adam smith: the wealth of nations - hawramani

An Inquiry into the

Nature and Causes of

THE WEALTH

OF NATIONS

Adam Smith

ELECBOOK CLASSICS

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ELECBOOK CLASSICSebc0072. Adam Smith: Wealth of Nations

An InquiryInto the Nature

and Causes of theWealth of Nations

Adam Smith

The Wealth of Nations: Book 1

Adam Smith ElecBook Classics

4

Contents

Click on page number to go to ChapterIntroduction and Plan of the Work ....................................................12

Book One: Of The Causes Of Improvement In TheProductive Powers Of Labour, And Of The OrderAccording To Which Its Produce Is NaturallyDistributed Among The Different Ranks Of The People ...............16

Chapter 1. Of the Division of Labour ................................................17

Chapter II. Of the Principle which gives occasion tothe Division of Labour..........................................................................29

Chapter III. That the Division of Labour is limited bythe Extent of the Market......................................................................35

Chapter IV. Of the Origin and Use of Money...................................41

Chapter V. Of the Real and Nominal Price ofCommodities, or their Price in Labour, and their Pricein Money.................................................................................................50

Chapter VI.Of the Component Parts of the Price ofCommodities..........................................................................................73

Chapter VII. Of the Natural and Market Price ofCommodities..........................................................................................83

Chapter VIII. Of the Wages of Labour ............................................96

Chapter IX. Of the Profits of Stock ................................................127

Chapter X. Of Wages and Profit in the different



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Employments of Labour and Stock .................................................142

PART 1.......................................................................................................... 143

Inequalities arising from the Nature of the Employments

themselves................................................................................................. 143

PART 2.......................................................................................................... 169

Inequalities by the Policy of Europe........................................................... 169

Chapter XI. Of the Rent of Land .....................................................203

PART 1.......................................................................................................... 206

Of the Produce of Land which always affords Rent .................................... 206

PART 2.......................................................................................................... 227

Of the Produce of Land which sometimes does, and sometimes

does not, afford Rent ................................................................................. 227

PART 3.......................................................................................................... 245

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................. 245

Digression Concerning The Variations In The Value Of Silver

During The Course Of The Four Last Centuries ..................................... 248

First Period .......................................................................................... 248

Second Period...................................................................................... 267

Third Period ........................................................................................ 269

Variations In The Proportion Between The Respective Values

Of Gold And Silver ............................................................................... 292



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Grounds Of The Suspicion That The Value Of Silver Still

Continues To Decrease.......................................................................... 299

Different Effects Of The Progress Of Improvement Upon

Three Different Sorts Of Rude Produce.................................................. 301

First Sort.............................................................................................. 301

Second Sort.......................................................................................... 304

Third Sort ............................................................................................ 317

Conclusion Of The Digression Concerning The Variations In

The Value Of Silver .............................................................................. 330

Effects Of The Progress Of Improvement Upon The Real

Price Of Manufactures........................................................................... 337

Conclusion Of The Chapter ................................................................... 344

Book Two: Of the Nature, Accumulation, andEmployment of Stock........................................................................359

Chapter I. Of the Division of Stock..................................................363

Chapter II. Of Money Considered as a ParticularBranch of the General Stock of the Society, or of theExpense of Maintaining the National Capital ................................374

Chapter III. Of the Accumulation of Capital, or ofProductive and Unproductive Labour ............................................438

Chapter IV. Of Stock Lent at Interest.............................................465

Chapter V. Of the Different Employment of Capitals...................477



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Book Three: Of the Different Progress of Opulence inDifferent Nations ................................................................................499

Chapter I. Of the Natural Progress of Opulence...........................500

Chapter II. Of the Discouragement of Agriculture inthe ancient State of Europe after the Fall of the RomanEmpire..................................................................................................507

Chapter III. Of the Rise and Progress of Cities andTowns after the Fall of the Roman Empire ....................................523

