sufficient to reimburse them from advancing
      the tax. Some of them withdraw a part of their stocks from the trade, and
      the market is more sparingly supplied than before. The price of the goods
      rises, and the final payment of the tax falls upon the consumer. But when
      a tax is imposed upon the profits of stock employed in agriculture, it is
      not the interest of the farmers to withdraw any part of their stock from
      that employment. Each farmer occupies a certain quantity of land, for
      which he pays rent. For the proper cultivation of this land, a certain
      quantity of stock is necessary; and by withdrawing any part of this
      necessary quantity, the farmer is not likely to be more able to pay either
      the rent or the tax. In order to pay the tax, it can never be his interest
      to diminish the quantity of his produce, nor consequently to supply the
      market more sparingly than before. The tax, therefore, will never enable
      him to raise the price of his produce, so as to reimburse himself, by
      throwing the final payment upon the consumer. The farmer, however, must
      have his reasonable profit as well as every other dealer, otherwise he
      must give up the trade. After the imposition of a tax of this kind, he can
      get this reasonable profit only by paying less rent to the landlord. The
      more he is obliged to pay in the way of tax, the less he can afford to pay
      in the way of rent. A tax of this kind, imposed during the currency of a
      lease, may, no doubt, distress or ruin the farmer. Upon the renewal of the
      lease, it must always fall upon the landlord.
    
      In the countries where the personal taille takes place, the farmer is
      commonly assessed in proportion to the stock which he appears to employ in
      cultivation. He is, upon this account, frequently afraid to have a good
      team of horses or oxen, but endeavours to cultivate with the meanest and
      most wretched instruments of husbandry that he can. Such is his distrust
      in the justice of his assessors, that he counterfeits poverty, and wishes
      to appear scarce able to pay anything, for fear of being obliged to pay
      too much. By this miserable policy, he does not, perhaps, always consult
      his own interest in the most effectual manner; and he probably loses more
      by the diminution of his produce, than he saves by that of his tax.
      Though, in consequence of this wretched cultivation, the market is, no
      doubt, somewhat worse supplied; yet the small rise of price which this may
      occasion, as it is not likely even to indemnify the farmer for the
      diminution of his produce, it is still less likely to enable him to pay
      more rent to the landlord. The public, the farmer, the landlord, all
      suffer more or less by this degraded cultivation. That the personal taille
      tends, in many different ways, to discourage cultivation, and consequently
      to dry up the principal source of the wealth of every great country, I
      have already had occasion to observe in the third book of this Inquiry.
    
      What are called poll-taxes in the southern provinces of North America, and
      the West India islands, annual taxes of so much a-head upon every negro,
      are properly taxes upon the profits of a certain species of stock employed
      in agriculture. As the planters, are the greater part of them, both
      farmers and landlords, the final payment of the tax falls upon them in
      their quality of landlords, without any retribution.
    
      Taxes of so much a head upon the bondmen employed in cultivation, seem
      anciently to have been common all over Europe. There subsists at present a
      tax of this kind in the empire of Russia. It is probably upon this account
      that poll-taxes of all kinds have often been represented as badges of
      slavery. Every tax, however, is, to the person who pays it, a badge, not
      of slavery, but of liberty. It denotes that he is subject to government,
      indeed; but that, as he has some property, he cannot himself be the
      property of a master. A poll tax upon slaves is altogether different from
      a poll-tax upon freemen. The latter is paid by the persons upon whom it is
      imposed; the former, by a different set of persons. The latter is either
      altogether arbitrary, or altogether unequal, and, in most cases, is both
      the one and the other; the former, though in some respects unequal,
      different slaves being of different values, is in no respect arbitrary.
      Every master, who knows the number of his own slaves, knows exactly what
      he has to pay. Those different taxes, however, being called by the same
      name, have been considered as of the same nature.
    
      The taxes which in Holland are imposed upon men and maid servants, are
      taxes, not upon stock, but upon expense; and so far resemble the taxes
      upon consumable commodities. The tax of a guinea a-head for every
      man-servant, which has lately been imposed in Great Britain, is of the
      same kind. It falls heaviest upon the middling rank. A man of two hundred
      a-year may keep a single man-servant. A man of ten thousand a-year will
      not keep fifty. It does not affect the poor.
    
      Taxes upon the profits of stock, in particular employments, can never
      affect the interest of money. Nobody will lend his money for less interest
      to those who exercise the taxed, than to those who exercise the untaxed
      employments. Taxes upon the revenue arising from stock in all employments,
      where the government attempts to levy them with any degree of exactness,
      will, in many cases, fall upon the interest of money. The vingtieme, or
      twentieth penny, in France, is a tax of the same kind with what is called
      the land tax in England, and is assessed, in the same manner, upon the
      revenue arising upon land, houses, and stock. So far as it affects stock,
      it is assessed, though not with great rigour, yet with much more exactness
      than that part of the land tax in England which is imposed upon the same
      fund. It, in many cases, falls altogether upon the interest of money.
      Money is frequently sunk in France, upon what are called contracts for the
      constitution of a rent; that is, perpetual annuities, redeemable at any
      time by the debtor, upon payment of the sum originally advanced, but of
      which this redemption is not exigible by the creditor except in particular
      cases. The vingtieme seems not to have raised the rate of those annuities,
      though it is exactly levied upon them all.
    


    
      APPENDIX TO ARTICLES I. AND II.—Taxes upon the Capital Value of
      Lands, Houses, and Stock.
    
      While property remains in the possession of the same person, whatever
      permanent taxes may have been imposed upon it, they have never been
      intended to diminish or take away any part of its capital value, but only
      some part of the revenue arising from it. But when property changes hands,
      when it is transmitted either from the dead to the living, or from the
      living to the living, such taxes have frequently been imposed upon it as
      necessarily take away some part of its capital value.
    
      The transference of all sorts of property from the dead to the living, and
      that of immoveable property of land and houses from the living to the
      living, are transactions which are in their nature either public and
      notorious, or such as cannot be long concealed. Such transactions,
      therefore, may be taxed directly. The transference of stock or moveable
      property, from the living to the living, by the lending of money, is
      frequently a secret transaction, and may always be made so. It cannot
      easily, therefore, be taxed directly. It has been taxed indirectly in two
      different ways; first, by requiring that the deed, containing the
      obligation to repay, should be written upon paper or parchment which had
      paid a certain stamp duty, otherwise not to be valid; secondly, by
      requiring, under the like penalty of invalidity, that it should be
      recorded either in a public or secret register, and by imposing certain
      duties upon such registration. Stamp duties, and duties of registration,
      have frequently been imposed likewise upon the deeds transferring property
      of all kinds from the dead to the living, and upon those transferring
      immoveable property from the living to the living; transactions which
      might easily have been taxed directly.
    
      The vicesima hereditatum, or the twentieth penny of inheritances, imposed
      by Augustus upon the ancient Romans, was a tax upon the transference of
      property from the dead to the living. Dion Cassius, { Lib. 55. See also
      Burman. de Vectigalibus Pop. Rom. cap. xi. and Bouchaud de l’impot du
      vingtieme sur les successions.} the author who writes concerning it the
      least indistinctly, says, that it was imposed upon all successions,
      legacies and donations, in case of death, except upon those to the nearest
      relations, and to the poor.
    
      Of the same kind is the Dutch tax upon successions. {See Memoires
      concernant les Droits, etc. tom i, p. 225.} Collateral successions are
      taxed according to the degree of relation, from five to thirty per cent.
      upon the whole value of the succession. Testamentary donations, or
      legacies to collaterals, are subject to the like duties. Those from
      husband to wife, or from wife to husband, to the fiftieth penny. The
      luctuosa hereditas, the mournful succession of ascendants to descendants,
      to the twentieth penny only. Direct successions, or those of descendants
      to ascendants, pay no tax. The death of a father, to such of his children
      as live in the same house with him, is seldom attended with any increase,
      and frequently with a considerable diminution of revenue; by the loss of
      his industry, of his office, or of some life-rent estate, of which he may
      have been in possession. That tax would be cruel and oppressive, which
      aggravated their loss, by taking from them any part of his succession. It
      may, however, sometimes be otherwise with those children, who, in the
      language of the Roman law, are said to be emancipated; in that of the
      Scotch law, to be foris-familiated; that is, who have received their
      portion, have got families of their own, and are supported by funds
      separate and independent of those of their father. Whatever part of his
      succession might come to such children, would be a real addition to their
      fortune, and might, therefore, perhaps, without more inconveniency than
      what attends all duties of this kind, be liable to some tax. The
      casualties of the feudal law were taxes upon the transference of land,
      both from the dead to the living, and from the living to the living. In
      ancient times, they constituted, in every part of Europe, one of the
      principal branches of the revenue of the crown.
    
      The heir of every immediate vassal of the crown paid a certain duty,
      generally a year’s rent, upon receiving the investiture of the estate. If
      the heir was a minor, the whole rents of the estate, during the
      continuance of the minority, devolved to the superior, without any other
      charge besides the maintenance of the minor, and the payment of the
      widow’s dower, when there happened to be a dowager upon the land. When the
      minor came to be of age, another tax, called relief, was still due to the
      superior, which generally amounted likewise to a year’s rent. A long
      minority, which, in the present times, so frequently disburdens a great
      estate of all its incumbrances, and restores the family to their ancient
      splendour, could in those times have no such effect. The waste, and not
      the disincumbrance of the estate, was the common effect of a long
      minority.
    
      By a feudal law, the vassal could not alienate without the consent of his
      superior, who generally extorted a fine or composition on granting it.
      This fine, which was at first arbitrary, came, in many countries, to be
      regulated at a certain portion of the price of the land. In some
      countries, where the greater part of the other feudal customs have gone
      into disuse, this tax upon the alienation of land still continues to make
      a very considerable branch of the revenue of the sovereign. In the canton
      of Berne it is so high as a sixth part of the price of all noble fiefs,
      and a tenth part of that of all ignoble ones. {Memoires concernant les
      Droits, etc, tom.i p.154} In the canton of Lucern, the tax upon the sale
      of land is not universal, and takes place only in certain districts. But
      if any person sells his land in order to remove out of the territory, he
      pays ten per cent. upon the whole price of the sale. {id. p.157.} Taxes of
      the same kind, upon the sale either of all lands, or of lands held by
      certain tenures, take place in many other countries, and make a more or
      less considerable branch of the revenue of the sovereign.
    
      Such transactions may be taxed indirectly, by means either of stamp
      duties, or of duties upon registration; and those duties either may, or
      may not, be proportioned to the value of the subject which is transferred.
    
      In Great Britain, the stamp duties are higher or lower, not so much
      according to the value of the property transferred (an eighteen-penny or
      half-crown stamp being sufficient upon a bond for the largest sum of
      money), as according to the nature of the deed. The highest do not exceed
      six pounds upon every sheet of paper, or skin of parchment; and these high
      duties fall chiefly upon grants from the crown, and upon certain law
      proceedings, without any regard to the value of the subject. There are, in
      Great Britain, no duties on the registration of deeds or writings, except
      the fees of the officers who keep the register; and these are seldom more
      than a reasonable recompence for their labour. The crown derives no
      revenue from them.
    
      In Holland {Memoires concernant les Droits, etc. tom. i. p 223, 224, 225.}
      there are both stamp duties and duties upon registration; which in some
      cases are, and in some are not, proportioned to the value of the property
      transferred. All testaments must be written upon stamped paper, of which
      the price is proportioned to the property disposed of; so that there are
      stamps which cost from three pence or three stivers a-sheet, to three
      hundred florins, equal to about twenty-seven pounds ten shillings of our
      money. If the stamp is of an inferior price to what the testator ought to
      have made use of, his succession is confiscated. This is over and above
      all their other taxes on succession. Except bills of exchange, and some
      other mercantile bills, all other deeds, bonds, and contracts, are subject
      to a stamp duty. This duty, however, does not rise in proportion to the
      value of the subject. All sales of land and of houses, and all mortgages
      upon either, must be registered, and, upon registration, pay a duty to the
      state of two and a-half per cent. upon the amount of the price or of the
      mortgage. This duty is extended to the sale of all ships and vessels of
      more than two tons burden, whether decked or undecked. These, it seems,
      are considered as a sort of houses upon the water. The sale of moveables,
      when it is ordered by a court of justice, is subject to the like duty of
      two and a-half per cent.
    
      In France, there are both stamp duties and duties upon registration. The
      former are considered as a branch of the aids of excise, and, in the
      provinces where those duties take place, are levied by the excise
      officers. The latter are considered as a branch of the domain of the crown
      and are levied by a different set of officers.
    
      Those modes of taxation by stamp duties and by duties upon registration,
      are of very modern invention. In the course of little more than a century,
      however, stamp duties have, in Europe, become almost universal, and duties
      upon registration extremely common. There is no art which one government
      sooner learns of another, than that of draining money from the pockets of
      the people.
    
      Taxes upon the transference of property from the dead to the living, fall
      finally, as well as immediately, upon the persons to whom the property is
      transferred. Taxes upon the sale of land fall altogether upon the seller.
      The seller is almost always under the necessity of selling, and must,
      therefore, take such a price as he can get. The buyer is scarce ever under
      the necessity of buying, and will, therefore, only give such a price as he
      likes. He considers what the land will cost him, in tax and price
      together. The more he is obliged to pay in the way of tax, the less he
      will be disposed to give in the way of price. Such taxes, therefore, fall
      almost always upon a necessitous person, and must, therefore, be
      frequently very cruel and oppressive. Taxes upon the sale of new-built
      houses, where the building is sold without the ground, fall generally upon
      the buyer, because the builder must generally have his profit; otherwise
      he must give up the trade. If he advances the tax, therefore, the buyer
      must generally repay it to him. Taxes upon the sale of old houses, for the
      same reason as those upon the sale of land, fall generally upon the
      seller; whom, in most cases, either conveniency or necessity obliges to
      sell. The number of new-built houses that are annually brought to market,
      is more or less regulated by the demand. Unless the demand is such as to
      afford the builder his profit, after paying all expenses, he will build no
      more houses. The number of old houses which happen at any time to come to
      market, is regulated by accidents, of which the greater part have no
      relation to the demand. Two or three great bankruptcies in a mercantile
      town, will bring many houses to sale, which must be sold for what can be
      got for them. Taxes upon the sale of ground-rents fall altogether upon the
      seller, for the same reason as those upon the sale of lands. Stamp duties,
      and duties upon the registration of bonds and contracts for borrowed
      money, fall altogether upon the borrower, and, in fact, are always paid by
      him. Duties of the same kind upon law proceedings fall upon the suitors.
      They reduce to both the capital value of the subject in dispute. The more
      it costs to acquire any property, the less must be the neat value of it
      when acquired.
    
      All taxes upon the transference of property of every kind, so far as they
      diminish the capital value of that property, tend to diminish the funds
      destined for the maintenance of productive labour. They are all more or
      less unthrifty taxes that increase the revenue of the sovereign, which
      seldom maintains any but unproductive labourers, at the expense of the
      capital of the people, which maintains none but productive.
    
      Such taxes, even when they are proportioned to the value of the property
      transferred, are still unequal; the frequency of transference not being
      always equal in property of equal value. When they are not proportioned to
      this value, which is the case with the greater part of the stamp duties
      and duties of registration, they are still more so. They are in no respect
      arbitrary, but are, or may be, in all cases, perfectly clear and certain.
      Though they sometimes fall upon the person who is not very able to pay,
      the time of payment is, in most cases, sufficiently convenient for him.
      When the payment becomes due, he must, in most cases, have the more to
      pay. They are levied at very little expense, and in general subject the
      contributors to no other inconveniency, besides always the unavoidable one
      of paying the tax. In France, the stamp duties are not much complained of.
      Those of registration, which they call the Controle, are. They give
      occasion, it is pretended, to much extortion in the officers of the
      farmers-general who collect the tax, which is in a great measure arbitrary
      and uncertain. In the greater part of the libels which have been written
      against the present system of finances in France, the abuses of the
      controle make a principal article. Uncertainty, however, does not seem to
      be necessarily inherent in the nature of such taxes. If the popular
      complaints are well founded, the abuse must arise, not so much from the
      nature of the tax as from the want of precision and distinctness in the
      words of the edicts or laws which impose it.
    
      The registration of mortgages, and in general of all rights upon
      immoveable property, as it gives great security both to creditors and
      purchasers, is extremely advantageous to the public. That of the greater
      part of deeds of other kinds, is frequently inconvenient and even
      dangerous to individuals, without any advantage to the public. All
      registers which, it is acknowledged, ought to be kept secret, ought
      certainly never to exist. The credit of individuals ought certainly never
      to depend upon so very slender a security, as the probity and religion of
      the inferior officers of revenue. But where the fees of registration have
      been made a source of revenue to the sovereign, register-offices have
      commonly been multiplied without end, both for the deeds which ought to be
      registered, and for those which ought not. In France there are several
      different sorts of secret registers. This abuse, though not perhaps a
      necessary, it must be acknowledged, is a very natural effect of such
      taxes.
    
      Such stamp duties as those in England upon cards and dice, upon newspapers
      and periodical pamphlets, etc. are properly taxes upon consumption; the
      final payment falls upon the persons who use or consume such commodities.
      Such stamp duties as those upon licences to retail ale, wine, and
      spiritous liquors, though intended, perhaps, to fall upon the profits of
      the retailers, are likewise finally paid by the consumers of those
      liquors. Such taxes, though called by the same name, and levied by the
      same officers, and in the same manner with the stamp duties above
      mentioned upon the transference of property, are, however, of a quite
      different nature, and fall upon quite different funds.
    
      ARTICLE III.—Taxes upon the Wages of Labour.
    
      The wages of the inferior classes of work men, I have endeavoured to show
      in the first book are everywhere necessarily regulated by two different
      circumstances; the demand for labour, and the ordinary or average price of
      provisions. The demand for labour, according as it happens to be either
      increasing stationary or declining; or to require an increasing,
      stationary, or declining population, regulates the subsistence of the
      labourer, and determines in what degree it shall be either liberal,
      moderate, or scanty. The ordinary average price of provisions determines
      the quantity of money which must be paid to the workman, in order to
      enable him, one year with another, to purchase this liberal, moderate, or
      scanty subsistence. While the demand for the labour and the price of
      provisions, therefore, remain the same, a direct tax upon the wages of
      labour can have no other effect, than to raise them somewhat higher than
      the tax. Let us suppose, for example, that, in a particular place, the
      demand for labour and the price of provisions were such as to render ten
      shillings a-week the ordinary wages of labour; and that a tax of
      one-fifth, or four shillings in the pound, was imposed upon wages. If the
      demand for labour and the price of provisions remained the same, it would
      still be necessary that the labourer should, in that place, earn such a
      subsistence as could be bought only for ten shillings a-week; so that,
      after paying the tax, he should have ten shillings a-week free wages. But,
      in order to leave him such free wages, after paying such a tax, the price
      of labour must, in that place, soon rise, not to twelve shillings a week
      only, but to twelve and sixpence; that is, in order to enable him to pay a
      tax of one-fifth, his wages must necessarily soon rise, not one-fifth part
      only, but one-fourth. Whatever was the proportion of the tax, the wages of
      labour must, in all cases rise, not only in that proportion, but in a
      higher proportion. If the tax for example, was one-tenth, the wages of
      labour must necessarily soon rise, not one-tenth part only, but
      one-eighth.
    
      A direct tax upon the wages of labour, therefore, though the labourer
      might, perhaps, pay it out of his hand, could not properly be said to be
      even advanced by him; at least if the demand for labour and the average
      price of provisions remained the same after the tax as before it. In all
      such cases, not only the tax, but something more than the tax, would in
      reality be advanced by the person who immediately employed him. The final
      payment would, in different cases, fall upon different persons. The rise
      which such a tax might occasion in the wages of manufacturing labour would
      be advanced by the master manufacturer, who would both be entitled and
      obliged to charge it, with a profit, upon the price of his goods. The
      final payment of this rise of wages, therefore, together with the
      additional profit of the master manufacturer would fall upon the consumer.
      The rise which such a tax might occasion in the wages of country labour
      would be advanced by the farmer, who, in order to maintain the same number
      of labourers as before, would be obliged to employ a greater capital. In
      order to get back this greater capital, together with the ordinary profits
      of stock, it would be necessary that he should retain a larger portion,
      or, what comes to the same thing, the price of a larger portion, of the
      produce of the land, and, consequently, that he should pay less rent to
      the landlord. The final payment of this rise of wages, therefore, would,
      in this case, fall upon the landlord, together with the additional profit
      of the farmer who had advanced it. In all cases, a direct tax upon the
      wages of labour must, in the long-run, occasion both a greater reduction
      in the rent of land, and a greater rise in the price of manufactured goods
      than would have followed from the proper assessment of a sum equal to the
      produce of the tax, partly upon the rent of land, and partly upon
      consumable commodities.
    
      If direct taxes upon the wages of labour have not always occasioned a
      proportionable rise in those wages, it is because they have generally
      occasioned a considerable fall in the demand of labour. The declension of
      industry, the decrease of employment for the poor, the diminution of the
      annual produce of the land and labour of the country, have generally been
      the effects of such taxes. In consequence of them, however, the price of
      labour must always be higher than it otherwise would have been in the
      actual state of the demand; and this enhancement of price, together with
      the profit of those who advance it, must always be finally paid by the
      landlords and consumers.
    
      A tax upon the wages of country labour does not raise the price of the
      rude produce of land in proportion to the tax; for the same reason that a
      tax upon the farmer’s profit does not raise that price in that proportion.
    
      Absurd and destructive as such taxes are, however, they take place in many
      countries. In France, that part of the taille which is charged upon the
      industry of workmen and day-labourers in country villages, is properly a
      tax of this kind. Their wages are computed according to the common rate of
      the district in which they reside; and, that they may be as little liable
      as possible to any overcharge, their yearly gains are estimated at no more
      than two hundred working days in the year. {Memoires concernant les
      Droits, etc. tom. ii. p. 108.} The tax of each individual is varied from
      year to year, according to different circumstances, of which the collector
      or the commissary, whom intendant appoints to assist him, are the judges.
      In Bohemia, in consequence of the alteration in the system of finances
      which was begun in 1748, a very heavy tax is imposed upon the industry of
      artificers. They are divided into four classes. The highest class pay a
      hundred florins a year, which, at two-and-twenty pence half penny
      a-florin, amounts to £9:7:6. The second class are taxed at seventy; the
      third at fifty; and the fourth, comprehending artificers in villages, and
      the lowest class of those in towns, at twenty-five florins. {Memoires
      concernant les Droits, etc. tom. iii. p. 87.}
    
      The recompence of ingenious artists, and of men of liberal professions, I
      have endeavoured to show in the first book, necessarily keeps a certain
      proportion to the emoluments of inferior trades. A tax upon this
      recompence, therefore, could have no other effect than to raise it
      somewhat higher than in proportion to the tax. If it did not rise in this
      manner, the ingenious arts and the liberal professions, being no longer
      upon a level with other trades, would be so much deserted, that they would
      soon return to that level.
    
      The emoluments of offices are not, like those of trades and professions,
      regulated by the free competition of the market, and do not, therefore,
      always bear a just proportion to what the nature of the employment
      requires. They are, perhaps, in most countries, higher than it requires;
      the persons who have the administration of government being generally
      disposed to regard both themselves and their immediate dependents, rather
      more than enough. The emoluments of offices, therefore, can, in most
      cases, very well bear to be taxed. The persons, besides, who enjoy public
      offices, especially the more lucrative, are, in all countries, the objects
      of general envy; and a tax upon their emoluments, even though it should be
      somewhat higher than upon any other sort of revenue, is always a very
      popular tax. In England, for example, when, by the land-tax, every other
      sort of revenue was supposed to be assessed at four shillings in the
      pound, it was very popular to lay a real tax of five shillings and
      sixpence in the pound upon the salaries of offices which exceeded a
      hundred pounds a-year; the pensions of the younger branches of the royal
      family, the pay of the officers of the army and navy, and a few others
      less obnoxious to envy, excepted. There are in England no other direct
      taxes upon the wages of labour.
    
      ARTICLE IV.—Taxes which it is intended should fall indifferently
      upon every different Species of Revenue.
    
      The taxes which it is intended should fall indifferently upon every
      different species of revenue, are capitation taxes, and taxes upon
      consumable commodities. Those must be paid indifferently, from whatever
      revenue the contributors may possess; from the rent of their land, from
      the profits of their stock, or from the wages of their labour.
    
      Capitation Taxes.
    
      Capitation taxes, if it is attempted to proportion them to the fortune or
      revenue of each contributor, become altogether arbitrary. The state of a
      man’s fortune varies from day to day; and, without an inquisition, more
      intolerable than any tax, and renewed at least once every year, can only
      be guessed at. His assessment, therefore, must, in most cases, depend upon
      the good or bad humour of his assessors, and must, therefore, be
      altogether arbitrary and uncertain.
    
      Capitation taxes, if they are proportioned, not to the supposed fortune,
      but to the rank of each contributor, become altogether unequal; the
      degrees of fortune being frequently unequal in the same degree of rank.
    
      Such taxes, therefore, if it is attempted to render them equal, become
      altogether arbitrary and uncertain; and if it is attempted to render them
      certain and not arbitrary, become altogether unequal. Let the tax be light
      or heavy, uncertainty is always a great grievance. In a light tax, a
      considerable degree of inequality may be supported; in a heavy one, it is
      altogether intolerable.
    
      In the different poll-taxes which took place in England during the reign
      of William III. the contributors were, the greater part of them, assessed
      according to the degree of their rank; as dukes, marquises, earls,
      viscounts, barons, esquires, gentlemen, the eldest and youngest sons of
      peers, etc. All shop-keepers and tradesmen worth more than three hundred
      pounds, that is, the better sort of them, were subject to the same
      assessment, how great soever might be the difference in their fortunes.
      Their rank was more considered than their fortune. Several of those who,
      in the first poll-tax, were rated according to their supposed fortune were
      afterwards rated according to their rank. Serjeants, attorneys, and
      proctors at law, who, in the first poll-tax, were assessed at three
      shillings in the pound of their supposed income, were afterwards assessed
      as gentlemen. In the assessment of a tax which was not very heavy, a
      considerable degree of inequality had been found less insupportable than
      any degree of uncertainty.
    
      In the capitation which has been levied in France, without-any
      interruption, since the beginning of the present century, the highest
      orders of people are rated according to their rank, by an invariable
      tariff; the lower orders of people, according to what is supposed to be
      their fortune, by an assessment which varies from year to year. The
      officers of the king’s court, the judges, and other officers in the
      superior courts of justice, the officers of the troops, etc are assessed
      in the first manner. The inferior ranks of people in the provinces are
      assessed in the second. In France, the great easily submit to a
      considerable degree of inequality in a tax which, so far as it affects
      them, is not a very heavy one; but could not brook the arbitrary
      assessment of an intendant.
    
      The inferior ranks of people must, in that country, suffer patiently the
      usage which their superiors think proper to give them.
    
      In England, the different poll-taxes never produced the sum which had been
      expected from them, or which it was supposed they might have produced, had
      they been exactly levied. In France, the capitation always produces the
      sum expected from it. The mild government of England, when it assessed the
      different ranks of people to the poll-tax, contented itself with what that
      assessment happened to produce, and required no compensation for the loss
      which the state might sustain, either by those who could not pay, or by
      those who would not pay (for there were many such), and who, by the
      indulgent execution of the law, were not forced to pay. The more severe
      government of France assesses upon each generality a certain sum, which
      the intendant must find as he can. If any province complains of being
      assessed too high, it may, in the assessment of next year, obtain an
      abatement proportioned to the overcharge of the year before; but it must
      pay in the mean time. The intendant, in order to be sure of finding the
      sum assessed upon his generality, was empowered to assess it in a larger
      sum, that the failure or inability of some of the contributors might be
      compensated by the overcharge of the rest; and till 1765, the fixation of
      this surplus assessment was left altogether to his discretion. In that
      year, indeed, the council assumed this power to itself. In the capitation
      of the provinces, it is observed by the perfectly well informed author of
      the Memoirs upon the Impositions in France, the proportion which falls
      upon the nobility, and upon those whose privileges exempt them from the
      taille, is the least considerable. The largest falls upon those subject to
      the taille, who are assessed to the capitation at so much a-pound of what
      they pay to that other tax. Capitation taxes, so far as they are levied
      upon the lower ranks of people, are direct taxes upon the wages of labour,
      and are attended with all the inconveniencies of such taxes.
    
      Capitation taxes are levied at little expense; and, where they are
      rigorously exacted, afford a very sure revenue to the state. It is upon
      this account that, in countries where the case, comfort, and security of
      the inferior ranks of people are little attended to, capitation taxes are
      very common. It is in general, however, but a small part of the public
      revenue, which, in a great empire, has ever been drawn from such taxes;
      and the greatest sum which they have ever afforded, might always have been
      found in some other way much more convenient to the people.
    
      Taxes upon Consumable Commodities.
    
      The impossibility of taxing the people, in proportion to their revenue, by
      any capitation, seems to have given occasion to the invention of taxes
      upon consumable commodities. The state not knowing how to tax, directly
      and proportionably, the revenue of its subjects, endeavours to tax it
      indirectly by taxing their expense, which, it is supposed, will, in most
      cases, be nearly in proportion to their revenue. Their expense is taxed,
      by taxing the consumable commodities upon which it is laid out.
    
      Consumable commodities are either necessaries or luxuries.
    
      By necessaries I understand, not only the commodities which are
      indispensibly necessary for the support of life, but whatever the custom
      of the country renders it indecent for creditable people, even of the
      lowest order, to be without. A linen shirt, for example, is, strictly
      speaking, not a necessary of life. The Greeks and Romans lived, I suppose,
      very comfortably, though they had no linen. But in the present times,
      through the greater part of Europe, a creditable day-labourer would be
      ashamed to appear in public without a linen shirt, the want of which would
      be supposed to denote that disgraceful degree of poverty, which, it is
      presumed, nobody can well fall into without extreme bad conduct. Custom,
      in the same manner, has rendered leather shoes a necessary of life in
      England. The poorest creditable person, of either sex, would be ashamed to
      appear in public without them. In Scotland, custom has rendered them a
      necessary of life to the lowest order of men; but not to the same order of
      women, who may, without any discredit, walk about barefooted. In France,
      they are necessaries neither to men nor to women; the lowest rank of both
      sexes appearing there publicly, without any discredit, sometimes in wooden
      shoes, and sometimes barefooted. Under necessaries, therefore, I
      comprehend, not only those things which nature, but those things which the
      established rules of decency have rendered necessary to the lowest rank of
      people. All other things I call luxuries, without meaning, by this
      appellation, to throw the smallest degree of reproach upon the temperate
      use of them. Beer and ale, for example, in Great Britain, and wine, even
      in the wine countries, I call luxuries. A man of any rank may, without any
      reproach, abstain totally from tasting such liquors. Nature does not
      render them necessary for the support of life; and custom nowhere renders
      it indecent to live without them.
    
      As the wages of labour are everywhere regulated, partly by the demand for
      it, and partly by the average price of the necessary articles of
      subsistence; whatever raises this average price must necessarily raise
      those wages; so that the labourer may still be able to purchase that
      quantity of those necessary articles which the state of the demand for
      labour, whether increasing, stationary, or declining, requires that he
      should have. {See book i.chap. 8} A tax upon those articles necessarily
      raises their price somewhat higher than the amount of the tax, because the
      dealer, who advances the tax, must generally get it back, with a profit.
      Such a tax must, therefore, occasion a rise in the wages of labour,
      proportionable to this rise of price.
    
      It is thus that a tax upon the necessaries of life operates exactly in the
      same manner as a direct tax upon the wages of labour. The labourer, though
      he may pay it out of his hand, cannot, for any considerable time at least,
      be properly said even to advance it. It must always, in the long-run, be
      advanced to him by his immediate employer, in the advanced state of wages.
      His employer, if he is a manufacturer, will charge upon the price of his
      goods the rise of wages, together with a profit, so that the final payment
      of the tax, together with this overcharge, will fall upon the consumer. If
      his employer is a farmer, the final payment, together with a like
      overcharge, will fall upon the rent of the landlord.
    
      It is otherwise with taxes upon what I call luxuries, even upon those of
      the poor. The rise in the price of the taxed commodities, will not
      necessarily occasion any rise in the wages of labour. A tax upon tobacco,
      for example, though a luxury of the poor, as well as of the rich, will not
      raise wages. Though it is taxed in England at three times, and in France
      at fifteen times its original price, those high duties seem to have no
      effect upon the wages of labour. The same thing maybe said of the taxes
      upon tea and sugar, which, in England and Holland, have become luxuries of
      the lowest ranks of people; and of those upon chocolate, which, in Spain,
      is said to have become so.
    
      The different taxes which, in Great Britain, have, in the course of the
      present century, been imposed upon spiritous liquors, are not supposed to
      have had any effect upon the wages of labour. The rise in the price of
      porter, occasioned by an additional tax of three shillings upon the barrel
      of strong beer, has not raised the wages of common labour in London. These
      were about eighteen pence or twenty pence a-day before the tax, and they
      are not more now.
    
      The high price of such commodities does not necessarily diminish the
      ability of the inferior ranks of people to bring up families. Upon the
      sober and industrious poor, taxes upon such commodities act as sumptuary
      laws, and dispose them either to moderate, or to refrain altogether from
      the use of superfluities which they can no longer easily afford. Their
      ability to bring up families, in consequence of this forced frugality,
      instead of being diminished, is frequently, perhaps, increased by the tax.
      It is the sober and industrious poor who generally bring up the most
      numerous families, and who principally supply the demand for useful
      labour. All the poor, indeed, are not sober and industrious; and the
      dissolute and disorderly might continue to indulge themselves in the use
      of such commodities, after this rise of price, in the same manner as
      before, without regarding the distress which this indulgence might bring
      upon their families. Such disorderly persons, however, seldom rear up
      numerous families, their children generally perishing from neglect,
      mismanagement, and the scantiness or unwholesomeness of their food. If by
      the strength of their constitution, they survive the hardships to which
      the bad conduct of their parents exposes them, yet the example of that bad
      conduct commonly corrupts their morals; so that, instead of being useful
      to society by their industry, they become public nuisances by their vices
      and disorders. Through the advanced price of the luxuries of the poor,
      therefore, might increase somewhat the distress of such disorderly
      families, and thereby diminish somewhat their ability to bring up
      children, it would not probably diminish much the useful population of the
      country.
    
      Any rise in the average price of necessaries, unless it be compensated by
      a proportionable rise in the wages of labour, must necessarily diminish,
      more or less, the ability of the poor to bring up numerous families, and,
      consequently, to supply the demand for useful labour; whatever may be the
      state of that demand, whether increasing, stationary, or declining; or
      such as requires an increasing, stationary, or declining population.
    
      Taxes upon luxuries have no tendency to raise the price of any other
      commodities, except that of the commodities taxed. Taxes upon necessaries,
      by raising the wages of labour, necessarily tend to raise the price of all
      manufactures, and consequently to diminish the extent of their sale and
      consumption. Taxes upon luxuries are finally paid by the consumers of the
      commodities taxed, without any retribution. They fall indifferently upon
      every species of revenue, the wages of labour, the profits of stock, and
      the rent of land. Taxes upon necessaries, so far as they affect the
      labouring poor, are finally paid, partly by landlords, in the diminished
      rent of their lands, and partly by rich consumers, whether landlords or
      others, in the advanced price of manufactured goods; and always with a
      considerable overcharge. The advanced price of such manufactures as are
      real necessaries of life, and are destined for the consumption of the
      poor, of coarse woollens, for example, must be compensated to the poor by
      a farther advancement of their wages. The middling and superior ranks of
      people, if they understood their own interest, ought always to oppose all
      taxes upon the necessaries of life, as well as all taxes upon the wages of
      labour. The final payment of both the one and the other falls altogether
      upon themselves, and always with a considerable overcharge. They fall
      heaviest upon the landlords, who always pay in a double capacity; in that
      of landlords, by the reduction, of their rent; and in that of rich
      consumers, by the increase of their expense. The observation of Sir
      Matthew Decker, that certain taxes are, in the price of certain goods,
      sometimes repeated and accumulated four or five times, is perfectly just
      with regard to taxes upon the necessaries of life. In the price of
      leather, for example, you must pay not only for the tax upon the leather
      of your own shoes, but for a part of that upon those of the shoemaker and
      the tanner. You must pay, too, for the tax upon the salt, upon the soap,
      and upon the candles which those workmen consume while employed in your
      service; and for the tax upon the leather, which the saltmaker, the
      soap-maker, and the candle-maker consume, while employed in their service.
    
      In Great Britain, the principal taxes upon the necessaries of life, are
      those upon the four commodities just now mentioned, salt, leather, soap,
      and candles.
    
      Salt is a very ancient and a very universal subject of taxation. It was
      taxed among the Romans, and it is so at present in, I believe, every part
      of Europe. The quantity annually consumed by any individual is so small,
      and may be purchased so gradually, that nobody, it seems to have been
      thought, could feel very sensibly even a pretty heavy tax upon it. It is
      in England taxed at three shillings and fourpence a bushel; about three
      times the original price of the commodity. In some other countries, the
      tax is still higher. Leather is a real necessary of life. The use of linen
      renders soap such. In countries where the winter nights are long, candles
      are a necessary instrument of trade. Leather and soap are in Great Britain
      taxed at three halfpence a-pound; candles at a penny; taxes which, upon
      the original price of leather, may amount to about eight or ten per cent.;
      upon that of soap, to about twenty or five-and-twenty per cent.; and upon
      that of candles to about fourteen or fifteen per cent.; taxes which,
      though lighter than that upon salt, are still very heavy. As all those
      four commodities are real necessaries of life, such heavy taxes upon them
      must increase somewhat the expense of the sober and industrious poor, and
      must consequently raise more or less the wages of their labour.
    
      In a country where the winters are so cold as in Great Britain, fuel is,
      during that season, in the strictest sense of the word, a necessary of
      life, not only for the purpose of dressing victuals, but for the
      comfortable subsistence of many different sorts of workmen who work within
      doors; and coals are the cheapest of all fuel. The price of fuel has so
      important an influence upon that of labour, that all over Great Britain,
      manufactures have confined themselves principally to the coal counties;
      other parts of the country, on account of the high price of this necessary
      article, not being able to work so cheap. In some manufactures, besides,
      coal is a necessary instrument of trade; as in those of glass, iron, and
      all other metals. If a bounty could in any case be reasonable, it might
      perhaps be so upon the transportation of coals from those parts of the
      country in which they abound, to those in which they are wanted. But the
      legislature, instead of a bounty, has imposed a tax of three shillings and
      threepence a-ton upon coals carried coastways; which, upon most sorts of
      coal, is more than sixty per cent. of the original price at the coal pit.
      Coals carried, either by land or by inland navigation, pay no duty. Where
      they are naturally cheap, they are consumed duty free; where they are
      naturally dear, they are loaded with a heavy duty.
    
      Such taxes, though they raise the price of subsistence, and consequently
      the wages of labour, yet they afford a considerable revenue to government,
      which it might not be easy to find in any other way. There may, therefore,
      be good reasons for continuing them. The bounty upon the exportation of
      corn, so far as it tends, in the actual state of tillage, to raise the
      price of that necessary article, produces all the like bad effects; and
      instead of affording any revenue, frequently occasions a very great
      expense to government. The high duties upon the importation of foreign
      corn, which, in years of moderate plenty, amount to a prohibition; and the
      absolute prohibition of the importation, either of live cattle, or of salt
      provisions, which takes place in the ordinary state of the law, and which,
      on account of the scarcity, is at present suspended for a limited time
      with regard to Ireland and the British plantations, have all had the bad
      effects of taxes upon the necessaries of life, and produce no revenue to
      government. Nothing seems necessary for the repeal of such regulations,
      but to convince the public of the futility of that system in consequence
      of which they have been established.
    
      Taxes upon the necessaries of life are much higher in many other countries
      than in Great Britain. Duties upon flour and meal when ground at the mill,
      and upon bread when baked at the oven, take place in many countries. In
      Holland the money-price of the bread consumed in towns is supposed to be
      doubled by means of such taxes. In lieu of a part of them, the people who
      live in the country, pay every year so much a-head, according to the sort
      of bread they are supposed to consume. Those who consume wheaten bread pay
      three guilders fifteen stivers; about six shillings and ninepence
      halfpenny. Those, and some other taxes of the same kind, by raising the
      price of labour, are said to have ruined the greater part of the
      manufactures of Holland {Memoires concernant les Droits, etc. p. 210,
      211.}. Similar taxes, though not quite so heavy, take place in the
      Milanese, in the states of Genoa, in the duchy of Modena, in the duchies
      of Parma, Placentia, and Guastalla, and the Ecclesiastical state. A French
      author {Le Reformateur} of some note, has proposed to reform the finances
      of his country, by substituting in the room of the greater part of other
      taxes, this most ruinous of all taxes. There is nothing so absurd, says
      Cicero, which has not sometimes been asserted by some philosophers.
    
      Taxes upon butcher’s meat are still more common than those upon bread. It
      may indeed be doubted, whether butcher’s meat is any where a necessary of
      life. Grain and other vegetables, with the help of milk, cheese, and
      butter, or oil, where butter is not to be had, it is known from
      experience, can, without any butcher’s meat, afford the most plentiful,
      the most wholesome, the most nourishing, and the most invigorating diet.
      Decency nowhere requires that any man should eat butcher’s meat, as it in
      most places requires that he should wear a linen shirt or a pair of
      leather shoes.
    
      Consumable commodities, whether necessaries or luxuries, may be taxed in
      two different ways. The consumer may either pay an annual sum on account
      of his using or consuming goods of a certain kind; or the goods may be
      taxed while they remain in the hands of the dealer, and before they are
      delivered to the consumer. The consumable goods which last a considerable
      time before they are consumed altogether, are most properly taxed in the
      one way; those of which the consumption is either immediate or more
      speedy, in the other. The coach-tax and plate tax are examples of the
      former method of imposing; the greater part of the other duties of excise
      and customs, of the latter.
    
      A coach may, with good management, last ten or twelve years. It might be
      taxed, once for all, before it comes out of the hands of the coach-maker.
      But it is certainly more convenient for the buyer to pay four pounds
      a-year for the privilege of keeping a coach, than to pay all at once forty
      or forty-eight pounds additional price to the coach-maker; or a sum
      equivalent to what the tax is likely to cost him during the time he uses
      the same coach. A service of plate in the same manner, may last more than
      a century. It is certainly-easier for the consumer to pay five shillings
      a-year for every hundred ounces of plate, near one per cent. of the value,
      than to redeem this long annuity at five-and-twenty or thirty years
      purchase, which would enhance the price at least five-and-twenty or thirty
      per cent. The different taxes which affect houses, are certainly more
      conveniently paid by moderate annual payments, than by a heavy tax of
      equal value upon the first building or sale of the house.
    
      It was the well-known proposal of Sir Matthew Decker, that all
      commodities, even those of which the consumption is either immediate or
      speedy, should be taxed in this manner; the dealer advancing nothing, but
      the consumer paying a certain annual sum for the licence to consume
      certain goods. The object of his scheme was to promote all the different
      branches of foreign trade, particularly the carrying trade, by taking away
      all duties upon importation and exportation, and thereby enabling the
      merchant to employ his whole capital and credit in the purchase of goods
      and the freight of ships, no part of either being diverted towards the
      advancing of taxes, The project, however, of taxing, in this manner, goods
      of immediate or speedy consumption, seems liable to the four following
      very important objections. First, the tax would be more unequal, or not so
      well proportioned to the expense and consumption of the different
      contributors, as in the way in which it is commonly imposed. The taxes
      upon ale, wine, and spiritous liquors, which are advanced by the dealers,
      are finally paid by the different consumers, exactly in proportion to
      their respective consumption. But if the tax were to be paid by purchasing
      a licence to drink those liquors, the sober would, in proportion to his
      consumption, be taxed much more heavily than the drunken consumer. A
      family which exercised great hospitality, would be taxed much more lightly
      than one who entertained fewer guests. Secondly, this mode of taxation, by
      paying for an annual, half-yearly, or quarterly licence to consume certain
      goods, would diminish very much one of the principal conveniences of taxes
      upon goods of speedy consumption; the piece-meal payment. In the price of
      threepence halfpenny, which is at present paid for a pot of porter, the
      different taxes upon malt, hops, and beer, together with the extraordinary
      profit which the brewer charges for having advanced than, may perhaps
      amount to about three halfpence. If a workman can conveniently spare those
      three halfpence, he buys a pot of porter. If he cannot, he contents
      himself with a pint; and, as a penny saved is a penny got, he thus gains a
      farthing by his temperance. He pays the tax piece-meal, as he can afford
      to pay it, and when he can afford to pay it, and every act of payment is
      perfectly voluntary, and what he can avoid if he chuses to do so. Thirdly,
      such taxes would operate less as sumptuary laws. When the licence was once
      purchased, whether the purchaser drunk much or drunk little, his tax would
      be the same. Fourthly, if a workman were to pay all at once, by yearly,
      half-yearly, or quarterly payments, a tax equal to what he at present
      pays, with little or no inconveniency, upon all the different pots and
      pints of porter which he drinks in any such period of time, the sum might
      frequently distress him very much. This mode of taxation, therefore, it
      seems evident, could never, without the most grievous oppression, produce
      a revenue nearly equal to what is derived from the present mode without
      any oppression. In several countries, however, commodities of an immediate
      or very speedy consumption are taxed in this manner. In Holland, people
      pay so much a-head for a licence to drink tea. I have already mentioned a
      tax upon bread, which, so far as it is consumed in farm houses and country
      villages, is there levied in the same manner.
    
      The duties of excise are imposed chiefly upon goods of home produce,
      destined for home consumption. They are imposed only upon a few sorts of
      goods of the most general use. There can never be any doubt, either
      concerning the goods which are subject to those duties, or concerning the
      particular duty which each species of goods is subject to. They fall
      almost altogether upon what I call luxuries, excepting always the four
      duties above mentioned, upon salt, soap, leather, candles, and perhaps
      that upon green glass.
    
      The duties of customs are much more ancient than those of excise. They
      seem to have been called customs, as denoting customary payments, which
      had been in use for time immemorial. They appear to have been originally
      considered as taxes upon the profits of merchants. During the barbarous
      times of feudal anarchy, merchants, like all the other inhabitants of
      burghs, were considered as little better than emancipated bondmen, whose
      persons were despised, and whose gains were envied. The great nobility,
      who had consented that the king should tallage the profits of their own
      tenants, were not unwilling that he should tallage likewise those of an
      order of men whom it was much less their interest to protect. In those
      ignorant times, it was not understood, that the profits of merchants are a
      subject not taxable directly; or that the final payment of all such taxes
      must fall, with a considerable overcharge, upon the consumers.
    
      The gains of alien merchants were looked upon more unfavourably than those
      of English merchants. It was natural, therefore, that those of the former
      should be taxed more heavily than those of the latter. This distinction
      between the duties upon aliens and those upon English merchants, which was
      begun from ignorance, has been continued front the spirit of monopoly, or
      in order to give our own merchants an advantage, both in the home and in
      the foreign market.
    
      With this distinction, the ancient duties of customs were imposed equally
      upon all sorts of goods, necessaries as well its luxuries, goods exported
      as well as goods imported. Why should the dealers in one sort of goods, it
      seems to have been thought, be more favoured than those in another? or why
      should the merchant exporter be more favoured than the merchant importer?
    
      The ancient customs were divided into three branches. The first, and,
      perhaps, the most ancient of all those duties, was that upon wool and
      leather. It seems to have been chiefly or altogether an exportation duty.
      When the woollen manufacture came to be established in England, lest the
      king should lose any part of his customs upon wool by the exportation of
      woollen cloths, a like duty was imposed upon them. The other two branches
      were, first, a duty upon wine, which being imposed at so much a-ton, was
      called a tonnage; and, secondly, a duty upon all other goods, which being
      imposed at so much a-pound of their supposed value, was called a poundage.
      In the forty-seventh year of Edward III., a duty of sixpence in the pound
      was imposed upon all goods exported and imported, except wools,
      wool-felts, leather, and wines which were subject to particular duties. In
      the fourteenth of Richard II., this duty was raised to one shilling in the
      pound; but, three years afterwards, it was again reduced to sixpence. It
      was raised to eightpence in the second year of Henry IV.; and, in the
      fourth of the same prince, to one shilling. From this time to the ninth
      year of William III., this duty continued at one shilling in the pound.
      The duties of tonnage and poundage were generally granted to the king by
      one and the same act of parliament, and were called the subsidy of tonnage
      and poundage. The subsidy of poundage having continued for so long a time
      at one shilling in the pound, or at five per cent., a subsidy came, in the
      language of the customs, to denote a general duty of this kind of five per
      cent. This subsidy, which is now called the old subsidy, still continues
      to be levied, according to the book of rates established by the twelfth of
      Charles II. The method of ascertaining, by a book of rates, the value of
      goods subject to this duty, is said to be older than the time of James I.
      The new subsidy, imposed by the ninth and tenth of William III., was an
      additional five per cent. upon the greater part of goods. The one-third
      and the two-third subsidy made up between them another five per cent. of
      which they were proportionable parts. The subsidy of 1747 made a fourth
      five per cent. upon the greater part of goods; and that of 1759, a fifth
      upon some particular sorts of goods. Besides those five subsidies, a great
      variety of other duties have occasionally been imposed upon particular
      sorts of goods, in order sometimes to relieve the exigencies of the
      state, and sometimes to regulate the trade of the country, according to
      the principles of the mercantile system.
    
      That system has come gradually more and more into fashion. The old subsidy
      was imposed indifferently upon exportation, as well as importation. The
      four subsequent subsidies, as well as the other duties which have since
      been occasionally imposed upon particular sorts of goods, have, with a few
      exceptions, been laid altogether upon importation. The greater part of the
      ancient duties which had been imposed upon the exportation of the goods of
      home produce and manufacture, have either been lightened or taken away
      altogether. In most cases, they have been taken away. Bounties have even
      been given upon the exportation of some of them. Drawbacks, too, sometimes
      of the whole, and, in most cases, of a part of the duties which are paid
      upon the importation of foreign goods, have been granted upon their
      exportation. Only half the duties imposed by the old subsidy upon
      importation, are drawn back upon exportation; but the whole of those
      imposed by the latter subsidies and other imposts are, upon the greater
      parts of the goods, drawn back in the same manner. This growing favour of
      exportation, and discouragement of importation, have suffered only a few
      exceptions, which chiefly concern the materials of some manufactures.
      These our merchants and manufacturers are willing should come as cheap as
      possible to themselves, and as dear as possible to their rivals and
      competitors in other countries. Foreign materials are, upon this account,
      sometimes allowed to be imported duty-free; spanish wool, for example,
      flax, and raw linen yarn. The exportation of the materials of home
      produce, and of those which are the particular produce of our colonies,
      has sometimes been prohibited, and sometimes subjected to higher duties.
      The exportation of English wool has been prohibited. That of beaver skins,
      of beaver wool, and of gum-senega, has been subjected to higher duties;
      Great Britain, by the conquests of Canada and Senegal, having got almost
      the monopoly of those commodities.
    
      That the mercantile system has not been very favourable to the revenue of
      the great body of the people, to the annual produce of the land and labour
      of the country, I have endeavoured to show in the fourth book of this
      Inquiry. It seems not to have been more favourable to the revenue of the
      sovereign; so far, at least, as that revenue depends upon the duties of
      customs.
    
      In consequence of that system, the importation of several sorts of goods
      has been prohibited altogether. This prohibition has, in some cases,
      entirely prevented, and in others has very much diminished, the
      importation of those commodities, by reducing the importers to the
      necessity of smuggling. It has entirely prevented the importation of
      foreign wollens; and it has very much diminished that of foreign silks and
      velvets, In both cases, it has entirely annihilated the revenue of customs
      which might have been levied upon such importation.
    
      The high duties which have been imposed upon the importation of many
      different sorts of foreign goods in order to discourage their consumption
      in Great Britain, have, in many cases, served only to encourage smuggling,
      and, in all cases, have reduced the revenues of the customs below what
      more moderate duties would have afforded. The saying of Dr. Swift, that in
      the arithmetic of the customs, two and two, instead of making four, make
      sometimes only one, holds perfectly true with regard to such heavy duties,
      which never could have been imposed, had not the mercantile system taught
      us, in many cases, to employ taxation as an instrument, not of revenue,
      but of monopoly.
    
      The bounties which are sometimes given upon the exportation of home
      produce and manufactures, and the drawbacks which are paid upon the
      re-exportation of the greater part of foreign goods, have given occasion
      to many frauds, and to a species of smuggling, more destructive of the
      public revenue than any other. In order to obtain the bounty or drawback,
      the goods, it is well known, are sometimes shipped, and sent to sea, but
      soon afterwards clandestinely re-landed in some other part of the country.
      The defalcation of the revenue of customs occasioned by bounties and
      drawbacks, of which a great part are obtained fraudulently, is very great.
      The gross produce of the customs, in the year which ended on the 5th of
      January 1755, amounted to £5,068,000. The bounties which were paid out of
      this revenue, though in that year there was no bounty upon corn, amounted
      to £167,806. The drawbacks which were paid upon debentures and
      certificates, to £2,156,800. Bounties and drawbacks together amounted to
      £2,324,600. In consequence of these deductions, the revenue of the customs
      amounted only to £2,743,400; from which deducting £287,900 for the expense
      of management, in salaries and other incidents, the neat revenue of the
      customs for that year comes out to be £2,455,500. The expense of
      management, amounts, in this manner, to between five and six per cent.
      upon the gross revenue of the customs; and to something more than ten per
      cent. upon what remains of that revenue, after deducting what is paid away
      in bounties and drawbacks.
    
      Heavy duties being imposed upon almost all goods imported, our merchant
      importers smuggle as much, and make entry of as little as they can. Our
      merchant exporters, on the contrary, make entry of more than they export;
      sometimes out of vanity, and to pass for great dealers in goods which pay
      no duty gain a bounty back. Our exports, in consequence of these different
      frauds, appear upon the custom-house books greatly to overbalance our
      imports, to the unspeakable comfort of those politicians, who measure the
      national prosperity by what they call the balance of trade.
    
      All goods imported, unless particularly exempted, and such exemptions are
      not very numerous, are liable to some duties of customs. If any goods are
      imported, not mentioned in the book of rates, they are taxed at 4s:9¾d.
      for every twenty shillings value, according to the oath of the importer,
      that is, nearly at five subsidies, or five poundage duties. The book of
      rates is extremely comprehensive, and enumerates a great variety of
      articles, many of them little used, and, therefore, not well known. It is,
      upon this account, frequently uncertain under what article a particular
      sort of goods ought to be classed, and, consequently what duty they ought
      to pay. Mistakes with regard to this sometimes ruin the custom-house
      officer, and frequently occasion much trouble, expense, and vexation to
      the importer. In point of perspicuity, precision, and distinctness,
      therefore, the duties of customs are much inferior to those of excise.
    
      In order that the greater part of the members of any society should
      contribute to the public revenue, in proportion to their respective
      expense, it does not seem necessary that every single article of that
      expense should be taxed. The revenue which is levied by the duties of
      excise is supposed to fall as equally upon the contributors as that which
      is levied by the duties of customs; and the duties of excise are imposed
      upon a few articles only of the most general used and consumption. It has
      been the opinion of many people, that, by proper management, the duties of
      customs might likewise, without any loss to the public revenue, and with
      great advantage to foreign trade, be confined to a few articles only.
    
      The foreign articles, of the most general use and consumption in Great
      Britain, seem at present to consist chiefly in foreign wines and brandies;
      in some of the productions of America and the West Indies, sugar, rum,
      tobacco, cocoa-nuts, etc. and in some of those of the East Indies, tea,
      coffee, china-ware, spiceries of all kinds, several sorts of piece-goods,
      etc. These different articles afford, the greater part of the perhaps, at
      present, revenue which is drawn from the duties of customs. The taxes
      which at present subsist upon foreign manufactures, if you except those
      upon the few contained in the foregoing enumeration, have, the greater
      part of them, been imposed for the purpose, not of revenue, but of
      monopoly, or to give our own merchants an advantage in the home market. By
      removing all prohibitions, and by subjecting all foreign manufactures to
      such moderate taxes, as it was found from experience, afforded upon each
      article the greatest revenue to the public, our own workmen might still
      have a considerable advantage in the home market; and many articles, some
      of which at present afford no revenue to government, and others a very
      inconsiderable one, might afford a very great one.
    
      High taxes, sometimes by diminishing the consumption of the taxed
      commodities, and sometimes by encouraging smuggling frequently afford a
      smaller revenue to government than what might be drawn from more moderate
      taxes.
    
      When the diminution of revenue is the effect of the diminution of
      consumption, there can be but one remedy, and that is the lowering of the
      tax. When the diminution of revenue is the effect of the encouragement
      given to smuggling, it may, perhaps, be remedied in two ways; either by
      diminishing the temptation to smuggle, or by increasing the difficulty of
      smuggling. The temptation to smuggle can be diminished only by the
      lowering of the tax; and the difficulty of smuggling can be increased only
      by establishing that system of administration which is most proper for
      preventing it.
    
      The excise laws, it appears, I believe, from experience, obstruct and
      embarrass the operations of the smuggler much more effectually than those
      of the customs. By introducing into the customs a system of administration
      as similar to that of the excise as the nature of the different duties
      will admit, the difficulty of smuggling might be very much increased. This
      alteration, it has been supposed by many people, might very easily be
      brought about.
    
      The importer of commodities liable to any duties of customs, it has been
      said, might, at his option, be allowed either to carry them to his own
      private warehouse; or to lodge them in a warehouse, provided either at his
      own expense or at that of the public, but under the key of the
      custom-house officer, and never to be opened but in his presence. If the
      merchant carried them to his own private warehouse, the duties to be
      immediately paid, and never afterwards to be drawn back; and that
      warehouse to be at all times subject to the visit and examination of the
      custom-house officer, in order to ascertain how far the quantity contained
      in it corresponded with that for which the duty had been paid. If he
      carried them to the public warehouse, no duty to be paid till they were
      taken out for home consumption. If taken out for exportation, to be
      duty-free; proper security being always given that they should be so
      exported. The dealers in those particular commodities, either by wholesale
      or retail, to be at all times subject to the visit and examination of the
      custom-house officer; and to be obliged to justify, by proper
      certificates, the payment of the duty upon the whole quantity contained in
      their shops or warehouses. What are called the excise duties upon rum
      imported, are at present levied in this manner; and the same system of
      administration might, perhaps, be extended to all duties upon goods
      imported; provided always that those duties were, like the duties of
      excise, confined to a few sorts of goods of the most general use and
      consumption. If they were extended to almost all sorts of goods, as at
      present, public warehouses of sufficient extent could not easily be
      provided; and goods of a very delicate nature, or of which the
      preservation required much care and attention, could not safely be trusted
      by the merchant in any warehouse but his own.
    
      If, by such a system of administration, smuggling to any considerable
      extent could be prevented, even under pretty high duties; and if every
      duty was occasionally either heightened or lowered according as it was
      most likely, either the one way or the other, to afford the greatest
      revenue to the state; taxation being always employed as an instrument of
      revenue, and never of monopoly; it seems not improbable that a revenue, at
      least equal to the present neat revenue of the customs, might be drawn
      from duties upon the importation of only a few sorts of goods of the most
      general use and consumption; and that the duties of customs might thus be
      brought to the same degree of simplicity, certainty, and precision, as
      those of excise. What the revenue at present loses by drawbacks upon the
      re-exportation of foreign goods, which are afterwards re-landed and
      consumed at home, would, under this system, be saved altogether. If to
      this saving, which would alone be very considerable, were added the
      abolition of all bounties upon the exportation of home produce; in all
      cases in which those bounties were not in reality drawbacks of some duties
      of excise which had before been advanced; it cannot well be doubted, but
      that the neat revenue of customs might, after an alteration of this kind,
      be fully equal to what it had ever been before.
    
      If, by such a change of system, the public revenue suffered no loss, the
      trade and manufactures of the country would certainly gain a very
      considerable advantage. The trade in the commodities not taxed, by far the
      greatest number would be perfectly free, and might be carried on to and
      from all parts of the world with every possible advantage. Among those
      commodities would be comprehended all the necessaries of life, and all the
      materials of manufacture. So far as the free importation of the
      necessaries of life reduced their average money price in the home market,
      it would reduce the money price of labour, but without reducing in any
      respect its real recompence. The value of money is in proportion to the
      quantity of the necessaries of life which it will purchase. That of the
      necessaries of life is altogether independent of the quantity of money
      which can be had for them. The reduction in the money price of labour
      would necessarily be attended with a proportionable one in that of all
      home manufactures, which would thereby gain some advantage in all foreign
      markets. The price of some manufactures would be reduced, in a still
      greater proportion, by the free importation of the raw materials. If raw
      silk could be imported from China and Indostan, duty-free, the silk
      manufacturers in England could greatly undersell those of both France and
      Italy. There would be no occasion to prohibit the importation of foreign
      silks and velvets. The cheapness of their goods would secure to our own
      workmen, not only the possession of a home, but a very great command of
      the foreign market. Even the trade in the commodities taxed, would be
      carried on with much more advantage than at present. If those commodities
      were delivered out of the public warehouse for foreign exportation, being
      in this case exempted from all taxes, the trade in them would be perfectly
      free. The carrying trade, in all sorts of goods, would, under this system,
      enjoy every possible advantage. If these commodities were delivered out
      for home consumption, the importer not being obliged to advance the tax
      till he had an opportunity of selling his goods, either to some dealer, or
      to some consumer, he could always afford to sell them cheaper than if he
      had been obliged to advance it at the moment of importation. Under the
      same taxes, the foreign trade of consumption, even in the taxed
      commodities, might in this manner be carried on with much more advantage
      than it is at present.
    
      It was the object of the famous excise scheme of Sir Robert Walpole, to
      establish, with regard to wine and tobacco, a system not very unlike that
      which is here proposed. But though the bill which was then brought into
      Parliament, comprehended those two commodities only, it was generally
      supposed to be meant as an introduction to a more extensive scheme of the
      same kind. Faction, combined with the interest of smuggling merchants,
      raised so violent, though so unjust a clamour, against that bill, that the
      minister thought proper to drop it; and, from a dread of exciting a
      clamour of the same kind, none of his successors have dared to resume the
      project.
    
      The duties upon foreign luxuries, imported for home consumption, though
      they sometimes fall upon the poor, fall principally upon people of
      middling or more than middling fortune. Such are, for example, the duties
      upon foreign wines, upon coffee, chocolate, tea, sugar, etc.
    
      The duties upon the cheaper luxuries of home produce, destined for home
      consumption, fall pretty equally upon people of all ranks, in proportion
      to their respective expense. The poor pay the duties upon malt, hops,
      beer, and ale, upon their own consumption; the rich, upon both their own
      consumption and that of their servants.
    
      The whole consumption of the inferior ranks of people, or of those below
      the middling rank, it must be observed, is, in every country, much
      greater, not only in quantity, but in value, than that of the middling,
      and of those above the middling rank. The whole expense of the inferior is
      much greater titan that of the superior ranks. In the first place, almost
      the whole capital of every country is annually distributed among the
      inferior ranks of people, as the wages of productive labour. Secondly, a
      great part of the revenue, arising from both the rent of land and the
      profits of stock, is annually distributed among the same rank, in the
      wages and maintenance of menial servants, and other unproductive
      labourers. Thirdly, some part of the profits of stock belongs to the same
      rank, as a revenue arising from the employment of their small capitals.
      The amount of the profits annually made by small shopkeepers, tradesmen,
      and retailers of all kinds, is everywhere very considerable, and makes a
      very considerable portion of the annual produce. Fourthly and lastly, some
      part even of the rent of land belongs to the same rank; a considerable
      part to those who are somewhat below the middling rank, and a small part
      even to the lowest rank; common labourers sometimes possessing in property
      an acre or two of land. Though the expense of those inferior ranks of
      people, therefore, taking them individually, is very small, yet the whole
      mass of it, taking them collectively, amounts always to by much the
      largest portion of the whole expense of the society; what remains of the
      annual produce of the land and labour of the country, for the consumption
      of the superior ranks, being always much less, not only in quantity, but
      in value. The taxes upon expense, therefore, which fall chiefly upon that
      of the superior ranks of people, upon the smaller portion of the annual
      produce, are likely to be much less productive than either those which
      fall indifferently upon the expense of all ranks, or even those which fall
      chiefly upon that of the inferior ranks, than either those which fall
      indifferently upon the whole annual produce, or those which fall chiefly
      upon the larger portion of it. The excise upon the materials and
      manufacture of home-made fermented and spirituous liquors, is,
      accordingly, of all the different taxes upon expense, by far the most
      productive; and this branch of the excise falls very much, perhaps
      principally, upon the expense of the common people. In the year which
      ended on the 5th of July 1775, the gross produce of this branch of the
      excise amounted to £3,341,837:9:9.
    
      It must always be remembered, however, that it is the luxuries, and not
      the necessary expense of the inferior ranks of people, that ought ever to
      be taxed. The final payment of any tax upon their necessary expense, would
      fall altogether upon the superior ranks of people; upon the smaller
      portion of the annual produce, and not upon the greater. Such a tax must,
      in all cases, either raise the wages of labour, or lessen the demand for
      it. It could not raise the wages of labour, without throwing the final
      payment of the tax upon the superior ranks of people. It could not lessen
      the demand for labour, without lessening the annual produce of the land
      and labour of the country, the fund upon which all taxes must be finally
      paid. Whatever might be the state to which a tax of this kind reduced the
      demand for labour, it must always raise wages higher than they otherwise
      would be in that state; and the final payment of this enhancement of wages
      must, in all cases, fall upon the superior ranks of people.
    
      Fermented liquors brewed, and spiritous liquors distilled, not for sale,
      but for private use, are not in Great Britain liable to any duties of
      excise. This exemption, of which the object is to save private families
      from the odious visit and examination of the tax-gatherer, occasions the
      burden of those duties to fall frequently much lighter upon the rich than
      upon the poor. It is not, indeed, very common to distil for private use,
      though it is done sometimes. But in the country, many middling and almost
      all rich and great families, brew their own beer. Their strong beer,
      therefore, costs them eight shillings a-barrel less than it costs the
      common brewer, who must have his profit upon the tax, as well as upon all
      the other expense which he advances. Such families, therefore, must drink
      their beer at least nine or ten shillings a-barrel cheaper than any liquor
      of the same quality can be drank by the common people, to whom it is
      everywhere more convenient to buy their beer, by little and little, from
      the brewery or the ale-house. Malt, in the same manner, that is made for
      the use of a private family, is not liable to the visit or examination of
      the tax-gatherer but, in this case the family must compound at seven
      shillings and sixpence a-head for the tax. Seven shillings and sixpence
      are equal to the excise upon ten bushels of malt; a quantity fully equal
      to what all the different members of any sober family, men, women, and
      children, are, at an average, likely to consume. But in rich and great
      families, where country hospitality is much practised, the malt liquors
      consumed by the members of the family make but a small part of the
      consumption of the house. Either on account of this composition, however,
      or for other reasons, it is not near so common to malt as to brew for
      private use. It is difficult to imagine any equitable reason, why those
      who either brew or distil for private use should not be subject to a
      composition of the same kind.
    
      A greater revenue than what is at present drawn from all the heavy taxes
      upon malt, beer, and ale, might be raised, it has frequently been said, by
      a much lighter tax upon malt; the opportunities of defrauding the revenue
      being much greater in a brewery than in a malt-house; and those who brew
      for private use being exempted from all duties or composition for duties,
      which is not the case with those who malt for private use.
    
      In the porter brewery of London, a quarter of malt is commonly brewed into
      more than two barrels and a-half, sometimes into three barrels of porter.
      The different taxes upon malt amount to six shillings a-quarter; those
      upon strong ale and beer to eight shillings a-barrel. In the porter
      brewery, therefore, the different taxes upon malt, beer, and ale, amount
      to between twenty-six and thirty shillings upon the produce of a quarter
      of malt. In the country brewery for common country sale, a quarter of malt
      is seldom brewed into less than two barrels of strong, and one barrel of
      small beer; frequently into two barrels and a-half of strong beer. The
      different taxes upon small beer amount to one shilling and fourpence
      a-barrel. In the country brewery, therefore, the different taxes upon
      malt, beer, and ale, seldom amount to less than twenty-three shillings and
      fourpence, frequently to twenty-six shillings, upon the produce of a
      quarter of malt. Taking the whole kingdom at an average, therefore, the
      whole amount of the duties upon malt, beer, and ale, cannot be estimated
      at less than twenty-four or twenty-five shillings upon the produce of a
      quarter of malt. But by taking off all the different duties upon beer and
      ale, and by trebling the malt tax, or by raising it from six to eighteen
      shillings upon the quarter of malt, a greater revenue, it is said, might
      be raised by this single tax, than what is at present drawn from all those
      heavier taxes.
    

  In 1772, the old malt tax produced.........  £722,023: 11: 11
                             The additional... £356,776:  7:  9¾
  In 1775, the old tax produced............... £561,627:  3:  7½
                             The additional... £278,650: 15:  3¾
  In 1774, the old tax  produced ............ £624,614: 17:  5¾
                             The additional....£310,745:  2:  8½
  In 1775, the old tax produced  ............£657,357:  0:  8¼
                             The additional....£323,785: 12:  6¼
                                             £5,855,580: 12:  0¾
  Average of these four years ..............  £958,895:  3:  0

  In 1772, the country excise produced.......£1,243,120:  5:  3
                    The London brewery          408,260:  7:  2¾
  In 1773, the country excise................£1,245,808:  3:  3
                    The London brewery          405,406: 17: 10½
  In 1774, the country excise................£1,246,373: 14:  5½
                    The London brewery          320,601: 18:  0¼
  In 1775, the country excise................£1,214,583:  6:  1¼
                    The London brewery          463,670:  7:  0¼
                                           4)£6,547,832: 19:  2¼
  Average of these four years ..............£1,636,958:  4:  9½
  To which adding the average malt tax........  958,895:  3:  0¼

  The whole amount of those different
                taxes comes out to be........£2,595,835:  7: 10

  But, by trebling the malt tax,
  or by raising it from six to
  eighteen shillings upon the quarter
  of malt, that single tax would produce.....£2,876,685:  9:  0
  A sum which exceeds the
                         foregoing by....       280,832:  1:  3

    

      Under the old malt tax, indeed, is comprehended a tax of four shillings
      upon the hogshead of cyder, and another of ten shillings upon the barrel
      of mum. In 1774, the tax upon cyder produced only £3,083:6:8. It probably
      fell somewhat short of its usual amount; all the different taxes upon
      cyder, having, that year, produced less than ordinary. The tax upon mum,
      though much heavier, is still less productive, on account of the smaller
      consumption of that liquor. But to balance whatever may be the ordinary
      amount of those two taxes, there is comprehended under what is called the
      country excise, first, the old excise of six shillings and eightpence upon
      the hogshead of cyder; secondly, a like tax of six shillings and
      eightpence upon the hogshead of verjuice; thirdly, another of eight
      shillings and ninepence upon the hogshead of vinegar; and, lastly, a
      fourth tax of elevenpence upon the gallon of mead or metheglin. The
      produce of those different taxes will probably much more than
      counterbalance that of the duties imposed, by what is called the annual
      malt tax, upon cyder and mum.
    
      Malt is consumed, not only in the brewery of beer and ale, but in the
      manufacture of low wines and spirits. If the malt tax were to be raised to
      eighteen shillings upon the quarter, it might be necessary to make some
      abatement in the different excises which are imposed upon those particular
      sorts of low wines and spirits, of which malt makes any part of the
      materials. In what are called malt spirits, it makes commonly but a third
      part of the materials; the other two-thirds being either raw barley, or
      one-third barley and one-third wheat. In the distillery of malt spirits,
      both the opportunity and the temptation to smuggle are much greater than
      either in a brewery or in a malt-house; the opportunity, on account of the
      smaller bulk and greater value of the commodity, and the temptation, on
      account of the superior height of the duties, which amounted to 3s. 10
      2/3d. upon the gallon of spirits. {Though the duties directly imposed upon
      proof spirits amount only to 2s. 6d per gallon, these, added to the duties
      upon the low wines, from which they are distilled, amount to 3s 10 2/3d.
      Both low wines and proof spirits are, to prevent frauds, now rated
      according to what they gauge in the wash.}
    
      By increasing the duties upon malt, and reducing those upon the
      distillery, both the opportunities and the temptation to smuggle would be
      diminished, which might occasion a still further augmentation of revenue.
    
      It has for some time past been the policy of Great Britain to discourage
      the consumption of spiritous liquors, on account of their supposed
      tendency to ruin the health and to corrupt the morals of the common
      people. According to this policy, the abatement of the taxes upon the
      distillery ought not to be so great as to reduce, in any respect, the
      price of those liquors. Spiritous liquors might remain as dear as ever;
      while, at the same time, the wholesome and invigorating liquors of beer
      and ale might be considerably reduced in their price. The people might
      thus be in part relieved from one of the burdens of which they at present
      complain the most; while, at the same time, the revenue might be
      considerably augmented.
    
      The objections of Dr. Davenant to this alteration in the present system of
      excise duties, seem to be without foundation. Those objections are, that
      the tax, instead of dividing itself, as at present, pretty equally upon
      the profit of the maltster, upon that of the brewer and upon that of the
      retailer, would so far as it affected profit, fall altogether upon that of
      the maltster; that the maltster could not so easily get back the amount of
      the tax in the advanced price of his malt, as the brewer and retailer in
      the advanced price of their liquor; and that so heavy a tax upon malt
      might reduce the rent and profit of barley land.
    
      No tax can ever reduce, for any considerable time, the rate of profit in
      any particular trade, which must always keep its level with other trades
      in the neighbourhood. The present duties upon malt, beer, and ale, do not
      affect the profits of the dealers in those commodities, who all get back
      the tax with an additional profit, in the enhanced price of their goods. A
      tax, indeed, may render the goods upon which it is imposed so dear, as to
      diminish the consumption of them. But the consumption of malt is in malt
      liquors; and a tax of eighteen shillings upon the quarter of malt could
      not well render those liquors dearer than the different taxes, amounting
      to twenty-four or twenty-five shillings, do at present. Those liquors, on
      the contrary, would probably become cheaper, and the consumption of them
      would be more likely to increase than to diminish.
    
      It is not very easy to understand why it should be more difficult for the
      maltster to get back eighteen shillings in the advanced price of his malt,
      than it is at present for the brewer to get back twenty-four or
      twenty-five, sometimes thirty shillings, in that of his liquor. The
      maltster, indeed, instead of a tax of six shillings, would be obliged to
      advance one of eighteen shilling upon every quarter of malt. But the
      brewer is at present obliged to advance a tax of twenty-four or
      twenty-five, sometimes thirty shillings, upon every quarter of malt which
      he brews. It could not be more inconvenient for the maltster to advance a
      lighter tax, than it is at present for the brewer to advance a heavier
      one. The maltster does not always keep in his granaries a stock of malt,
      which it will require a longer time to dispose of than the stock of beer
      and ale which the brewer frequently keeps in his cellars. The former,
      therefore, may frequently get the returns of his money as soon as the
      latter. But whatever inconveniency might arise to the maltster from being
      obliged to advance a heavier tax, it could easily be remedied, by granting
      him a few months longer credit than is at present commonly given to the
      brewer.
    
      Nothing could reduce the rent and profit of barley land, which did not
      reduce the demand for barley. But a change of system, which reduced the
      duties upon a quarter of malt brewed into beer and ale, from twentyfour
      and twenty-five shillings to eighteen shillings, would be more likely to
      increase than diminish that demand. The rent and profit of barley land,
      besides, must always be nearly equal to those of other equally fertile and
      equally well cultivated land. If they were less, some part of the barley
      land would soon be turned to some other purpose; and if they were greater,
      more land would soon be turned to the raising of barley. When the ordinary
      price of any particular produce of land is at what may be called a
      monopoly price, a tax upon it necessarily reduces the rent and profit of
      the land which grows it. A tax upon the produce of those precious
      vineyards, of which the wine falls so much short of the effectual demand,
      that its price is always above the natural proportion to that of the
      produce of other equally fertile and equally well cultivated land, would
      necessarily reduce the rent and profit of those vineyards. The price of
      the wines being already the highest that could be got for the quantity
      commonly sent to market, it could not be raised higher without diminishing
      that quantity; and the quantity could not be diminished without still
      greater loss, because the lands could not be turned to any other equally
      valuable produce. The whole weight of the tax, therefore, would fall upon
      the rent and profit; properly upon the rent of the vineyard. When it has
      been proposed to lay any new tax upon sugar, our sugar planters have
      frequently complained that the whole weight of such taxes fell not upon
      the consumer, but upon the producer; they never having been able to raise
      the price of their sugar after the tax higher than it was before. The
      price had, it seems, before the tax, been a monopoly price; and the
      arguments adduced to show that sugar was an improper subject of taxation,
      demonstrated perhaps that it was a proper one; the gains of monopolists,
      whenever they can be come at, being certainly of all subjects the most
      proper. But the ordinary price of barley has never been a monopoly price;
      and the rent and profit of barley land have never been above their natural
      proportion to those of other equally fertile and equally well cultivated
      land. The different taxes which have been imposed upon malt, beer, and
      ale, have never lowered the price of barley; have never reduced the rent
      and profit of barley land. The price of malt to the brewer has constantly
      risen in proportion to the taxes imposed upon it; and those taxes,
      together with the different duties upon beer and ale, have constantly
      either raised the price, or, what comes to the same thing, reduced the
      quality of those commodities to the consumer. The final payment of those
      taxes has fallen constantly upon the consumer, and not upon the producer.
    
      The only people likely to suffer by the change of system here proposed,
      are those who brew for their own private use. But the exemption, which
      this superior rank of people at present enjoy, from very heavy taxes which
      are paid by the poor labourer and artificer, is surely most unjust and
      unequal, and ought to be taken away, even though this change was never to
      take place. It has probably been the interest of this superior order of
      people, however, which has hitherto prevented a change of system that
      could not well fail both to increase the revenue and to relieve the
      people.
    
      Besides such duties as those of custom and excise above mentioned, there
      are several others which affect the price of goods more unequally and more
      indirectly. Of this kind are the duties, which, in French, are called
      peages, which in old Saxon times were called the duties of passage, and
      which seem to have been originally established for the same purpose as our
      turnpike tolls, or the tolls upon our canals and navigable rivers, for the
      maintenance of the road or of the navigation. Those duties, when applied
      to such purposes, are most properly imposed according to the bulk or
      weight of the goods. As they were originally local and provincial duties,
      applicable to local and provincial purposes, the administration of them
      was, in most cases, entrusted to the particular town, parish, or lordship,
      in which they were levied; such communities being, in some way or other,
      supposed to be accountable for the application. The sovereign, who is
      altogether unaccountable, has in many countries assumed to himself the
      administration of those duties; and though he has in most cases enhanced
      very much the duty, he has in many entirely neglected the application. If
      the turnpike tolls of Great Britain should ever become one of the
      resources of government, we may learn, by the example of many other
      nations, what would probably be the consequence. Such tolls, no doubt, are
      finally paid by the consumer; but the consumer is not taxed in proportion
      to his expense, when he pays, not according to the value, but according to
      the bulk or weight of what he consumes. When such duties are imposed, not
      according to the bulk or weight, but according to the supposed value of
      the goods, they become properly a sort of inland customs or excise, which
      obstruct very much the most important of all branches of commerce, the
      interior commerce of the country.
    
      In some small states, duties similar to those passage duties are imposed
      upon goods carried across the territory, either by land or by water, from
      one foreign country to another. These are in some countries called
      transit-duties. Some of the little Italian states which are situated upon
      the Po, and the rivers which run into it, derive some revenue from duties
      of this kind, which are paid altogether by foreigners, and which, perhaps,
      are the only duties that one state can impose upon the subjects of
      another, without obstruction in any respect, the industry or commerce of
      its own. The most important transit-duty in the world, is that levied by
      the king of Denmark upon all merchant ships which pass through the Sound.
    
      Such taxes upon luxuries, as the greater part of the duties of customs and
      excise, though they all fall indifferently upon every different species of
      revenue, and are paid finally, or without any retribution, by whoever
      consumes the commodities upon which they are imposed; yet they do not
      always fall equally or proportionally upon the revenue of every
      individual. As every man’s humour regulates the degree of his consumption,
      every man contributes rather according to his humour, than proportion to
      his revenue: the profuse contribute more, the parsimonious less, than
      their proper proportion. During the minority of a man of great fortune, he
      contributes commonly very little, by his consumption, towards the support
      of that state from whose protection he derives a great revenue. Those who
      live in another country, contribute nothing by their consumption towards
      the support of the government of that country, in which is situated the
      source of their revenue. If in this latter country there should be no land
      tax, nor any considerable duty upon the transference either of moveable or
      immoveable property, as is the case in Ireland, such absentees may derive
      a great revenue from the protection of a government, to the support of
      which they do not contribute a single shilling. This inequality is likely
      to be greatest in a country of which the government is, in some respects,
      subordinate and dependant upon that of some other. The people who possess
      the most extensive property in the dependant, will, in this case,
      generally chuse to live in the governing country. Ireland is precisely in
      this situation; and we cannot therefore wonder, that the proposal of a tax
      upon absentees should be so very popular in that country. It might,
      perhaps, be a little difficult to ascertain either what sort, or what
      degree of absence, would subject a man to be taxed as an absentee, or at
      what precise time the tax should either begin or end. If you except,
      however, this very peculiar situation, any inequality in the contribution
      of individuals which can arise from such taxes, is much more than
      compensated by the very circumstance which occasions that inequality; the
      circumstance that every man’s contribution is altogether voluntary; it
      being altogether in his power, either to consume, or not to consume, the
      commodity taxed. Where such taxes, therefore, are properly assessed, and
      upon proper commodities, they are paid with less grumbling than any other.
      When they are advanced by the merchant or manufacturer, the consumer, who
      finally pays them, soon comes to confound them with the price of the
      commodities, and almost forgets that he pays any tax. Such taxes are, or
      may be, perfectly certain; or may be assessed, so as to leave no doubt
      concerning either what ought to be paid, or when it ought to be paid;
      concerning either the quantity or the time of payment. What ever
      uncertainty there may sometimes be, either in the duties of customs in
      Great Britain, or in other duties of the same kind in other countries, it
      cannot arise from the nature of those duties, but from the inaccurate or
      unskilful manner in which the law that imposes them is expressed.
    
      Taxes upon luxuries generally are, and always may be, paid piece-meal, or
      in proportion as the contributors have occasion to purchase the goods upon
      which they are imposed. In the time and mode of payment, they are, or may
      be, of all taxes the most convenient. Upon the whole, such taxes,
      therefore, are perhaps as agreeable to the three first of the four general
      maxims concerning taxation, as any other. They offend in every respect
      against the fourth.
    
      Such taxes, in proportion to what they bring into the public treasury of
      the state, always take out, or keep out, of the pockets of the people,
      more than almost any other taxes. They seem to do this in all the four
      different ways in which it is possible to do it.
    
      First, the levying of such taxes, even when imposed in the most judicious
      manner, requires a great number of custom-house and excise officers, whose
      salaries and perquisites are a real tax upon the people, which brings
      nothing into the treasury of the state. This expense, however, it must be
      acknowledged, is more moderate in Great Britain than in most other
      countries. In the year which ended on the 5th of July, 1775, the gross
      produce of the different duties, under the management of the commissioners
      of excise in England, amounted to £5,507,308:18:8¼, which was levied at an
      expense of little more than five and a-half per cent. From this gross
      produce, however, there must be deducted what was paid away in bounties
      and drawbacks upon the exportation of exciseable goods, which will reduce
      the neat produce below five millions. {The neat produce of that year,
      after deducting all expenses and allowances, amounted to £4,975,652:19:6.}
      The levying of the salt duty, and excise duty, but under a different
      management, is much more expensive. The neat revenue of the customs does
      not amount to two millions and a-half, which is levied at an expense of
      more than ten per cent., in the salaries of officers and other incidents.
      But the perquisites of custom-house officers are everywhere much greater
      than their salaries; at some ports more than double or triple those
      salaries. If the salaries of officers, and other incidents, therefore,
      amount to more than ten per cent. upon the neat revenue of the customs,
      the whole expense of levying that revenue may amount, in salaries and
      perquisites together, to more than twenty or thirty per cent. The officers
      of excise receive few or no perquisites; and the administration of that
      branch of the revenue being of more recent establishment, is in general
      less corrupted than that of the customs, into which length of time has
      introduced and authorised many abuses. By charging upon malt the whole
      revenue which is at present levied by the different duties upon malt and
      malt liquors, a saving, it is supposed, of more than £50,000, might be
      made in the annual expense of the excise. By confining the duties of
      customs to a few sorts of goods, and by levying those duties according to
      the excise laws, a much greater saving might probably be made in the
      annual expense of the customs.
    
      Secondly, such taxes necessarily occasion some obstruction or
      discouragement to certain branches of industry. As they always raise the
      price of the commodity taxed, they so far discourage its consumption, and
      consequently its production. If it is a commodity of home growth or
      manufacture, less labour comes to be employed in raising and producing it.
      If it is a foreign commodity of which the tax increases in this manner the
      price, the commodities of the same kind which are made at home may
      thereby, indeed, gain some advantage in the home market, and a greater
      quantity of domestic industry may thereby be turned toward preparing them.
      But though this rise of price in a foreign commodity, may encourage
      domestic industry in one particular branch, it necessarily discourages
      that industry in almost every other. The dearer the Birmingham
      manufacturer buys his foreign wine, the cheaper he necessarily sells that
      part of his hardware with which, or, what comes to the same thing, with
      the price of which, he buys it. That part of his hardware, therefore,
      becomes of less value to him, and he has less encouragement to work at it.
      The dearer the consumers in one country pay for the surplus produce of
      another, the cheaper they necessarily sell that part of their own surplus
      produce with which, or, what comes to the same thing, with the price of
      which, they buy it. That part of their own surplus produce becomes of less
      value to them, and they have less encouragement to increase its quantity.
      All taxes upon consumable commodities, therefore, tend to reduce the
      quantity of productive labour below what it otherwise would be, either in
      preparing the commodities taxed, if they are home commodities, or in
      preparing those with which they are purchased, if they are foreign
      commodities. Such taxes, too, always alter, more or less, the natural
      direction of national industry, and turn it into a channel always
      different from, and generally less advantageous, than that in which it
      would have run of its own accord.
    
      Thirdly, the hope of evading such taxes by smuggling, gives frequent
      occasion to forfeitures and other penalties, which entirely ruin the
      smuggler; a person who, though no doubt highly blameable for violating the
      laws of his country, is frequently incapable of violating those of natural
      justice, and would have been, in every respect, an excellent citizen, had
      not the laws of his country made that a crime which nature never meant to
      be so. In those corrupted governments, where there is at least a general
      suspicion of much unnecessary expense, and great misapplication of the
      public revenue, the laws which guard it are little respected. Not many
      people are scrupulous about smuggling, when, without perjury, they can
      find an easy and safe opportunity of doing so. To pretend to have any
      scruple about buying smuggled goods, though a manifest encouragement to
      the violation of the revenue laws, and to the perjury which almost always
      attends it, would, in most countries, be regarded as one of those pedantic
      pieces of hypocrisy which, instead of gaining credit with anybody, serve
      only to expose the person who affects to practise them to the suspicion of
      being a greater knave than most of his neighbours. By this indulgence of
      the public, the smuggler is often encouraged to continue a trade, which he
      is thus taught to consider as in some measure innocent; and when the
      severity of the revenue laws is ready to fall upon him, he is frequently
      disposed to defend with violence, what he has been accustomed to regard as
      his just property. From being at first, perhaps, rather imprudent than
      criminal, he at last too often becomes one of the hardiest and most
      determined violators of the laws of society. By the ruin of the smuggler,
      his capital, which had before been employed in maintaining productive
      labour, is absorbed either in the revenue of the state, or in that of the
      revenue officer; and is employed in maintaining unproductive, to the
      diminution of the general capital of the society, and of the useful
      industry which it might otherwise have maintained.
    
      Fourthly, such taxes, by subjecting at least the dealers in the taxed
      commodities, to the frequent visits and odious examination of the
      tax-gatherers, expose them sometimes, no doubt, to some degree of
      oppression, and always to much trouble and vexation; and though vexation,
      as has already been said, is not strictly speaking expense, it is
      certainly equivalent to the expense at which every man would be willing to
      redeem himself from it. The laws of excise, though more effectual for the
      purpose for which they were instituted, are, in this respect, more
      vexatious than those of the customs. When a merchant has imported goods
      subject to certain duties of customs; when he has paid those duties, and
      lodged the goods in his warehouse; he is not, in most cases, liable to any
      further trouble or vexation from the custom-house officer. It is otherwise
      with goods subject to duties of excise. The dealers have no respite from
      the continual visits and examination of the excise officers. The duties of
      excise are, upon this account, more unpopular than those of the customs;
      and so are the officers who levy them. Those officers, it is pretended,
      though in general, perhaps, they do their duty fully as well as those of
      the customs; yet, as that duty obliges them to be frequently very
      troublesome to some of their neighbours, commonly contract a certain
      hardness of character, which the others frequently have not. This
      observation, however, may very probably be the mere suggestion of
      fraudulent dealers, whose smuggling is either prevented or detected by
      their diligence.
    
      The inconveniencies, however, which are, perhaps, in some degree
      inseparable from taxes upon consumable communities, fall as light upon the
      people of Great Britain as upon those of any other country of which the
      government is nearly as expensive. Our state is not perfect, and might be
      mended; but it is as good, or better, than that of most of our neighbours.
    
      In consequence of the notion, that duties upon consumable goods were taxes
      upon the profits of merchants, those duties have, in some countries, been
      repeated upon every successive sale of the goods. If the profits of the
      merchant-importer or merchant-manufacturer were taxed, equality seemed to
      require that those of all the middle buyers, who intervened between either
      of them and the consumer, should likewise be taxed. The famous alcavala of
      Spain seems to have been established upon this principle. It was at first
      a tax of ten per cent. afterwards of fourteen per cent. and it is at
      present only six per cent. upon the sale of every sort of property whether
      moveable or immoveable; and it is repeated every time the property is
      sold. {Memoires concernant les Droits, etc. tom. i, p. 15} The levying of
      this tax requires a multitude of revenue officers, sufficient to guard the
      transportation of goods, not only from one province to another, but from
      one shop to another. It subjects, not only the dealers in some sorts of
      goods, but those in all sorts, every farmer, every manufacturer, every
      merchant and shopkeeper, to the continual visit and examination of the
      tax-gatherers. Through the greater part of the country in which a tax of
      this kind is established, nothing can be produced for distant sale. The
      produce of every part of the country must be proportioned to the
      consumption of the neighbourhood. It is to the alcavala, accordingly, that
      Ustaritz imputes the ruin of the manufactures of Spain. He might have
      imputed to it, likewise, the declension of agriculture, it being imposed
      not only upon manufactures, but upon the rude produce of the land.
    
      In the kingdom of Naples, there is a similar tax of three per cent. upon
      the value of all contracts, and consequently upon that of all contracts of
      sale. It is both lighter than the Spanish tax, and the greater part of
      towns and parishes are allowed to pay a composition in lieu of it. They
      levy this composition in what manner they please, generally in a way that
      gives no interruption to the interior commerce of the place. The
      Neapolitan tax, therefore, is not near so ruinous as the Spanish one.
    
      The uniform system of taxation, which, with a few exception of no great
      consequence, takes place in all the different parts of the united kingdom
      of Great Britain, leaves the interior commerce of the country, the inland
      and coasting trade, almost entirely free. The inland trade is almost
      perfectly free; and the greater part of goods may be carried from one end
      of the kingdom to the other, without requiring any permit or let-pass,
      without being subject to question, visit or examination, from the revenue
      officers. There are a few exceptions, but they are such as can give no
      interruption to any important branch of inland commerce of the country.
      Goods carried coastwise, indeed, require certificates or coast-cockets. If
      you except coals, however, the rest are almost all duty-free. This freedom
      of interior commerce, the effect of the uniformity of the system of
      taxation, is perhaps one of the principal causes of the prosperity of
      Great Britain; every great country being necessarily the best and most
      extensive market for the greater part of the productions of its own
      industry. If the same freedom in consequence of the same uniformity, could
      be extended to Ireland and the plantations, both the grandeur of the
      state, and the prosperity of every part of the empire, would probably be
      still greater than at present.
    
      In France, the different revenue laws which take place in the different
      provinces, require a multitude of revenue officers to surround, not only
      the frontiers of the kingdom, but those of almost each particular
      province, in order either to prevent the importation of certain goods, or
      to subject it to the payment of certain duties, to the no small
      interruption of the interior commerce of the country. Some provinces are
      allowed to compound for the gabelle, or salt tax; others are exempted from
      it altogether. Some provinces are exempted from the exclusive sale of
      tobacco, which the farmers-general enjoy through the greater part of the
      kingdom. The aides, which correspond to the excise in England, are very
      different in different provinces. Some provinces are exempted from them,
      and pay a composition or equivalent. In those in which they take place,
      and are in farm, there are many local duties which do not extend beyond a
      particular town or district. The traites, which correspond to our customs,
      divide the kingdom into three great parts; first, the provinces subject to
      the tariff of 1664, which are called the provinces of the five great
      farms, and under which are comprehended Picardy, Normandy, and the greater
      part of the interior provinces of the kingdom; secondly, the provinces
      subject to the tariff of 1667, which are called the provinces reckoned
      foreign, and under which are comprehended the greater part of the frontier
      provinces; and, thirdly, those provinces which are said to be treated as
      foreign, or which, because they are allowed a free commerce with foreign
      countries, are, in their commerce with the other provinces of France,
      subjected to the same duties as other foreign countries. These are Alsace,
      the three bishoprics of Mentz, Toul, and Verdun, and the three cities of
      Dunkirk, Bayonne, and Marseilles. Both in the provinces of the five great
      farms (called so on account of an ancient division of the duties of
      customs into five great branches, each of which was originally the subject
      of a particular farm, though they are now all united into one), and in
      those which are said to be reckoned foreign, there are many local duties
      which do not extend beyond a particular town or district. There are some
      such even in the provinces which are said to be treated as foreign,
      particularly in the city of Marseilles. It is unnecessary to observe how
      much both the restraints upon the interior commerce of the country, and
      the number of the revenue officers, must be multiplied, in order to guard
      the frontiers of those different provinces and districts which are subject
      to such different systems of taxation.
    
      Over and above the general restraints arising from this complicated system
      of revenue laws, the commerce of wine (after corn, perhaps, the most
      important production of France) is, in the greater part of the provinces,
      subject to particular restraints arising from the favour which has been
      shown to the vineyards of particular provinces and districts above those
      of others. The provinces most famous for their wines, it will be found, I
      believe, are those in which the trade in that article is subject to the
      fewest restraints of this kind. The extensive market which such provinces
      enjoy, encourages good management both in the cultivation of their
      vineyards, and in the subsequent preparation of their wines.
    
      Such various and complicated revenue laws are not peculiar to France. The
      little duchy of Milan is divided into six provinces, in each of which
      there is a different system of taxation, with regard to several different
      sorts of consumable goods. The still smaller territories of the duke of
      Parma are divided into three or four, each of which has, in the same
      manner, a system of its own. Under such absurd management, nothing but the
      great fertility of the soil, and happiness of the climate, could preserve
      such countries from soon relapsing into the lowest state of poverty and
      barbarism.
    
      Taxes upon consumable commodities may either be levied by an
      administration, of which the officers are appointed by govermnent, and are
      immediately accountable to government, of which the revenue must, in this
      case, vary from year to year, according to the occasional variations in
      the produce of the tax; or they may be let in farm for a rent certain, the
      farmer being allowed to appoint his own officers, who, though obliged to
      levy the tax in the manner directed by the law, are under his immediate
      inspection, and are immediately accountable to him. The best and most
      frugal way of levying a tax can never be by farm. Over and above what is
      necessary for paying the stipulated rent, the salaries of the officers,
      and the whole expense of administration, the farmer must always draw from
      the produce of the tax a certain profit, proportioned at least to the
      advance which he makes, to the risk which he runs, to the trouble which he
      is at, and to the knowledge and skill which it requires to manage so very
      complicated a concern. Government, by establishing an administration under
      their own immediate inspection, of the same kind with that which the
      farmer establishes, might at least save this profit, which is almost
      always exorbitant. To farm any considerable branch of the public revenue
      requires either a great capital, or a great credit; circumstances which
      would alone restrain the competition for such an undertaking to a very
      small number of people. Of the few who have this capital or credit, a
      still smaller number have the necessary knowledge or experience; another
      circumstance which restrains the competition still further. The very few
      who are in condition to become competitors, find it more for their
      interest to combine together; to become copartners, instead of
      competitors; and, when the farm is set up to auction, to offer no rent but
      what is much below the real value. In countries where the public revenues
      are in farm, the farmers are generally the most opulent people. Their
      wealth would alone excite the public indignation; and the vanity which
      almost always accompanies such upstart fortunes, the foolish ostentation
      with which they commonly display that wealth, excite that indignation
      still more.
    
      The farmers of the public revenue never find the laws too severe, which
      punish any attempt to evade the payment of a tax. They have no bowels for
      the contributors, who are not their subjects, and whose universal
      bankruptcy, if it should happen the day after the farm is expired, would
      not much affect their interest. In the greatest exigencies of the state,
      when the anxiety of the sovereign for the exact payment of his revenue is
      necessarily the greatest, they seldom fail to complain, that without laws
      more rigorous than those which actually took place, it will be impossible
      for them to pay even the usual rent. In those moments of public distress,
      their commands cannot be disputed. The revenue laws, therefore, become
      gradually more and more severe. The most sanguinary are always to be found
      in countries where the greater part of the public revenue is in farm; the
      mildest, in countries where it is levied under the immediate inspection of
      the sovereign. Even a bad sovereign feels more compassion for his people
      than can ever be expected from the farmers of his revenue. He knows that
      the permanent grandeur of his family depends upon the prosperity of his
      people, and he will never knowingly ruin that prosperity for the sake of
      any momentary interest of his own. It is otherwise with the farmers of his
      revenue, whose grandeur may frequently be the effect of the ruin, and not
      of the prosperity, of his people.
    
      A tax is sometimes not only farmed for a certain rent, but the farmer has,
      besides, the monopoly of the commodity taxed. In France, the duties upon
      tobacco and salt are levied in this manner. In such cases, the farmer,
      instead of one, levies two exorbitant profits upon the people; the profit
      of the farmer, and the still more exorbitant one of the monopolist.
      Tobacco being a luxury, every man is allowed to buy or not to buy as he
      chuses; but salt being a necessary, every man is obliged to buy of the
      farmer a certain quantity of it; because, if he did not buy this quantity
      of the farmer, he would, it is presumed, buy it of some smuggler. The
      taxes upon both commodities are exorbitant. The temptation to smuggle,
      consequently, is to many people irresistible; while, at the same time, the
      rigour of the law, and the vigilance of the farmer’s officers, render the
      yielding to the temptation almost certainly ruinous. The smuggling of salt
      and tobacco sends every year several hundred people to the galleys,
      besides a very considerable number whom it sends to the gibbet. Those
      taxes, levied in this manner, yield a very considerable revenue to
      government. In 1767, the farm of tobacco was let for twenty-two millions
      five hundred and forty-one thousand two hundred and seventy-eight livres
      a-year; that of salt for thirty-six millions four hundred and ninety-two
      thousand four hundred and four livres. The farm, in both cases, was to
      commence in 1768, and to last for six years. Those who consider the blood
      of the people as nothing, in comparison with the revenue of the prince,
      may, perhaps, approve of this method of levying taxes. Similar taxes and
      monopolies of salt and tobacco have been established in many other
      countries, particularly in the Austrian and Prussian dominions, and in the
      greater part of the states of Italy.
    
      In France, the greater part of the actual revenue of the crown is derived
      from eight different sources; the taille, the capitation, the two
      vingtiemes, the gabelles, the aides, the traites, the domaine, and the
      farm of tobacco. The five last are, in the greater part of the provinces,
      under farm. The three first are everywhere levied by an administration,
      under the immediate inspection and direction of government; and it is
      universally acknowledged, that in proportion to what they take out of the
      pockets of the people, they bring more into the treasury of the prince
      than the other five, of which the administration is much more wasteful and
      expensive.
    
      The finances of France seem, in their present state, to admit of three
      very obvious reformations. First, by abolishing the taille and the
      capitation, and by increasing the number of the vingtiemes, so as to
      produce an additional revenue equal to the amount of those other taxes,
      the revenue of the crown might be preserved; the expense of collection
      might be much diminished; the vexation of the inferior ranks of people,
      which the taille and capitation occasion, might be entirely prevented; and
      the superior ranks might not be more burdened than the greater part of
      them are at present. The vingtieme, I have already observed, is a tax very
      nearly of the same kind with what is called the land tax of England. The
      burden of the taille, it is acknowledged, falls finally upon the
      proprietors of land; and as the greater part of the capitation is assessed
      upon those who are subject to the taille, at so much a-pound of that other
      tax, the final payment of the greater part of it must likewise fall upon
      the same order of people. Though the number of the vingtiemes, therefore,
      was increased, so as to produce an additional revenue equal to the amount
      of both those taxes, the superior ranks of people might not be more
      burdened than they are at present; many individuals, no doubt, would, on
      account of the great inequalities with which the taille is commonly
      assessed upon the estates and tenants of different individuals. The
      interest and opposition of such favoured subjects, are the obstacles most
      likely to prevent this, or any other reformation of the same kind.
      Secondly, by rendering the gabelle, the aides, the traites, the taxes upon
      tobacco, all the different customs and excises, uniform in all the
      different parts of the kingdom, those taxes might be levied at much less
      expense, and the interior commerce of the kingdom might be rendered as
      free as that of England. Thirdly, and lastly, by subjecting all those
      taxes to an administration under the immediate inspection and direction or
      government, the exorbitant profits of the farmers-general might be added
      to the revenue of the state. The opposition arising from the private
      interest of individuals, is likely to be as effectual for preventing the
      two last as the first-mentioned scheme of reformation.
    
      The French system of taxation seems, in every respect, inferior to the
      British. In Great Britain, ten millions sterling are annually levied upon
      less than eight millions of people, without its being possible to say that
      any particular order is oppressed. From the Collections of the Abbé
      Expilly, and the observations of the author of the Essay upon the
      Legislation and Commerce of Corn, it appears probable that France,
      including the provinces of Lorraine and Bar, contains about twenty-three
      or twenty-four millions of people; three times the number, perhaps,
      contained in Great Britain. The soil and climate of France are better than
      those of Great Britain. The country has been much longer in a state of
      improvement and cultivation, and is, upon that account, better stocked
      with all those things which it requires a long time to raise up and
      accumulate; such as great towns, and convenient and well-built houses,
      both in town and country. With these advantages, it might be expected,
      that in France a revenue of thirty millions might be levied for the
      support of the state, with as little inconvenience as a revenue of ten
      millions is in Great Britain. In 1765 and 1766, the whole revenue paid
      into the treasury of France, according to the best, though, I acknowledge,
      very imperfect accounts which I could get of it, usually run between 308
      and 325 millions of livres; that is, it did not amount to fifteen millions
      sterling; not the half of what might have been expected, had the people
      contributed in the same proportion to their numbers as the people of Great
      Britain. The people of France, however, it is generally acknowledged, are
      much more oppressed by taxes than the people of Great Britain. France,
      however, is certainly the great empire in Europe, which, after that of
      Great Britain, enjoys the mildest and most indulgent government.
    
      In Holland, the heavy taxes upon the necessaries of life have ruined, it
      is said, their principal manufacturers, and are likely to discourage,
      gradually, even their fisheries and their trade in ship-building. The
      taxes upon the necessaries of life are inconsiderable in Great Britain,
      and no manufacture has hitherto been ruined by them. The British taxes
      which bear hardest on manufactures, are some duties upon the importation
      of raw materials, particularly upon that of raw silk. The revenue of the
      States-General and of the different cities, however, is said to amount to
      more than five millions two hundred and fifty thousand pounds sterling;
      and as the inhabitants of the United Provinces cannot well be supposed to
      amount to more than a third part of those of Great Britain, they must, in
      proportion to their number, be much more heavily taxed.
    
      After all the proper subjects of taxation have been exhausted, if the
      exigencies of the state still continue to require new taxes, they must be
      imposed upon improper ones. The taxes upon the necessaries of life,
      therefore, may be no impeachment of the wisdom of that republic, which, in
      order to acquire and to maintain its independency, has, in spite of its
      meat frugality, been involved in such expensive wars as have obliged it to
      contract great debts. The singular countries of Holland and Zealand,
      besides, require a considerable expense even to preserve their existence,
      or to prevent their being swallowed up by the sea, which must have
      contributed to increase considerably the load of taxes in those two
      provinces. The republican form of government seems to be the principal
      support of the present grandeur of Holland. The owners of great capitals,
      the great mercantile families, have generally either some direct share, or
      some indirect influence, in the administration of that government. For the
      sake of the respect and authority which they derive from this situation,
      they are willing to live in a country where their capital, if they employ
      it themselves, will bring them less profit, and if they lend it to
      another, less interest; and where the very moderate revenue which they can
      draw from it will purchase less of the necessaries and conveniencies of
      life than in any other part of Europe. The residence of such wealthy
      people necessarily keeps alive, in spite of all disadvantages, a certain
      degree of industry in the country. Any public calamity which should
      destroy the republican form of government, which should throw the whole
      administration into the hands of nobles and of soldiers, which should
      annihilate altogether the importance of those wealthy merchants, would
      soon render it disagreeable to them to live in a country where they were
      no longer likely to be much respected. They would remove both their
      residence and their capital to some other country, and the industry and
      commerce of Holland would soon follow the capitals which supported them.
    


CHAPTER III.
OF PUBLIC DEBTS.


    
      In that rude state of society which precedes the extension of commerce and
      the improvement of manufactures; when those expensive luxuries, which
      commerce and manufactures can alone introduce, are altogether unknown; the
      person who possesses a large revenue, I have endeavoured to show in the
      third book of this Inquiry, can spend or enjoy that revenue in no other
      way than by maintaining nearly as many people as it can maintain. A large
      revenue may at all times be said to consist in the command of a large
      quantity of the necessaries of life. In that rude state of things, it is
      commonly paid in a large quantity of those necessaries, in the materials
      of plain food and coarse clothing, in corn and cattle, in wool and raw
      hides. When neither commerce nor manufactures furnish any thing for which
      the owner can exchange the greater part of those materials which are over
      and above his own consumption, he can do nothing with the surplus, but
      feed and clothe nearly as many people as it will feed and clothe. A
      hospitality in which there is no luxury, and a liberality in which there
      is no ostentation, occasion, in this situation of things, the principal
      expenses of the rich and the great. But these I have likewise endeavoured
      to show, in the same book, are expenses by which people are not very apt
      to ruin themselves. There is not, perhaps, any selfish pleasure so
      frivolous, of which the pursuit has not sometimes ruined even sensible
      men. A passion for cock-fighting has ruined many. But the instances, I
      believe, are not very numerous, of people who have been ruined by a
      hospitality or liberality of this kind; though the hospitality of luxury,
      and the liberality of ostentation have ruined many. Among our feudal
      ancestors, the long time during which estates used to continue in the same
      family, sufficiently demonstrates the general disposition of people to
      live within their income. Though the rustic hospitality, constantly
      exercised by the great landholders, may not, to us in the present times,
      seem consistent with that order which we are apt to consider as
      inseparably connected with good economy; yet we must certainly allow them
      to have been at least so far frugal, as not commonly to have spent their
      whole income. A part of their wool and raw hides, they had generally an
      opportunity of selling for money. Some part of this money, perhaps, they
      spent in purchasing the few objects of vanity and luxury, with which the
      circumstances of the times could furnish them; but some part of it they
      seem commonly to have hoarded. They could not well, indeed, do any thing
      else but hoard whatever money they saved. To trade, was disgraceful to a
      gentleman; and to lend money at interest, which at that time was
      considered as usury, and prohibited bylaw, would have been still more so.
      In those times of violence and disorder, besides, it was convenient to
      have a hoard of money at hand, that in case they should be driven from
      their own home, they might have something of known value to carry with
      them to some place of safety. The same violence which made it convenient
      to hoard, made it equally convenient to conceal the hoard. The frequency
      of treasure-trove, or of treasure found, of which no owner was known,
      sufficiently demonstrates the frequency, in those times, both of hoarding
      and of concealing the hoard. Treasure-trove was then considered as an
      important branch of the revenue of the sovereign. All the treasure-trove
      of the kingdom would scarce, perhaps, in the present times, make an
      important branch of the revenue of a private gentleman of a good estate.
    
      The same disposition, to save and to hoard, prevailed in the sovereign, as
      well as in the subjects. Among nations, to whom commerce and manufacture
      are little known, the sovereign, it has already been observed in the
      Fourth book, is in a situation which naturally disposes him to the
      parsimony requisite for accumulation. In that situation, the expense, even
      of a sovereign, cannot be directed by that vanity which delights in the
      gaudy finery of a court. The ignorance of the times affords but few of the
      trinkets in which that finery consists. Standing armies are not then
      necessary; so that the expense, even of a sovereign, like that of any
      other great lord can be employed in scarce any thing but bounty to his
      tenants, and hospitality to his retainers. But bounty and hospitality very
      seldom lead to extravagance; though vanity almost always does. All the
      ancient sovereigns of Europe, accordingly, it has already been observed,
      had treasures. Every Tartar chief, in the present times, is said to have
      one.
    
      In a commercial country, abounding with every sort of expensive luxury,
      the sovereign, in the same manner as almost all the great proprietors in
      his dominions, naturally spends a great part of his revenue in purchasing
      those luxuries. His own and the neighbouring countries supply him
      abundantly with all the costly trinkets which compose the splendid, but
      insignificant, pageantry of a court. For the sake of an inferior pageantry
      of the same kind, his nobles dismiss their retainers, make their tenants
      independent, and become gradually themselves as insignificant as the
      greater part of the wealthy burghers in his dominions. The same frivolous
      passions, which influence their conduct, influence his. How can it be
      supposed that he should be the only rich man in his dominions who is
      insensible to pleasures of this kind? If he does not, what he is very
      likely to do, spend upon those pleasures so great a part of his revenue as
      to debilitate very much the defensive power of the state, it cannot well
      be expected that he should not spend upon them all that part of it which
      is over and above what is necessary for supporting that defensive power.
      His ordinary expense becomes equal to his ordinary revenue, and it is well
      if it does not frequently exceed it. The amassing of treasure can no
      longer be expected; and when extraordinary exigencies require
      extraordinary expenses, he must necessarily call upon his subjects for an
      extraordinary aid. The present and the late king of Prussia are the only
      great princes of Europe, who, since the death of Henry IV. of France, in
      1610, are supposed to have amassed any considerable treasure. The
      parsimony which leads to accumulation has become almost as rare in
      republican as in monarchical governments. The Italian republics, the
      United Provinces of the Netherlands, are all in debt. The canton of Berne
      is the single republic in Europe which has amassed any considerable
      treasure. The other Swiss republics have not. The taste for some sort of
      pageantry, for splendid buildings, at least, and other public ornaments,
      frequently prevails as much in the apparently sober senate-house of a
      little republic, as in the dissipated court of the greatest king.
    
      The want of parsimony, in time of peace, imposes the necessity of
      contracting debt in time of war. When war comes, there is no money in the
      treasury, but what is necessary for carrying on the ordinary expense of
      the peace establishment. In war, an establishment of three or four times
      that expense becomes necessary for the defence of the state; and
      consequently, a revenue three or four times greater than the peace
      revenue. Supposing that the sovereign should have, what he scarce ever
      has, the immediate means of augmenting his revenue in proportion to the
      augmentation of his expense; yet still the produce of the taxes, from
      which this increase of revenue must be drawn, will not begin to come into
      the treasury, till perhaps ten or twelve months after they are imposed.
      But the moment in which war begins, or rather the moment in which it
      appears likely to begin, the army must be augmented, the fleet must be
      fitted out, the garrisoned towns must be put into a posture of defence;
      that army, that fleet, those garrisoned towns, must be furnished with
      arms, ammunition, and provisions. An immediate and great expense must be
      incurred in that moment of immediate danger, which will not wait for the
      gradual and slow returns of the new taxes. In this exigency, government
      can have no other resource but in borrowing.
    
      The same commercial state of society which, by the operation of moral
      causes, brings government in this manner into the necessity of borrowing,
      produces in the subjects both an ability and an inclination to lend. If it
      commonly brings along with it the necessity of borrowing, it likewise
      brings with it the facility of doing so.
    
      A country abounding with merchants and manufacturers, necessarily abounds
      with a set of people through whose hands, not only their own capitals, but
      the capitals of all those who either lend them money, or trust them with
      goods, pass as frequently, or more frequently, than the revenue of a
      private man, who, without trade or business, lives upon his income, passes
      through his hands. The revenue of such a man can regularly pass through
      his hands only once in a year. But the whole amount of the capital and
      credit of a merchant, who deals in a trade of which the returns are very
      quick, may sometimes pass through his hands two, three, or four times in a
      year. A country abounding with merchants and manufacturers, therefore,
      necessarily abounds with a set of people, who have it at all times in
      their power to advance, if they chuse to do so, a very large sum of money
      to government. Hence the ability in the subjects of a commercial state to
      lend.
    
      Commerce and manufactures can seldom flourish long in any state which does
      not enjoy a regular administration of justice; in which the people do not
      feel themselves secure in the possession of their property; in which the
      faith of contracts is not supported by law; and in which the authority of
      the state is not supposed to be regularly employed in enforcing the
      payment of debts from all those who are able to pay. Commerce and
      manufactures, in short, can seldom flourish in any state, in which there
      is not a certain degree of confidence in the justice of government. The
      same confidence which disposes great merchants and manufacturers upon
      ordinary occasions, to trust their property to the protection of a
      particular government, disposes them, upon extraordinary occasions, to
      trust that government with the use of their property. By lending money to
      government, they do not even for a moment diminish their ability to carry
      on their trade and manufactures; on the contrary, they commonly augment
      it. The necessities of the state render government, upon most occasions
      willing to borrow upon terms extremely advantageous to the lender. The
      security which it grants to the original creditor, is made transferable to
      any other creditor; and from the universal confidence in the justice of
      the state, generally sells in the market for more than was originally paid
      for it. The merchant or monied man makes money by lending money to
      government, and instead of diminishing, increases his trading capital. He
      generally considers it as a favour, therefore, when the administration
      admits him to a share in the first subscription for a new loan. Hence the
      inclination or willingness in the subjects of a commercial state to lend.
    
      The government of such a state is very apt to repose itself upon this
      ability and willingness of its subjects to lend it their money on
      extraordinary occasions. It foresees the facility of borrowing, and
      therefore dispenses itself from the duty of saving.
    
      In a rude state of society, there are no great mercantile or manufacturing
      capitals. The individuals, who hoard whatever money they can save, and who
      conceal their hoard, do so from a distrust of the justice of government;
      from a fear, that if it was known that they had a hoard, and where that
      hoard was to be found, they would quickly be plundered. In such a state of
      things, few people would be able, and nobody would be willing to lend
      their money to government on extraordinary exigencies. The sovereign feels
      that he must provide for such exigencies by saving, because he foresees
      the absolute impossibility of borrowing. This foresight increases still
      further his natural disposition to save.
    
      The progress of the enormous debts which at present oppress, and will in
      the long-run probably ruin, all the great nations of Europe, has been
      pretty uniform. Nations, like private men, have generally begun to borrow
      upon what may be called personal credit, without assigning or mortgaging
      any particular fund for the payment of the debt; and when this resource
      has failed them, they have gone on to borrow upon assignments or mortgages
      of particular funds.
    
      What is called the unfunded debt of Great Britain, is contracted in the
      former of those two ways. It consists partly in a debt which bears, or is
      supposed to bear, no interest, and which resembles the debts that a
      private man contracts upon account; and partly in a debt which bears
      interest, and which resembles what a private man contracts upon his bill
      or promissory-note. The debts which are due, either for extraordinary
      services, or for services either not provided for, or not paid at the time
      when they are performed; part of the extraordinaries of the army, navy,
      and ordnance, the arrears of subsidies to foreign princes, those of
      seamen’s wages, etc. usually constitute a debt of the first kind. Navy and
      exchequer bills, which are issued sometimes in payment of a part of such
      debts, and sometimes for other purposes, constitute a debt of the second
      kind; exchequer bills bearing interest from the day on which they are
      issued, and navy bills six months after they are issued. The bank of
      England, either by voluntarily discounting those bills at their current
      value, or by agreeing with government for certain considerations to
      circulate exchequer bills, that is, to receive them at par, paying the
      interest which happens to be due upon them, keeps up their value, and
      facilitates their circulation, and thereby frequently enables government
      to contract a very large debt of this kind. In France, where there is no
      bank, the state bills (billets d’etat {See Examen des Reflections
      Politiques sur les Finances.}) have sometimes sold at sixty and seventy
      per cent. discount. During the great recoinage in king William’s time,
      when the bank of England thought proper to put a stop to its usual
      transactions, exchequer bills and tallies are said to have sold from
      twenty-five to sixty per cent. discount; owing partly, no doubt, to the
      supposed instability of the new government established by the Revolution,
      but partly, too, to the want of the support of the bank of England.
    
      When this resource is exhausted, and it becomes necessary, in order to
      raise money, to assign or mortgage some particular branch of the public
      revenue for the payment of the debt, government has, upon different
      occasions, done this in two different ways. Sometimes it has made this
      assignment or mortgage for a short period of time only, a year, or a few
      years, for example; and sometimes for perpetuity. In the one case, the
      fund was supposed sufficient to pay, within the limited time, both
      principal and interest of the money borrowed. In the other, it was
      supposed sufficient to pay the interest only, or a perpetual annuity
      equivalent to the interest, government being at liberty to redeem, at any
      time, this annuity, upon paying back the principal sum borrowed. When
      money was raised in the one way, it was said to be raised by anticipation;
      when in the other, by perpetual funding, or, more shortly, by funding.
    
      In Great Britain, the annual land and malt taxes are regularly anticipated
      every year, by virtue of a borrowing clause constantly inserted into the
      acts which impose them. The bank of England generally advances at an
      interest, which, since the Revolution, has varied from eight to three per
      cent., the sums of which those taxes are granted, and receives payment as
      their produce gradually comes in. If there is a deficiency, which there
      always is, it is provided for in the supplies of the ensuing year. The
      only considerable branch of the public revenue which yet remains
      unmortgaged, is thus regularly spent before it comes in. Like an
      improvident spendthrift, whose pressing occasions will not allow him to
      wait for the regular payment of his revenue, the state is in the constant
      practice of borrowing of its own factors and agents, and of paying
      interest for the use of its own money.
    
      In the reign of king William, and during a great part of that of queen
      Anne, before we had become so familiar as we are now with the practice of
      perpetual funding, the greater part of the new taxes were imposed but for
      a short period of time (for four, five, six, or seven years only), and a
      great part of the grants of every year consisted in loans upon
      anticipations of the produce of those taxes. The produce being frequently
      insufficient for paying, within the limited term, the principal and
      interest of the money borrowed, deficiencies arose; to make good which, it
      became necessary to prolong the term.
    
      In 1697, by the 8th of William III., c. 20, the deficiencies of several
      taxes were charged upon what was then called the first general mortgage or
      fund, consisting of a prolongation to the first of August 1706, of several
      different taxes, which would have expired within a shorter term, and of
      which the produce was accumulated into one general fund. The deficiencies
      charged upon this prolonged term amounted to £5,160,459: 14: 9½.
    
      In 1701, those duties, with some others, were still further prolonged, for
      the like purposes, till the first of August 1710, and were called the
      second general mortgage or fund. The deficiencies charged upon it amounted
      to £2,055,999: 7: 11½.
    
      In 1707, those duties were still further prolonged, as a fund for new
      loans, to the first of August 1712, and were called the third general
      mortgage or fund. The sum borrowed upon it was £983,254:11:9¼.
    
      In 1708, those duties were all (except the old subsidy of tonnage and
      poundage, of which one moiety only was made a part of this fund, and a
      duty upon the importation of Scotch linen, which had been taken off by the
      articles of union) still further continued, as a fund for new loans, to
      the first of August 1714, and were called the fourth general mortgage or
      fund. The sum borrowed upon it was £925,176:9:2¼.
    
      In 1709, those duties were all ( except the old subsidy of tonnage and
      poundage, which was now left out of this fund altogether ) still further
      continued, for the same purpose, to the first of August 1716, and were
      called the fifth general mortgage or fund. The sum borrowed upon it was
      £922,029:6s.
    
      In 1710, those duties were again prolonged to the first of August 1720,
      and were called the sixth general mortgage or fund. The sum borrowed upon
      it was £1,296,552:9:11¾.
    
      In 1711, the same duties (which at this time were thus subject to four
      different anticipations), together with several others, were continued for
      ever, and made a fund for paying the interest of the capital of the
      South-sea company, which had that year advanced to government, for paying
      debts, and making good deficiencies, the sum of £9,177,967:15:4d, the
      greatest loan which at that time had ever been made.
    
      Before this period, the principal, so far as I have been able to observe,
      the only taxes, which, in order to pay the interest of a debt, had been
      imposed for perpetuity, were those for paying the interest of the money
      which had been advanced to government by the bank and East-India company,
      and of what it was expected would be advanced, but which was never
      advanced, by a projected land bank. The bank fund at this time amounted to
      £3,375,027:17:10½, for which was paid an annuity or interest of
      £206,501:15:5d. The East-India fund amounted to £3,200,000, for which was
      paid an annuity or interest of £160,000; the bank fund being at six per
      cent., the East-India fund at five per cent. interest.
    
      In 1715, by the first of George I., c. 12, the different taxes which had
      been mortgaged for paying the bank annuity, together with several others,
      which, by this act, were likewise rendered perpetual, were accumulated
      into one common fund, called the aggregate fund, which was charged not
      only with the payment of the bank annuity, but with several other
      annuities and burdens of different kinds. This fund was afterwards
      augmented by the third of George I., c.8., and by the fifth of George I.,
      c. 3, and the different duties which were then added to it were likewise
      rendered perpetual.
    
      In 1717, by the third of George I., c. 7, several other taxes were
      rendered perpetual, and accumulated into another common fund, called the
      general fund, for the payment of certain annuities, amounting in the whole
      to £724,849:6:10½.
    
      In consequence of those different acts, the greater part of the taxes,
      which before had been anticipated only for a short term of years were
      rendered perpetual, as a fund for paying, not the capital, but the
      interest only, of the money which had been borrowed upon them by different
      successive anticipations.
    
      Had money never been raised but by anticipation, the course of a few years
      would have liberated the public revenue, without any other attention of
      government besides that of not overloading the fund, by charging it with
      more debt than it could pay within the limited term, and not of
      anticipating a second time before the expiration of the first
      anticipation. But the greater part of European governments have been
      incapable of those attentions. They have frequently overloaded the fund,
      even upon the first anticipation; and when this happened not to be the
      case, they have generally taken care to overload it, by anticipating a
      second and a third time, before the expiration of the first anticipation.
      The fund becoming in this manner altogether insufficient for paying both
      principal and interest of the money borrowed upon it, it became necessary
      to charge it with the interest only, or a perpetual annuity equal to the
      interest; and such improvident anticipations necessarily gave birth to the
      more ruinous practice of perpetual funding. But though this practice
      necessarily puts off the liberation of the public revenue from a fixed
      period, to one so indefinite that it is not very likely ever to arrive;
      yet, as a greater sum can, in all cases, be raised by this new practice
      than by the old one of anticipation, the former, when men have once become
      familiar with it, has, in the great exigencies of the state, been
      universally preferred to the latter. To relieve the present exigency, is
      always the object which principally interests those immediately concerned
      in the administration of public affairs. The future liberation of the
      public revenue they leave to the care of posterity.
    
      During the reign of queen Anne, the market rate of interest had fallen
      from six to five per cent.; and, in the twelfth year of her reign, five
      per cent. was declared to be the highest rate which could lawfully be
      taken for money borrowed upon private security. Soon after the greater
      part of the temporary taxes of Great Britain had been rendered perpetual,
      and distributed into the aggregate, South-sea, and general funds, the
      creditors of the public, like those of private persons, were induced to
      accept of five per cent. for the interest of their money, which occasioned
      a saving of one per cent. upon the capital of the greater part or the
      debts which had been thus funded for perpetuity, or of one-sixth of the
      greater part of the annuities which were paid out of the three great funds
      above mentioned. This saving left a considerable surplus in the produce of
      the different taxes which had been accumulated into those funds, over and
      above what was necessary for paying the annuities which were now charged
      upon them, and laid the foundation of what has since been called the
      sinking fund. In 1717, it amounted to £523,454:7:7½. In 1727, the interest
      of the greater part of the public debts was still further reduced to four
      per cent.; and, in 1753 and 1757, to three and a-half, and three per
      cent., which reductions still further augmented the sinking fund.
    
      A sinking fund, though instituted for the payment of old, facilitates very
      much the contracting of new debts. It is a subsidiary fund, always at
      hand, to be mortgaged in aid of any other doubtful fund, upon which money
      is proposed to be raised in any exigency of the state. Whether the sinking
      fund of Great Britain has been more frequently applied to the one or to
      other of those two purposes, will sufficiently appear by and by.
    
      Besides those two methods of borrowing, by anticipations and by a
      perpetual funding, there are two other methods, which hold a sort of
      middle place between them; these are, that of borrowing upon annuities for
      terms of years, and that of borrowing upon annuities for lives.
    
      During the reigns of king William and queen Anne, large sums were
      frequently borrowed upon annuities for terms of years, which were
      sometimes longer and sometimes shorter. In 1695, an act was passed for
      borrowing one million upon an annuity of fourteen per cent., or £140,000
      a-year, for sixteen years. In 1691, an act was passed for borrowing a
      million upon annuities for lives, upon terms which, in the present times,
      would appear very advantageous; but the subscription was not filled up. In
      the following year, the deficiency was made good, by borrowing upon
      annuities for lives, at fourteen per cent. or a little more than seven
      years purchase. In 1695, the persons who had purchased those annuities
      were allowed to exchange them for others of ninety-six years, upon paying
      into the exchequer sixty-three pounds in the hundred; that is, the
      difference between fourteen per cent. for life, and fourteen per cent. for
      ninety-six years, was sold for sixty-three pounds, or for four and a-half
      years purchase. Such was the supposed instability of government, that even
      these terms procured few purchasers. In the reign of queen Anne, money
      was, upon different occasions, borrowed both upon annuities for lives, and
      upon annuities for terms of thirty-two, of eighty-nine, of ninety-eight,
      and of ninety-nine years. In 1719, the proprietors of the annuities for
      thirty-two years were induced to accept, in lieu of them, South-sea stock
      to the amount of eleven and a-half years purchase of the annuities,
      together with an additional quantity of stock, equal to the arrears which
      happened then to be due upon them. In 1720, the greater part of the other
      annuities for terms of years, both long and short, were subscribed into
      the same fund. The long annuities, at that time, amounted to £666,821:
      8:3½ a-year. On the 5th of January 1775, the remainder of them, or what
      was not subscribed at that time, amounted only to £136,453:12:8d.
    
      During the two wars which began in 1739 and in 1755, little money was
      borrowed, either upon annuities for terms of years, or upon those for
      lives. An annuity for ninety-eight or ninety-nine years, however, is worth
      nearly as much as a perpetuity, and should therefore, one might think, be
      a fund for borrowing nearly as much. But those who, in order to make
      family settlements, and to provide for remote futurity, buy into the
      public stocks, would not care to purchase into one of which the value was
      continually diminishing; and such people make a very considerable
      proportion, both of the proprietors and purchasers of stock. An annuity
      for a long term of years, therefore, though its intrinsic value may be
      very nearly the same with that of a perpetual annuity, will not find
      nearly the same number of purchasers. The subscribers to a new loan, who
      mean generally to sell their subscription as soon as possible, prefer
      greatly a perpetual annuity, redeemable by parliament, to an irredeemable
      annuity, for a long term of years, of only equal amount. The value of the
      former may be supposed always the same, or very nearly the same; and it
      makes, therefore, a more convenient transferable stock than the latter.
    
      During the two last-mentioned wars, annuities, either for terms of years
      or for lives, were seldom granted, but as premiums to the subscribers of a
      new loan, over and above the redeemable annuity or interest, upon the
      credit of which the loan was supposed to be made. They were granted, not
      as the proper fund upon which the money was borrowed, but as an additional
      encouragement to the lender.
    
      Annuities for lives have occasionally been granted in two different ways;
      either upon separate lives, or upon lots of lives, which, in French, are
      called tontines, from the name of their inventor. When annuities are
      granted upon separate lives, the death of every individual annuitant
      disburdens the public revenue, so far as it was affected by his annuity.
      When annuities are granted upon tontines, the liberation of the public
      revenue does not commence till the death of all the annuitants
      comprehended in one lot, which may sometimes consist of twenty or thirty
      persons, of whom the survivors succeed to the annuities of all those who
      die before them; the last survivor succeeding to the annuities of the
      whole lot. Upon the same revenue, more money can always be raised by
      tontines than by annuities for separate lives. An annuity, with a right of
      survivorship, is really worth more than an equal annuity for a separate
      life; and, from the confidence which every man naturally has in his own
      good fortune, the principle upon which is founded the success of all
      lotteries, such an annuity generally sells for something more than it is
      worth. In countries where it is usual for government to raise money by
      granting annuities, tontines are, upon this account, generally preferred
      to annuities for separate lives. The expedient which will raise most
      money, is almost always preferred to that which is likely to bring about,
      in the speediest manner, the liberation of the public revenue.
    
      In France, a much greater proportion of the public debts consists in
      annuities for lives than in England. According to a memoir presented by
      the parliament of Bourdeaux to the king, in 1764, the whole public debt of
      France is estimated at twenty-four hundred millions of livres; of which
      the capital, for which annuities for lives had been granted, is supposed
      to amount to three hundred millions, the eighth part of the whole public
      debt. The annuities themselves are computed to amount to thirty millions
      a-year, the fourth part of one hundred and twenty millions, the supposed
      interest of that whole debt. These estimations, I know very well, are not
      exact; but having been presented by so very respectable a body as
      approximations to the truth, they may, I apprehend, be considered as such.
      It is not the different degrees of anxiety in the two governments of
      France and England for the liberation of the public revenue, which
      occasions this difference in their respective modes of borrowing; it
      arises altogether from the different views and interests of the lenders.
    
      In England, the seat of government being in the greatest mercantile city
      in the world, the merchants are generally the people who advance money to
      government. By advancing it, they do not mean to diminish, but, on the
      contrary, to increase their mercantile capitals; and unless they expected
      to sell, with some profit, their share in the subscription for a new loan,
      they never would subscribe. But if, by advancing their money, they were to
      purchase, instead of perpetual annuities, annuities for lives only,
      whether their own or those of other people, they would not always be so
      likely to sell them with a profit. Annuities upon their own lives they
      would always sell with loss; because no man will give for an annuity upon
      the life of another, whose age and state of health are nearly the same
      with his own, the same price which he would give for one upon his own. An
      annuity upon the life of a third person, indeed, is, no doubt, of equal
      value to the buyer and the seller; but its real value begins to diminish
      from the moment it is granted, and continues to do so, more and more, as
      long as it subsists. It can never, therefore, make so convenient a
      transferable stock as a perpetual annuity, of which the real value may be
      supposed always the same, or very nearly the same.
    
      In France, the seat of government not being in a great mercantile city,
      merchants do not make so great a proportion of the people who advance
      money to government. The people concerned in the finances, the
      farmers-general, the receivers of the taxes which are not in farm, the
      court-bankers, etc. make the greater part of those who advance their money
      in all public exigencies. Such people are commonly men of mean birth, but
      of great wealth, and frequently of great pride. They are too proud to
      marry their equals, and women of quality disdain to marry them. They
      frequently resolve, therefore, to live bachelors; and having neither any
      families of their own, nor much regard for those of their relations, whom
      they are not always very fond of acknowledging, they desire only to live
      in splendour during their own time, and are not unwilling that their
      fortune should end with themselves. The number of rich people, besides,
      who are either averse to marry, or whose condition of life renders it
      either improper or inconvenient for them to do so, is much greater in
      France than in England. To such people, who have little or no care for
      posterity, nothing can be more convenient than to exchange their capital
      for a revenue, which is to last just as long, and no longer, than they
      wish it to do.
    
      The ordinary expense of the greater part of modern governments, in time of
      peace, being equal, or nearly equal, to their ordinary revenue, when war
      comes, they are both unwilling and unable to increase their revenue in
      proportion to the increase of their expense. They are unwilling, for fear
      of offending the people, who, by so great and so sudden an increase of
      taxes, would soon be disgusted with the war; and they are unable, from not
      well knowing what taxes would be sufficient to produce the revenue wanted.
      The facility of borrowing delivers them from the embarrassment which this
      fear and inability would otherwise occasion. By means of borrowing, they
      are enabled, with a very moderate increase of taxes, to raise, from year
      to year, money sufficient for carrying on the war; and by the practice of
      perpetual funding, they are enabled, with the smallest possible increase
      of taxes, to raise annually the largest possible sum of money. In great
      empires, the people who live in the capital, and in the provinces remote
      from the scene of action, feel, many of them, scarce any inconveniency
      from the war, but enjoy, at their ease, the amusement of reading in the
      newspapers the exploits of their own fleets and armies. To them this
      amusement compensates the small difference between the taxes which they
      pay on account of the war, and those which they had been accustomed to pay
      in time of peace. They are commonly dissatisfied with the return of peace,
      which puts an end to their amusement, and to a thousand visionary hopes of
      conquest and national glory, from a longer continuance of the war.
    
      The return of peace, indeed, seldom relieves them from the greater part of
      the taxes imposed during the war. These are mortgaged for the interest of
      the debt contracted, in order to carry it on. If, over and above paying
      the interest of this debt, and defraying the ordinary expense of
      government, the old revenue, together with the new taxes, produce some
      surplus revenue, it may, perhaps, be converted into a sinking fund for
      paying off the debt. But, in the first place, this sinking fund, even
      supposing it should be applied to no other purpose, is generally
      altogether inadequate for paying, in the course of any period during which
      it can reasonably be expected that peace should continue, the whole debt
      contracted during the war; and, in the second place, this fund is almost
      always applied to other purposes.
    
      The new taxes were imposed for the sole purpose of paying the interest of
      the money borrowed upon them. If they produce more, it is generally
      something which was neither intended nor expected, and is, therefore,
      seldom very considerable. Sinking funds have generally arisen, not so much
      from any surplus of the taxes which was over and above what was necessary
      for paying the interest or annuity originally charged upon them, as from a
      subsequent reduction of that interest; that of Holland in 1655, and that
      of the ecclesiastical state in 1685, were both formed in this manner.
      Hence the usual insufficiency of such funds.
    
      During the most profound peace, various events occur, which require an
      extraordinary expense; and government finds it always more convenient to
      defray this expense by misapplying the sinking fund, than by imposing a
      new tax. Every new tax is immediately felt more or less by the people. It
      occasions always some murmur, and meets with some opposition. The more
      taxes may have been multiplied, the higher they may have been raised upon
      every different subject of taxation; the more loudly the people complain
      of every new tax, the more difficult it becomes, too, either to find out
      new subjects of taxation, or to raise much higher the taxes already
      imposed upon the old. A momentary suspension of the payment of debt is not
      immediately felt by the people, and occasions neither murmur nor
      complaint. To borrow of the sinking fund is always an obvious and easy
      expedient for getting out of the present difficulty. The more the public
      debts may have been accumulated, the more necessary it may have become to
      study to reduce them; the more dangerous, the more ruinous it may be to
      misapply any part of the sinking fund; the less likely is the public debt
      to be reduced to any considerable degree, the more likely, the more
      certainly, is the sinking fund to be misapplied towards defraying all the
      extraordinary expenses which occur in time of peace. When a nation is
      already overburdened with taxes, nothing but the necessities of a new war,
      nothing but either the animosity of national vengeance, or the anxiety for
      national security, can induce the people to submit, with tolerable
      patience, to a new tax. Hence the usual misapplication of the sinking
      fund.
    
      In Great Britain, from the time that we had first recourse to the ruinous
      expedient of perpetual funding, the reduction of the public debt, in time
      of peace, has never borne any proportion to its accumulation in time of
      war. It was in the war which began in 1668, and was concluded by the
      treaty of Ryswick, in 1697, that the foundation of the present enormous
      debt of Great Britain was first laid.
    
      On the 31st of December 1697, the public debts of Great Britain, funded
      and unfunded, amounted to £21,515,742:13:8½. A great part of those debts
      had been contracted upon short anticipations, and some part upon annuities
      for lives; so that, before the 31st of December 1701, in less than four
      years, there had partly been paid off; and partly reverted to the public,
      the sum of £5,121,041:12:0¾d; a greater reduction of the public debt than
      has ever since been brought about in so short a period of time. The
      remaining debt, therefore, amounted only to £16,394,701:1:7¼d.
    
      In the war which began in 1702, and which was concluded by the treaty of
      Utrecht, the public debts were still more accumulated. On the 31st of
      December 1714, they amounted to £53,681,076:5:6½. The subscription into
      the South-sea fund, of the short and long annuities, increased the capital
      of the public debt; so that, on the 31st of December 1722, it amounted to
      £55,282,978:1:3 5/6. The reduction of the debt began in 1723, and went on
      so slowly, that, on the 31st of December 1739, during seventeen years-of
      profound peace, the whole sum paid off was no more than £8,328,554:17:11
      3/12, the capital of the public debt, at that time, amounting to
      £46,954,623:3:4 7/12.
    
      The Spanish war, which began in 1739, and the French war which soon
      followed it, occasioned a further increase of the debt, which, on the 31st
      of December 1748, after the war had been concluded by the treaty of
      Aix-la-Chapelle, amounted to £78,293,313:1:10¾. The most profound peace,
      of 17 years continuance, had taken no more than £8,328,354, 17:11¼ from
      it. A war, of less than nine years continuance, added £31,338,689:18: 6
      1/6 to it. {See James Postlethwaite’s History of the Public Revenue.}
    
      During the administration of Mr. Pelham, the interest of the public debt
      was reduced, or at least measures were taken for reducing it, from four to
      three per cent.; the sinking fund was increased, and some part of the
      public debt was paid off. In 1755, before the breaking out of the late
      war, the funded debt of Great Britain amounted to £72,289,675. On the 5th
      of January 1763, at the conclusion of the peace, the funded debt amounted
      debt to £122,603,336:8:2¼. The unfunded debt has been stated at
      £13,927,589:2:2. But the expense occasioned by the war did not end with
      the conclusion of the peace; so that, though on the 5th of January 1764,
      the funded debt was increased (partly by a new loan, and partly by funding
      a part of the unfunded debt) to £129,586,789:10:1¾, there still remained
      (according to the very well informed author of Considerations on the Trade
      and Finances of Great Britain) an unfunded debt, which was brought to
      account in that and the following year, of £9,975,017: 12:2 15/44d. In
      1764, therefore, the public debt of Great Britain, funded and unfunded
      together, amounted, according to this author, to £139,561,807:2:4. The
      annuities for lives, too, which had been granted as premiums to the
      subscribers to the new loans in 1757, estimated at fourteen years
      purchase, were valued at £472,500; and the annuities for long terms of
      years, granted as premiums likewise, in 1761 and 1762, estimated at
      twenty-seven and a-half years purchase, were valued at £6,826,875. During
      a peace of about seven years continuance, the prudent and truly patriotic
      administration of Mr. Pelham was not able to pay off an old debt of six
      millions. During a war of nearly the same continuance, a new debt of more
      than seventy-five millions was contracted.
    
      On the 5th of January 1775, the funded debt of Great Britain amounted to
      £124,996,086, 1:6¼d. The unfunded, exclusive of a large civil-list debt,
      to £4,150,236:3:11 7/8. Both together, to £129,146,322:5:6. According to
      this account, the whole debt paid off, during eleven years of profound
      peace, amounted only to £10,415,476:16:9 7/8. Even this small reduction of
      debt, however, has not been all made from the savings out of the ordinary
      revenue of the state. Several extraneous sums, altogether independent of
      that ordinary revenue, have contributed towards it. Amongst these we may
      reckon an additional shilling in the pound land tax, for three years; the
      two millions received from the East-India company, as indemnification for
      their territorial acquisitions; and the one hundred and ten thousand
      pounds received from the bank for the renewal of their charter. To these
      must be added several other sums, which, as they arose out of the late
      war, ought perhaps to be considered as deductions from the expenses of it.
      The principal are,
    

   The produce of French prizes..............    £690,449: 18: 9
   Composition for French prisoners.........      670,000:  0: 0

   What has been received from the sale
   of the ceded islands.........................   95,500:  0: 0

   Total, .....................................£1,455,949: 18: 9

    

      If we add to this sum the balance of the earl of Chatham’s and Mr.
      Calcraft’s accounts, and other army savings of the same kind, together
      with what has been received from the bank, the East-India company, and the
      additional shilling in the pound land tax, the whole must be a good deal
      more than five millions. The debt, therefore, which, since the peace, has
      been paid out of the savings from the ordinary revenue of the state, has
      not, one year with another, amounted to half a million a-year. The sinking
      fund has, no doubt, been considerably augmented since the peace, by the
      debt which had been paid off, by the reduction of the redeemable four per
      cents to three per cents, and by the annuities for lives which have fallen
      in; and, if peace were to continue, a million, perhaps, might now be
      annually spared out of it towards the discharge of the debt. Another
      million, accordingly, was paid in the course of last year; but at the same
      time, a large civil-list debt was left unpaid, and we are now involved in
      a new war, which, in its progress, may prove as expensive as any of our
      former wars. {It has proved more expensive than any one of our former
      wars, and has involved us in an additional debt of more than one hundred
      millions. During a profound peace of eleven years, little more than ten
      millions of debt was paid; during a war of seven years, more than one
      hundred millions was contracted.} The new debt which will probably be
      contracted before the end of the next campaign, may, perhaps, be nearly
      equal to all the old debt which has been paid off from the savings out of
      the ordinary revenue of the state. It would be altogether chimerical,
      therefore, to expect that the public debt should ever be completely
      discharged, by any savings which are likely to be made from that ordinary
      revenue as it stands at present.
    
      The public funds of the different indebted nations of Europe, particularly
      those of England, have, by one author, been represented as the
      accumulation of a great capital, superadded to the other capital of the
      country, by means of which its trade is extended, its manufactures are
      multiplied, and its lands cultivated and improved, much beyond what they
      could have been by means of that other capital only. He does not consider
      that the capital which the first creditors of the public advanced to
      government, was, from the moment in which he advanced it, a certain
      portion of the annual produce, turned away from serving in the function of
      a capital, to serve in that of a revenue; from maintaining productive
      labourers, to maintain unproductive ones, and to be spent and wasted,
      generally in the course of the year, without even the hope of any future
      reproduction. In return for the capital which they advanced, they
      obtained, indeed, an annuity of the public funds, in most cases, of more
      than equal value. This annuity, no doubt, replaced to them their capital,
      and enabled them to carry on their trade and business to the same, or,
      perhaps, to a greater extent than before; that is, they were enabled,
      either to borrow of other people a new capital, upon the credit of this
      annuity or, by selling it, to get from other people a new capital of their
      own, equal, or superior, to that which they had advanced to government.
      This new capital, however, which they in this manner either bought or
      borrowed of other people, must have existed in the country before, and
      must have been employed, as all capitals are, in maintaining productive
      labour. When it came into the hands of those who had advanced their money
      to government, though it was, in some respects, a new capital to them, it
      was not so to the country, but was only a capital withdrawn from certain
      employments, in order to be turned towards others. Though it replaced to
      them what they had advanced to government, it did not replace it to the
      country. Had they not advanced this capital to government, there would
      have been in the country two capitals, two portions of the annual produce,
      instead of one, employed in maintaining productive labour.
    
      When, for defraying the expense of government, a revenue is raised within
      the year, from the produce of free or unmortgaged taxes, a certain portion
      of the revenue of private people is only turned away from maintaining one
      species of unproductive labour, towards maintaining another. Some part of
      what they pay in those taxes, might, no doubt, have been accumulated into
      capital, and consequently employed in maintaining productive labour; but
      the greater part would probably have been spent, and consequently employed
      in maintaining unproductive labour. The public expense, however, when
      defrayed in this manner, no doubt hinders, more or less, the further
      accumulation of new capital; but it does not necessarily occasion the
      destruction of any actually-existing capital.
    
      When the public expense is defrayed by funding, it is defrayed by the
      annual destruction of some capital which had before existed in the
      country; by the perversion of some portion of the annual produce which had
      before been destined for the maintenance of productive labour, towards
      that of unproductive labour. As in this case, however, the taxes are
      lighter than they would have been, had a revenue sufficient for defraying
      the same expense been raised within the year; the private revenue of
      individuals is necessarily less burdened, and consequently their ability
      to save and accumulate some part of that revenue into capital, is a good
      deal less impaired. If the method of funding destroys more old capital,
      it, at the same time, hinders less the accumulation or acquisition of new
      capital, than that of defraying the public expense by a revenue raised
      within the year. Under the system of funding, the frugality and industry
      of private people can more easily repair the breaches which the waste and
      extravagance of government may occasionally make in the general capital of
      the society.
    
      It is only during the continuance of war, however, that the system of
      funding has this advantage over the other system. Were the expense of war
      to be defrayed always by a revenue raised within the year, the taxes from
      which that extraordinary revenue was drawn would last no longer than the
      war. The ability of private people to accumulate, though less during the
      war, would have been greater during the peace, than under the system of
      funding. War would not necessarily have occasioned the destruction of any
      old capitals, and peace would have occasioned the accumulation of many
      more new. Wars would, in general, be more speedily concluded, and less
      wantonly undertaken. The people feeling, during continuance of war, the
      complete burden of it, would soon grow weary of it; and government, in
      order to humour them, would not be under the necessity of carrying it on
      longer than it was necessary to do so. The foresight of the heavy and
      unavoidable burdens of war would hinder the people from wantonly calling
      for it when there was no real or solid interest to fight for. The seasons
      during which the ability of private people to accumulate was somewhat
      impaired, would occur more rarely, and be of shorter continuance. Those,
      on the contrary, during which that ability was in the highest vigour would
      be of much longer duration than they can well be under the system of
      funding.
    
      When funding, besides, has made a certain progress, the multiplication of
      taxes which it brings along with it, sometimes impairs as much the ability
      of private people to accumulate, even in time of peace, as the other
      system would in time of war. The peace revenue of Great Britain amounts at
      present to more than ten millions a-year. If free and unmortgaged, it
      might be sufficient, with proper management, and without contracting a
      shilling of new debt, to carry on the most vigorous war. The private
      revenue of the inhabitants of Great Britain is at present as much
      incumbered in time of peace, their ability to accumulate is as much
      impaired, as it would have been in the time of the most expensive war, had
      the pernicious system of funding never been adopted.
    
      In the payment of the interest of the public debt, it has been said, it is
      the right hand which pays the left. The money does not go out of the
      country. It is only a part of the revenue of one set of the inhabitants
      which is transferred to another; and the nation is not a farthing the
      poorer. This apology is founded altogether in the sophistry of the
      mercantile system; and, after the long examination which I have already
      bestowed upon that system, it may, perhaps, be unnecessary to say anything
      further about it. It supposes, besides, that the whole public debt is
      owing to the inhabitants of the country, which happens not to be true; the
      Dutch, as well as several other foreign nations, having a very
      considerable share in our public funds. But though the whole debt were
      owing to the inhabitants of the country, it would not, upon that account,
      be less pernicious.
    
      Land and capital stock are the two original sources of all revenue, both
      private and public. Capital stock pays the wages of productive labour,
      whether employed in agriculture, manufactures, or commerce. The management
      of those two original sources of revenue belongs to two different sets of
      people; the proprietors of land, and the owners or employers of capital
      stock.
    
      The proprietor of land is interested, for the sake of his own revenue, to
      keep his estate in as good condition as he can, by building and repairing
      his tenants houses, by making and maintaining the necessary drains and
      inclosures, and all those other expensive improvements which it properly
      belongs to the landlord to make and maintain. But, by different land
      taxes, the revenue of the landlord may be so much diminished, and, by
      different duties upon the necessaries and conveniencies of life, that
      diminished revenue may be rendered of so little real value, that he may
      find himself altogether unable to make or maintain those expensive
      improvements. When the landlord, however, ceases to do his part, it is
      altogether impossible that the tenant should continue to do his. As the
      distress of the landlord increases, the agriculture of the country must
      necessarily decline.
    
      When, by different taxes upon the necessaries and conveniencies of life,
      the owners and employers of capital stock find, that whatever revenue they
      derive from it, will not, in a particular country, purchase the same
      quantity of those necessaries and conveniencies which an equal revenue
      would in almost any other, they will be disposed to remove to some other.
      And when, in order to raise those taxes, all or the greater part of
      merchants and manufacturers, that is, all or the greater part of the
      employers of great capitals, come to be continually exposed to the
      mortifying and vexatious visits of the tax-gatherers, this disposition to
      remove will soon be changed into an actual removing. The industry of the
      country will necessarily fall with the removal of the capital which
      supported it, and the ruin of trade and manufactures will follow the
      declension of agriculture.
    
      To transfer from the owners of those two great sources of revenue, land,
      and capital stock, from the persons immediately interested in the good
      condition of every particular portion of land, and in the good management
      of every particular portion of capital stock, to another set of persons
      (the creditors of the public, who have no such particular interest ), the
      greater part of the revenue arising from either, must, in the long-run,
      occasion both the neglect of land, and the waste or removal of capital
      stock. A creditor of the public has, no doubt, a general interest in the
      prosperity of the agriculture, manufactures, and commerce of the country;
      and consequently in the good condition of its land, and in the good
      management of its capital stock. Should there be any general failure or
      declension in any of these things, the produce of the different taxes
      might no longer be sufficient to pay him the annuity or interest which is
      due to him. But a creditor of the public, considered merely as such, has
      no interest in the good condition of any particular portion of land, or in
      the good management of any particular portion of capital stock. As a
      creditor of the public, he has no knowledge of any such particular
      portion. He has no inspection of it. He can have no care about it. Its
      ruin may in some cases be unknown to him, and cannot directly affect him.
    
      The practice of funding has gradually enfeebled every state which has
      adopted it. The Italian republics seem to have begun it. Genoa and Venice,
      the only two remaining which can pretend to an independent existence, have
      both been enfeebled by it. Spain seems to have learned the practice from
      the Italian republics, and (its taxes being probably less judicious than
      theirs) it has, in proportion to its natural strength, been-still more
      enfeebled. The debts of Spain are of very old standing. It was deeply in
      debt before the end of the sixteenth century, about a hundred years before
      England owed a shilling. France, notwithstanding all its natural
      resources, languishes under an oppressive load of the same kind. The
      republic of the United Provinces is as much enfeebled by its debts as
      either Genoa or Venice. Is it likely that, in Great Britain alone, a
      practice, which has brought either weakness or dissolution into every
      other country, should prove altogether innocent?
    
      The system of taxation established in those different countries, it may be
      said, is inferior to that of England. I believe it is so. But it ought to
      be remembered, that when the wisest government has exhausted all the
      proper subjects of taxation, it must, in cases of urgent necessity, have
      recourse to improper ones. The wise republic of Holland has, upon some
      occasions, been obliged to have recourse to taxes as inconvenient as the
      greater part of those of Spain. Another war, begun before any considerable
      liberation of the public revenue had been brought about, and growing in
      its progress as expensive as the last war, may, from irresistible
      necessity, render the British system of taxation as oppressive as that of
      Holland, or even as that of Spain. To the honour of our present system of
      taxation, indeed, it has hitherto given so little embarrassment to
      industry, that, during the course even of the most expensive wars, the
      frugality and good conduct of individuals seem to have been able, by
      saving and accumulation, to repair all the breaches which the waste and
      extravagance of government had made in the general capital of the society.
      At the conclusion of the late war, the most expensive that Great Britain
      ever waged, her agriculture was as flourishing, her manufacturers as
      numerous and as fully employed, and her commerce as extensive, as they had
      ever been before. The capital, therefore, which supported all those
      different branches of industry, must have been equal to what it had ever
      been before. Since the peace, agriculture has been still further improved;
      the rents of houses have risen in every town and village of the country, a
      proof of the increasing wealth and revenue of the people; and the annual
      amount of the greater part of the old taxes, of the principal branches of
      the excise and customs, in particular, has been continually increasing, an
      equally clear proof of an increasing consumption, and consequently of an
      increasing produce, which could alone support that consumption. Great
      Britain seems to support with ease, a burden which, half a century ago,
      nobody believed her capable of supporting, Let us not, however, upon this
      account, rashly conclude that she is capable of supporting any burden; nor
      even be too confident that she could support, without great distress, a
      burden a little greater than what has already been laid upon her.
    
      When national debts have once been accumulated to a certain degree, there
      is scarce, I believe, a single instance of their having been fairly and
      completely paid. The liberation of the public revenue, if it has ever been
      brought about at all, has always been brought about by a bankruptcy;
      sometimes by an avowed one, though frequently by a pretended payment.
    
      The raising of the denomination of the coin has been the most usual
      expedient by which a real public bankruptcy has been disguised under the
      appearance of a pretended payment. If a sixpence, for example, should,
      either by act of parliament or royal proclamation, be raised to the
      denomination of a shilling, and twenty sixpences to that of a pound
      sterling; the person who, under the old denomination, had borrowed twenty
      shillings, or near four ounces of silver, would, under the new, pay with
      twenty sixpences, or with something less than two ounces. A national debt
      of about a hundred and twenty-eight millions, near the capital of the
      funded and unfunded debt of Great Britain, might, in this manner, be paid
      with about sixty-four millions of our present money. It would, indeed, be
      a pretended payment only, and the creditors of the public would really be
      defrauded of ten shillings in the pound of what was due to them. The
      calamity, too, would extend much further than to the creditors of the
      public, and those of every private person would suffer a proportionable
      loss; and this without any advantage, but in most cases with a great
      additional loss, to the creditors of the public. If the creditors of the
      public, indeed, were generally much in debt to other people, they might in
      some measure compensate their loss by paying their creditors in the same
      coin in which the public had paid them. But in most countries, the
      creditors of the public are, the greater part of them, wealthy people, who
      stand more in the relation of creditors than in that of debtors, towards
      the rest of their fellow citizens. A pretended payment of this kind,
      therefore, instead of alleviating, aggravates, in most cases, the loss of
      the creditors of the public; and, without any advantage to the public,
      extends the calamity to a great number of other innocent people. It
      occasions a general and most pernicious subversion of the fortunes of
      private people; enriching, in most cases, the idle and profuse debtor, at
      the expense of the industrious and frugal creditor; and transporting a
      great part of the national capital from the hands which were likely to
      increase and improve it, to those who are likely to dissipate and destroy
      it. When it becomes necessary for a state to declare itself bankrupt, in
      the same manner as when it becomes necessary for an individual to do so, a
      fair, open, and avowed bankruptcy, is always the measure which is both
      least dishonourable to the debtor, and least hurtful to the creditor. The
      honour of a state is surely very poorly provided for, when, in order to
      cover the disgrace of a real bankruptcy, it has recourse to a juggling
      trick of this kind, so easily seen through, and at the same time so
      extremely pernicious.
    
      Almost all states, however, ancient as well as modern, when reduced to
      this necessity, have, upon some occasions, played this very juggling
      trick. The Romans, at the end of the first Punic war, reduced the As, the
      coin or denomination by which they computed the value of all their other
      coins, from containing twelve ounces of copper, to contain only two
      ounces; that is, they raised two ounces of copper to a denomination which
      had always before expressed the value of twelve ounces. The republic was,
      in this manner, enabled to pay the great debts which it had contracted
      with the sixth part of what it really owed. So sudden and so great a
      bankruptcy, we should in the present times be apt to imagine, must have
      occasioned a very violent popular clamour. It does not appear to have
      occasioned any. The law which enacted it was, like all other laws relating
      to the coin, introduced and carried through the assembly of the people by
      a tribune, and was probably a very popular law. In Rome, as in all other
      ancient republics, the poor people were constantly in debt to the rich and
      the great, who, in order to secure their votes at the annual elections,
      used to lend them money at exorbitant interest, which, being never paid,
      soon accumulated into a sum too great either for the debtor to pay, or for
      any body else to pay for him. The debtor, for fear of a very severe
      execution, was obliged, without any further gratuity, to vote for the
      candidate whom the creditor recommended. In spite of all the laws against
      bribery and corruption, the bounty of the candidates, together with the
      occasional distributions of coin which were ordered by the senate, were
      the principal funds from which, during the latter times of the Roman
      republic, the poorer citizens derived their subsistence. To deliver
      themselves from this subjection to their creditors, the poorer citizens
      were continually calling out, either for an entire abolition of debts, or
      for what they called new tables; that is, for a law which should entitle
      them to a complete acquittance, upon paying only a certain proportion of
      their accumulated debts. The law which reduced the coin of all
      denominations to a sixth part of its former value, as it enabled them to
      pay their debts with a sixth part of what they really owed, was equivalent
      to the most advantageous new tables. In order to satisfy the people, the
      rich and the great were, upon several different occasions, obliged to
      consent to laws, both for abolishing debts, and for introducing new
      tables; and they probably were induced to consent to this law, partly for
      the same reason, and partly that, by liberating the public revenue, they
      might restore vigour to that government, of which they themselves had the
      principal direction. An operation of this kind would at once reduce a debt
      of £128,000,000 to £21,333,333:6:8. In the course of the second Punic war,
      the As was still further reduced, first, from two ounces of copper to one
      ounce, and afterwards from one ounce to half an ounce; that is, to the
      twenty-fourth part of its original value. By combining the three Roman
      operations into one, a debt of a hundred and twenty-eight millions of our
      present money, might in this manner be reduced all at once to a debt of
      £5,333,333:6:8. Even the enormous debt of Great Britain might in this
      manner soon be paid.
    
      By means of such expedients, the coin of, I believe, all nations, has been
      gradually reduced more and more below its original value, and the same
      nominal sum has been gradually brought to contain a smaller and a smaller
      quantity of silver.
    
      Nations have sometimes, for the same purpose, adulterated the standard of
      their coin; that is, have mixed a greater quantity of alloy in it. If in
      the pound weight of our silver coin, for example, instead of eighteen
      penny-weight, according to the present standard, there were mixed eight
      ounces of alloy; a pound sterling, or twenty shillings of such coin, would
      be worth little more than six shillings and eightpence of our present
      money. The quantity of silver contained in six shillings and eightpence of
      our present money, would thus be raised very nearly to the denomination of
      a pound sterling. The adulteration of the standard has exactly the same
      effect with what the French call an augmentation, or a direct raising of
      the denomination of the coin.
    
      An augmentation, or a direct raising of the denomination of the coin,
      always is, and from its nature must be, an open and avowed operation. By
      means of it, pieces of a smaller weight and bulk are called by the same
      name, which had before been given to pieces of a greater weight and bulk.
      The adulteration of the standard, on the contrary, has generally been a
      concealed operation. By means of it, pieces are issued from the mint, of
      the same denomination, and, as nearly as could be contrived, of the same
      weight, bulk, and appearance, with pieces which had been current before of
      much greater value. When king John of France, {See Du Cange Glossary, voce
      Moneta; the Benedictine Edition.} in order to pay his debts, adulterated
      his coin, all the officers of his mint were sworn to secrecy. Both
      operations are unjust. But a simple augmentation is an injustice of open
      violence; whereas an adulteration is an injustice of treacherous fraud.
      This latter operation, therefore, as soon as it has been discovered, and
      it could never be concealed very long, has always excited much greater
      indignation than the former. The coin, after any considerable
      augmentation, has very seldom been brought back to its former weight; but
      after the greatest adulterations, it has almost always been brought back
      to its former fineness. It has scarce ever happened, that the fury and
      indignation of the people could otherwise be appeased.
    
      In the end of the reign of Henry VIII., and in the beginning of that of
      Edward VI., the English coin was not only raised in its denomination, but
      adulterated in its standard. The like frauds were practised in Scotland
      during the minority of James VI. They have occasionally been practised in
      most other countries.
    
      That the public revenue of Great Britain can never be completely
      liberated, or even that any considerable progress can ever be made towards
      that liberation, while the surplus of that revenue, or what is over and
      above defraying the annual expense of the peace establishment, is so very
      small, it seems altogether in vain to expect. That liberation, it is
      evident, can never be brought about, without either some very considerable
      augmentation of the public revenue, or some equally considerable reduction
      of the public expense.
    
      A more equal land tax, a more equal tax upon the rent of houses, and such
      alterations in the present system of customs and excise as those which
      have been mentioned in the foregoing chapter, might, perhaps, without
      increasing the burden of the greater part of the people, but only
      distributing the weight of it more equally upon the whole, produce a
      considerable augmentation of revenue. The most sanguine projector,
      however, could scarce flatter himself, that any augmentation of this kind
      would be such as could give any reasonable hopes, either of liberating the
      public revenue altogether, or even of making such progress towards that
      liberation in time of peace, as either to prevent or to compensate the
      further accumulation of the public debt in the next war.
    
      By extending the British system of taxation to all the different provinces
      of the empire, inhabited by people either of British or European
      extraction, a much greater augmentation of revenue might be expected.
      This, however, could scarce, perhaps, be done, consistently with the
      principles of the British constitution, without admitting into the British
      parliament, or, if you will, into the states-general of the British
      empire, a fair and equal representation of all those different provinces;
      that of each province bearing the same proportion to the produce of its
      taxes, as the representation of Great Britain might bear to the produce of
      the taxes levied upon Great Britain. The private interest of many powerful
      individuals, the confirmed prejudices of great bodies of people, seem,
      indeed, at present, to oppose to so great a change, such obstacles as it
      may be very difficult, perhaps altogether impossible, to surmount.
      Without, however, pretending to determine whether such a union be
      practicable or impracticable, it may not, perhaps, be improper, in a
      speculative work of this kind, to consider how far the British system of
      taxation might be applicable to all the different provinces of the empire;
      what revenue might be expected from it, if so applied; and in what manner
      a general union of this kind might be likely to affect the happiness and
      prosperity of the different provinces comprehended within it. Such a
      speculation, can, at worst, be regarded but as a new Utopia, less amusing,
      certainly, but no more useless and chimerical than the old one.
    
      The land-tax, the stamp duties, and the different duties of customs and
      excise, constitute the four principal branches of the British taxes.
    
      Ireland is certainly as able, and our American and West India plantations
      more able, to pay a land tax, than Great Britain. Where the landlord is
      subject neither to tythe nor poor’s rate, he must certainly be more able
      to pay such a tax, than where he is subject to both those other burdens.
      The tythe, where there is no modus, and where it is levied in kind,
      diminishes more what would otherwise be the rent of the landlord, than a
      land tax which really amounted to five shillings in the pound. Such a
      tythe will be found, in most cases, to amount to more than a fourth part
      of the real rent of the land, or of what remains after replacing
      completely the capital of the farmer, together with his reasonable profit.
      If all moduses and all impropriations were taken away, the complete church
      tythe of Great Britain and Ireland could not well be estimated at less
      than six or seven millions. If there was no tythe either in Great Britain
      or Ireland, the landlords could afford to pay six or seven millions
      additional land tax, without being more burdened than a very great part of
      them are at present. America pays no tythe, and could, therefore, very
      well afford to pay a land tax. The lands in America and the West Indies,
      indeed, are, in general, not tenanted nor leased out to farmers. They
      could not, therefore, be assessed according to any rent roll. But neither
      were the lands of Great Britain, in the 4th of William and Mary, assessed
      according to any rent roll, but according to a very loose and inaccurate
      estimation. The lands in America might be assessed either in the same
      manner, or according to an equitable valuation, in consequence of an
      accurate survey, like that which was lately made in the Milanese, and in
      the dominions of Austria, Prussia, and Sardinia.
    
      Stamp duties, it is evident, might be levied without any variation, in all
      countries where the forms of law process, and the deeds by which property,
      both real and personal, is transferred, are the same, or nearly the same.
    
      The extension of the custom-house laws of Great Britain to Ireland and the
      plantations, provided it was accompanied, as in justice it ought to be,
      with an extension of the freedom of trade, would be in the highest degree
      advantageous to both. All the invidious restraints which at present
      oppress the trade of Ireland, the distinction between the enumerated and
      non-enumerated commodities of America, would be entirely at an end. The
      countries north of Cape Finisterre would be as open to every part of the
      produce of America, as those south of that cape are to some parts of that
      produce at present. The trade between all the different parts of the
      British empire would, in consequence of this uniformity in the
      custom-house laws, be as free as the coasting trade of Great Britain is at
      present. The British empire would thus afford, within itself, an immense
      internal market for every part of the produce of all its different
      provinces. So great an extension of market would soon compensate, both to
      Ireland and the plantations, all that they could suffer from the increase
      of the duties of customs.
    
      The excise is the only part of the British system of taxation, which would
      require to be varied in any respect, according as it was applied to the
      different provinces of the empire. It might be applied to Ireland without
      any variation; the produce and consumption of that kingdom being exactly
      of the same nature with those of Great Britain. In its application to
      America and the West Indies, of which the produce and consumption are so
      very different from those of Great Britain, some modification might be
      necessary, in the same manner as in its application to the cyder and beer
      counties of England.
    
      A fermented liquor, for example, which is called beer, but which, as it is
      made of molasses, bears very little resemblance to our beer, makes a
      considerable part of the common drink of the people in America. This
      liquor, as it can be kept only for a few days, cannot, like our beer, be
      prepared and stored up for sale in great breweries; but every private
      family must brew it for their own use, in the same manner as they cook
      their victuals. But to subject every private family to the odious visits
      and examination of the tax-gatherers, in the same manner as we subject the
      keepers of ale-houses and the brewers for public sale, would be altogether
      inconsistent with liberty. If, for the sake of equality, it was thought
      necessary to lay a tax upon this liquor, it might be taxed by taxing the
      material of which it is made, either at the place of manufacture, or, if
      the circumstances of the trade rendered such an excise improper, by laying
      a duty upon its importation into the colony in which it was to be
      consumed. Besides the duty of one penny a-gallon imposed by the British
      parliament upon the importation of molasses into America, there is a
      provincial tax of this kind upon their importation into Massachusetts Bay,
      in ships belonging to any other colony, of eight-pence the hogshead; and
      another upon their importation from the northern colonies into South
      Carolina, of five-pence the gallon. Or, if neither of these methods was
      found convenient, each family might compound for its consumption of this
      liquor, either according to the number of persons of which it consisted,
      in the same manner as private families compound for the malt tax in
      England; or according to the different ages and sexes of those persons, in
      the same manner as several different taxes are levied in Holland; or,
      nearly as Sir Matthew Decker proposes, that all taxes upon consumable
      commodities should be levied in England. This mode of taxation, it has
      already been observed, when applied to objects of a speedy consumption, is
      not a very convenient one. It might be adopted, however, in cases where no
      better could be done.
    
      Sugar, rum, and tobacco, are commodities which are nowhere necessaries of
      life, which are become objects of almost universal consumption, and which
      are, therefore, extremely proper subjects of taxation. If a union with the
      colonies were to take place, those commodities might be taxed, either
      before they go out of the hands of the manufacturer or grower; or, if this
      mode of taxation did not suit the circumstances of those persons, they
      might be deposited in public warehouses, both at the place of manufacture,
      and at all the different ports of the empire, to which they might
      afterwards be transported, to remain there, under the joint custody of the
      owner and the revenue officer, till such time as they should be delivered
      out, either to the consumer, to the merchant-retailer for home
      consumption, or to the merchant-exporter; the tax not to be advanced till
      such delivery. When delivered out for exportation, to go duty-free, upon
      proper security being given, that they should really be exported out of
      the empire. These are, perhaps, the principal commodities, with regard to
      which the union with the colonies might require some considerable change
      in the present system of British taxation.
    
      What might be the amount of the revenue which this system of taxation,
      extended to all the different provinces of the empire, might produce, it
      must, no doubt, be altogether impossible to ascertain with tolerable
      exactness. By means of this system, there is annually levied in Great
      Britain, upon less than eight millions of people, more than ten millions
      of revenue. Ireland contains more than two millions of people, and,
      according to the accounts laid before the congress, the twelve associated
      provinces of America contain more than three. Those accounts, however, may
      have been exaggerated, in order, perhaps, either to encourage their own
      people, or to intimidate those of this country; and we shall suppose,
      therefore, that our North American and West Indian colonies, taken
      together, contain no more than three millions; or that the whole British
      empire, in Europe and America, contains no more than thirteen millions of
      inhabitants. If, upon less than eight millions of inhabitants, this system
      of taxation raises a revenue of more than ten millions sterling; it ought,
      upon thirteen millions of inhabitants, to raise a revenue of more than
      sixteen millions two hundred and fifty thousand pounds sterling. From this
      revenue, supposing that this system could produce it, must be deducted the
      revenue usually raised in Ireland and the plantations, for defraying the
      expense of the respective civil governments. The expense of the civil and
      military establishment of Ireland, together with the interest of the
      public debt, amounts, at a medium of the two years which ended March 1775,
      to something less than seven hundred and fifty thousand pounds a year. By
      a very exact account of the revenue of the principal colonies of America
      and the West Indies, it amounted, before the commencement of the present
      disturbances, to a hundred and forty-one thousand eight hundred pounds. In
      this account, however, the revenue of Maryland, of North Carolina, and of
      all our late acquisitions, both upon the continent, and in the islands, is
      omitted; which may, perhaps, make a difference of thirty or forty thousand
      pounds. For the sake of even numbers, therefore, let us suppose that the
      revenue necessary for supporting the civil government of Ireland and the
      plantations may amount to a million. There would remain, consequently, a
      revenue of fifteen millions two hundred and fifty thousand pounds, to be
      applied towards defraying the general expense of the empire, and towards
      paying the public debt. But if, from the present revenue of Great Britain,
      a million could, in peaceable times, be spared towards the payment of that
      debt, six millions two hundred and fifty thousand pounds could very well
      be spared from this improved revenue. This great sinking fund, too, might
      be augmented every year by the interest of the debt which had been
      discharged the year before; and might, in this manner, increase so very
      rapidly, as to be sufficient in a few years to discharge the whole debt,
      and thus to restore completely the at-present debilitated and languishing
      vigour of the empire. In the meantime, the people might be relieved from
      some of the most burdensome taxes; from those which are imposed either
      upon the necessaries of life, or upon the materials of manufacture. The
      labouring poor would thus be enabled to live better, to work cheaper, and
      to send their goods cheaper to market. The cheapness of their goods would
      increase the demand for them, and consequently for the labour of those who
      produced them. This increase in the demand for labour would both increase
      the numbers, and improve the circumstances of the labouring poor. Their
      consumption would increase, and, together with it, the revenue arising
      from all those articles of their consumption upon which the taxes might be
      allowed to remain.
    
      The revenue arising from this system of taxation, however, might not
      immediately increase in proportion to the number of people who were
      subjected to it. Great indulgence would for some time be due to those
      provinces of the empire which were thus subjected to burdens to which they
      had not before been accustomed; and even when the same taxes came to be
      levied everywhere as exactly as possible, they would not everywhere
      produce a revenue proportioned to the numbers of the people. In a poor
      country, the consumption of the principal commodities subject to the
      duties of customs and excise, is very small; and in a thinly inhabited
      country, the opportunities of smuggling are very great. The consumption of
      malt liquors among the inferior ranks of people in Scotland is very small;
      and the excise upon malt, beer, and ale, produces less there than in
      England, in proportion to the numbers of the people and the rate of the
      duties, which upon malt is different, on account of a supposed difference
      of quality. In these particular branches of the excise, there is not, I
      apprehend, much more smuggling in the one country than in the other. The
      duties upon the distillery, and the greater part of the duties of customs,
      in proportion to the numbers of people in the respective countries,
      produce less in Scotland than in England, not only on account of the
      smaller consumption of the taxed commodities, but of the much greater
      facility of smuggling. In Ireland, the inferior ranks of people are still
      poorer than in Scotland, and many parts of the country are almost as
      thinly inhabited. In Ireland, therefore, the consumption of the taxed
      commodities might, in proportion to the number of the people, be still
      less than in Scotland, and the facility of smuggling nearly the same. In
      America and the West Indies, the white people, even of the lowest rank,
      are in much better circumstances than those of the same rank in England;
      and their consumption of all the luxuries in which they usually indulge
      themselves, is probably much greater. The blacks, indeed, who make the
      greater part of the inhabitants, both of the southern colonies upon the
      continent and of the West India islands, as they are in a state of
      slavery, are, no doubt, in a worse condition than the poorest people
      either in Scotland or Ireland. We must not, however, upon that account,
      imagine that they are worse fed, or that their consumption of articles
      which might be subjected to moderate duties, is less than that even of the
      lower ranks of people in England. In order that they may work well, it is
      the interest of their master that they should be fed well, and kept in
      good heart, in the same manner as it is his interest that his working
      cattle should be so. The blacks, accordingly, have almost everywhere their
      allowance of rum, and of molasses or spruce-beer, in the same manner as
      the white servants; and this allowance would not probably be withdrawn,
      though those articles should be subjected to moderate duties. The
      consumption of the taxed commodities, therefore, in proportion to the
      number of inhabitants, would probably be as great in America and the West
      Indies as in any part of the British empire. The opportunities of
      smuggling, indeed, would be much greater; America, in proportion to the
      extent of the country, being much more thinly inhabited than either
      Scotland or Ireland. If the revenue, however, which is at present raised
      by the different duties upon malt and malt liquors, were to be levied by a
      single duty upon malt, the opportunity of smuggling in the most important
      branch of the excise would be almost entirely taken away; and if the
      duties of customs, instead of being imposed upon almost all the different
      articles of importation, were confined to a few of the most general use
      and consumption, and if the levying of those duties were subjected to the
      excise laws, the opportunity of smuggling, though not so entirely taken
      away, would be very much diminished. In consequence of those two
      apparently very simple and easy alterations, the duties of customs and
      excise might probably produce a revenue as great, in proportion to the
      consumption of the most thinly inhabited province, as they do at present,
      in proportion to that of the most populous.
    
      The Americans, it has been said, indeed, have no gold or silver money, the
      interior commerce of the country being carried on by a paper currency; and
      the gold and silver, which occasionally come among them, being all sent to
      Great Britain, in return for the commodities which they receive from us.
      But without gold and silver, it is added, there is no possibility of
      paying taxes. We already get all the gold and silver which they have. How
      is it possible to draw from them what they have not?
    
      The present scarcity of gold and silver money in America, is not the
      effect of the poverty of that country, or of the inability of the people
      there to purchase those metals. In a country where the wages of labour are
      so much higher, and the price of provisions so much lower than in England,
      the greater part of the people must surely have wherewithal to purchase a
      greater quantity, if it were either necessary or convenient for them to do
      so. The scarcity of those metals, therefore, must be the effect of choice,
      and not of necessity.
    
      It is for transacting either domestic or foreign business, that gold or
      silver money is either necessary or convenient.
    
      The domestic business of every country, it has been shewn in the second
      book of this Inquiry, may, at least in peaceable times, be transacted by
      means of a paper currency, with nearly the same degree of conveniency as
      by gold and silver money. It is convenient for the Americans, who could
      always employ with profit, in the improvement of their lands, a greater
      stock than they can easily get, to save as much as possible the expense of
      so costly an instrument of commerce as gold and silver; and rather to
      employ that part of their surplus produce which would be necessary for
      purchasing those metals, in purchasing the instruments of trade, the
      materials of clothing, several parts of household furniture, and the iron
      work necessary for building and extending their settlements and
      plantations; in purchasing not dead stock, but active and productive
      stock. The colony governments find it for their interest to supply the
      people with such a quantity of paper money as is fully sufficient, and
      generally more than sufficient, for transacting their domestic business.
      Some of those governments, that of Pennsylvania, particularly, derive a
      revenue from lending this paper money to their subjects, at an interest of
      so much per cent. Others, like that of Massachusetts Bay, advance, upon
      extraordinary emergencies, a paper money of this kind for defraying the
      public expense; and afterwards, when it suits the conveniency of the
      colony, redeem it at the depreciated value to which it gradually falls. In
      1747, {See Hutchinson’s History of Massachusetts Bay vol. ii. page 436 et
      seq.} that colony paid in this manner the greater part of its public
      debts, with the tenth part of the money for which its bills had been
      granted. It suits the conveniency of the planters, to save the expense of
      employing gold and silver money in their domestic transactions; and it
      suits the conveniency of the colony governments, to supply them with a
      medium, which, though attended with some very considerable disadvantages,
      enables them to save that expense. The redundancy of paper money
      necessarily banishes gold and silver from the domestic transactions of the
      colonies, for the same reason that it has banished those metals from the
      greater part of the domestic transactions in Scotland; and in both
      countries, it is not the poverty, but the enterprizing and projecting
      spirit of the people, their desire of employing all the stock which they
      can get, as active and productive stock, which has occasioned this
      redundancy of paper money.
    
      In the exterior commerce which the different colonies carry on with Great
      Britain, gold and silver are more or less employed, exactly in proportion
      as they are more or less necessary. Where those metals are not necessary,
      they seldom appear. Where they are necessary, they are generally found.
    
      In the commerce between Great Britain and the tobacco colonies, the
      British goods are generally advanced to the colonists at a pretty long
      credit, and are afterwards paid for in tobacco, rated at a certain price.
      It is more convenient for the colonists to pay in tobacco than in gold and
      silver. It would be more convenient for any merchant to pay for the goods
      which his correspondents had sold to him, in some other sort of goods
      which he might happen to deal in, than in money. Such a merchant would
      have no occasion to keep any part of his stock by him unemployed, and in
      ready money, for answering occasional demands. He could have, at all
      times, a larger quantity of goods in his shop or warehouse, and he could
      deal to a greater extent. But it seldom happens to be convenient for all
      the correspondents of a merchant to receive payment for the goods which
      they sell to him, in goods of some other kind which he happens to deal in.
      The British merchants who trade to Virginia and Maryland, happen to be a
      particular set of correspondents, to whom it is more convenient to receive
      payment for the goods which they sell to those colonies in tobacco, than
      in gold and silver. They expect to make a profit by the sale of the
      tobacco; they could make none by that of the gold and silver. Gold and
      silver, therefore, very seldom appear in the commerce between Great
      Britain and the tobacco colonies. Maryland and Virginia have as little
      occasion for those metals in their foreign, as in their domestic commerce.
      They are said, accordingly, to have less gold and silver money than any
      other colonies in America. They are reckoned, however, as thriving, and
      consequently as rich, as any of their neighbours.
    
      In the northern colonies, Pennsylvania, New York, New Jersey, the four
      governments of New England, etc. the value of their own produce which they
      export to Great Britain is not equal to that of the manufactures which
      they import for their own use, and for that of some of the other colonies,
      to which they are the carriers. A balance, therefore, must be paid to the
      mother-country in gold and silver and this balance they generally find.
    
      In the sugar colonies, the value of the produce annually exported to Great
      Britain is much greater than that of all the goods imported from thence.
      If the sugar and rum annually sent to the mother-country were paid for in
      those colonies, Great Britain would be obliged to send out, every year, a
      very large balance in money; and the trade to the West Indies would, by a
      certain species of politicians, be considered as extremely
      disadvantageous. But it so happens, that many of the principal proprietors
      of the sugar plantations reside in Great Britain. Their rents are remitted
      to them in sugar and rum, the produce of their estates. The sugar and rum
      which the West India merchants purchase in those colonies upon their own
      account, are not equal in value to the goods which they annually sell
      there. A balance, therefore, must necessarily be paid to them in gold and
      silver, and this balance, too, is generally found.
    
      The difficulty and irregularity of payment from the different colonies to
      Great Britain, have not been at all in proportion to the greatness or
      smallness of the balances which were respectively due from them. Payments
      have, in general, been more regular from the northern than from the
      tobacco colonies, though the former have generally paid a pretty large
      balance in money, while the latter have either paid no balance, or a much
      smaller one. The difficulty of getting payment from our different sugar
      colonies has been greater or less in proportion, not so much to the extent
      of the balances respectively due from them, as to the quantity of
      uncultivated land which they contained; that is, to the greater or smaller
      temptation which the planters have been under of over-trading, or of
      undertaking the settlement and plantation of greater quantities of waste
      land than suited the extent of their capitals. The returns from the great
      island of Jamaica, where there is still much uncultivated land, have, upon
      this account, been, in general, more irregular and uncertain than those
      from the smaller islands of Barbadoes, Antigua, and St. Christopher’s,
      which have, for these many years, been completely cultivated, and have,
      upon that account, afforded less field for the speculations of the
      planter. The new acquisitions of Grenada, Tobago, St. Vincent’s, and
      Dominica, have opened a new field for speculations of this kind; and the
      returns front those islands have of late been as irregular and uncertain
      as those from the great island of Jamaica.
    
      It is not, therefore, the poverty of the colonies which occasions, in the
      greater part of them, the present scarcity of gold and silver money. Their
      great demand for active and productive stock makes it convenient for them
      to have as little dead stock as possible, and disposes them, upon that
      account, to content themselves with a cheaper, though less commodious
      instrument of commerce, than gold and silver. They are thereby enabled to
      convert the value of that gold and silver into the instruments of trade,
      into the materials of clothing, into household furniture, and into the
      iron work necessary for building and extending their settlements and
      plantations. In those branches of business which cannot be transacted
      without gold and silver money, it appears, that they can always find the
      necessary quantity of those metals; and if they frequently do not find it,
      their failure is generally the effect, not of their necessary poverty, but
      of their unnecessary and excessive enterprise. It is not because they are
      poor that their payments are irregular and uncertain, but because they are
      too eager to become excessively rich. Though all that part of the produce
      of the colony taxes, which was over and above what was necessary for
      defraying the expense of their own civil and military establishments, were
      to be remitted to Great Britain in gold and silver, the colonies have
      abundantly wherewithal to purchase the requisite quantity of those metals.
      They would in this case be obliged, indeed, to exchange a part of their
      surplus produce, with which they now purchase active and productive stock,
      for dead stock. In transacting their domestic business, they would be
      obliged to employ a costly, instead of a cheap instrument of commerce; and
      the expense of purchasing this costly instrument might damp somewhat the
      vivacity and ardour of their excessive enterprise in the improvement of
      land. It might not, however, be necessary to remit any part of the
      American revenue in gold and silver. It might be remitted in bills drawn
      upon, and accepted by, particular merchants or companies in Great Britain,
      to whom a part of the surplus produce of America had been consigned, who
      would pay into the treasury the American revenue in money, after having
      themselves received the value of it in goods; and the whole business might
      frequently be transacted without exporting a single ounce of gold or
      silver from America.
    
      It is not contrary to justice, that both Ireland and America should
      contribute towards the discharge of the public debt of Great Britain. That
      debt has been contracted in support of the government established by the
      Revolution; a government to which the protestants of Ireland owe, not only
      the whole authority which they at present enjoy in their own country, but
      every security which they possess for their liberty, their property, and
      their religion; a government to which several of the colonies of America
      owe their present charters, and consequently their present constitution;
      and to which all the colonies of America owe the liberty, security, and
      property, which they have ever since enjoyed. That public debt has been
      contracted in the defence, not of Great Britain alone, but of all the
      different provinces of the empire. The immense debt contracted in the late
      war in particular, and a great part of that contracted in the war before,
      were both properly contracted in defence of America.
    
      By a union with Great Britain, Ireland would gain, besides the freedom of
      trade, other advantages much more important, and which would much more
      than compensate any increase of taxes that might accompany that union. By
      the union with England, the middling and inferior ranks of people in
      Scotland gained a complete deliverance from the power of an aristocracy,
      which had always before oppressed them. By a union with Great Britain, the
      greater part of people of all ranks in Ireland would gain an equally
      complete deliverance from a much more oppressive aristocracy; an
      aristocracy not founded, like that of Scotland, in the natural and
      respectable distinctions of birth and fortune, but in the most odious of
      all distinctions, those of religious and political prejudices;
      distinctions which, more than any other, animate both the insolence of the
      oppressors, and the hatred and indignation of the oppressed, and which
      commonly render the inhabitants of the same country more hostile to one
      another than those of different countries ever are. Without a union with
      Great Britain, the inhabitants of Ireland are not likely, for many ages,
      to consider themselves as one people.
    
      No oppressive aristocracy has ever prevailed in the colonies. Even they,
      however, would, in point of happiness and tranquillity, gain considerably
      by a union with Great Britain. It would, at least, deliver them from those
      rancourous and virulent factions which are inseparable from small
      democracies, and which have so frequently divided the affections of their
      people, and disturbed the tranquillity of their governments, in their form
      so nearly democratical. In the case of a total separation from Great
      Britain, which, unless prevented by a union of this kind, seems very
      likely to take place, those factions would be ten times more virulent than
      ever. Before the commencement of the present disturbances, the coercive
      power of the mother-country had always been able to restrain those
      factions from breaking out into any thing worse than gross brutality and
      insult. If that coercive power were entirely taken away, they would
      probably soon break out into open violence and bloodshed. In all great
      countries which are united under one uniform government, the spirit of
      party commonly prevails less in the remote provinces than in the centre of
      the empire. The distance of those provinces from the capital, from the
      principal seat of the great scramble of faction and ambition, makes them
      enter less into the views of any of the contending parties, and renders
      them more indifferent and impartial spectators of the conduct of all. The
      spirit of party prevails less in Scotland than in England. In the case of
      a union, it would probably prevail less in Ireland than in Scotland; and
      the colonies would probably soon enjoy a degree of concord and unanimity,
      at present unknown in any part of the British empire. Both Ireland and the
      colonies, indeed, would be subjected to heavier taxes than any which they
      at present pay. In consequence, however, of a diligent and faithful
      application of the public revenue towards the discharge of the national
      debt, the greater part of those taxes might not be of long continuance,
      and the public revenue of Great Britain might soon be reduced to what was
      necessary for maintaining a moderate peace-establishment.
    
      The territorial acquisitions of the East India Company, the undoubted
      right of the Crown, that is, of the state and people of Great Britain,
      might be rendered another source of revenue, more abundant, perhaps, than
      all those already mentioned. Those countries are represented as more
      fertile, more extensive, and, in proportion to their extent, much richer
      and more populous than Great Britain. In order to draw a great revenue
      from them, it would not probably be necessary to introduce any new system
      of taxation into countries which are already sufficiently, and more than
      sufficiently, taxed. It might, perhaps, be more proper to lighten than to
      aggravate the burden of those unfortunate countries, and to endeavour to
      draw a revenue from them, not by imposing new taxes, but by preventing the
      embezzlement and misapplication of the greater part of those which they
      already pay.
    
      If it should be found impracticable for Great Britain to draw any
      considerable augmentation of revenue from any of the resources above
      mentioned, the only resource which can remain to her, is a diminution of
      her expense. In the mode of collecting and in that of expending the public
      revenue, though in both there may be still room for improvement, Great
      Britain seems to be at least as economical as any of her neighbours. The
      military establishment which she maintains for her own defence in time of
      peace, is more moderate than that of any European state, which can pretend
      to rival her either in wealth or in power. None of these articles,
      therefore, seem to admit of any considerable reduction of expense. The
      expense of the peace-establishment of the colonies was, before the
      commencement of the present disturbances, very considerable, and is an
      expense which may, and, if no revenue can be drawn from them, ought
      certainly to be saved altogether. This constant expense in time of peace,
      though very great, is insignificant in comparison with what the defence of
      the colonies has cost us in time of war. The last war, which was
      undertaken altogether on account of the colonies, cost Great Britain, it
      has already been observed, upwards of ninety millions. The Spanish war of
      1739 was principally undertaken on their account; in which, and in the
      French war that was the consequence of it, Great Britain, spent upwards of
      forty millions; a great part of which ought justly to be charged to the
      colonies. In those two wars, the colonies cost Great Britain much more
      than double the sum which the national debt amounted to before the
      commencement of the first of them. Had it not been for those wars, that
      debt might, and probably would by this time, have been completely paid;
      and had it not been for the colonies, the former of those wars might not,
      and the latter certainly would not, have been undertaken. It was because
      the colonies were supposed to be provinces of the British Empire, that
      this expense was laid out upon them. But countries which contribute
      neither revenue nor military force towards the support of the empire,
      cannot be considered as provinces. They may, perhaps, be considered as
      appendages, as a sort of splendid and shewy equipage of the empire. But if
      the empire can no longer support the expense of keeping up this equipage,
      it ought certainly to lay it down; and if it cannot raise its revenue in
      proportion to its expense, it ought at least to accommodate its expense to
      its revenue. If the colonies, notwithstanding their refusal to submit to
      British taxes, are still to be considered as provinces of the British
      empire, their defence, in some future war, may cost Great Britain as great
      an expense as it ever has done in any former war. The rulers of Great
      Britain have, for more than a century past, amused the people with the
      imagination that they possessed a great empire on the west side of the
      Atlantic. This empire, however, has hitherto existed in imagination only.
      It has hitherto been, not an empire, but the project of an empire; not a
      gold mine, but the project of a gold mine; a project which has cost, which
      continues to cost, and which, if pursued in the same way as it has been
      hitherto, is likely to cost, immense expense, without being likely to
      bring any profit; for the effects of the monopoly of the colony trade, it
      has been shewn, are to the great body of the people, mere loss instead of
      profit. It is surely now time that our rulers should either realize this
      golden dream, in which they have been indulging themselves, perhaps, as
      well as the people; or that they should awake from it themselves, and
      endeavour to awaken the people. If the project cannot be completed, it
      ought to be given up. If any of the provinces of the British empire cannot
      be made to contribute towards the support of the whole empire, it is
      surely time that Great Britain should free herself from the expense of
      defending those provinces in time of war, and of supporting any part of
      their civil or military establishment in time of peace; and endeavour to
      accommodate her future views and designs to the real mediocrity of her
      circumstances.