Chapter IV. How the Commerce of the TownsContributed to the Improvement of the Country..........................538

Book Four: Of Systems of Political Economy................................556

Introduction.........................................................................................557

Chapter I. Of the Principle of the Commercial, orMercantile System..............................................................................558

Chapter II. Of Restraints upon the Importation fromForeign Countries of such Goods as can be produced atHome.....................................................................................................589

Chapter III. Of the extraordinary Restraints upon theImportation of Goods of almost all kinds from thoseCountries with which the Balance is supposed to bedisadvantageous..................................................................................617

PART 1.......................................................................................................... 617

Of the Unreasonableness of those Restraints even upon the

Principles of the Commercial System......................................................... 617



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Digression Concerning Banks Of Deposit, Particularly

Concerning That Of Amsterdam ............................................................ 625

PART 2.......................................................................................................... 639

Of the Unreasonableness of those extraordinary Restraints upon

other Principles.......................................................................................... 639

Chapter IV. Of Drawbacks................................................................654

Chapter V.Of Bounties ......................................................................662

DIGRESSION CONCERNING THE CORN TRADE AND

CORN LAWS ....................................................................................... 686

Chapter VI. Of Treaties of Commerce ............................................715

Chapter VII. Of Colonies...................................................................732

PART 1.......................................................................................................... 732

Of the Motives for establishing new Colonies ............................................ 732

PART 2.......................................................................................................... 744

Causes of Prosperity of New Colonies........................................................ 744

PART 3.......................................................................................................... 780

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 ................................................................................... 780

Chapter VIII. Conclusion of the Mercantile System ....................852

Chapter IX. Of the Agricultural Systems, or of thoseSystems of Political Economy which represent theProduce of Land as either the sole or the principalSource of the Revenue and Wealth every Country........................880



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Appendix ..............................................................................................917

Book Five: Of the Revenue of the Sovereign orCommonwealth ...................................................................................921

Chapter I. Of the Expenses of the Sovereign orCommonwealth ...................................................................................922

PART 1.......................................................................................................... 922

Of the Expense of Defence......................................................................... 922

PART 2.......................................................................................................... 946

Of the Expense of Justice........................................................................... 946

PART 3.......................................................................................................... 963

Of the Expense of Public Works and Public Institutions ............................. 963

ARTICLE 1.................................................................................................... 964

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. ......................................... 964

Of the Public Works and Institutions which are necessary for

facilitating particular Branches of Commerce. ............................................ 976

ARTICLE II ..................................................................................................1013

Of the Expense of the Institutions for the Education of Youth....................1013

ARTICLE III .................................................................................................1049

Of the Expense of the Institutions for the Instruction of People of

all Ages....................................................................................................1049



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PART 4.........................................................................................................1088

Of the Expense of Supporting the Dignity of the Sovereign.......................1088

CONCLUSION....................................................................................1088

Chapter II. Of the Sources of the General or PublicRevenue of the Society.....................................................................1091

PART 1.........................................................................................................1091

Of the Funds or Sources of Revenue which may peculiarly

belong to the Sovereign or Commonwealth ...............................................1091

PART 2.........................................................................................................1103

Of Taxes ..................................................................................................1103

ARTICLE I ...................................................................................................1107

Taxes upon Rent. Taxes upon the Rent of Land.........................................1107

Taxes which are proportioned, not to the Rent, but to the

Produce of Land...................................................................................1119

Taxes upon the Rent of Houses.............................................................1124

ARTICLE II ..................................................................................................1135

Taxes on Profit, or upon the Revenue arising from Stock...........................1135

Taxes upon as Profit of particular Employments...................................1142

Appendix to ARTICLES I and II. ...................................................................1151

Taxes upon the Capital Value of Land, Houses, and Stock.........................1151

ARTICLE III .................................................................................................1159

Taxes upon the Wages of Labour ..............................................................1159



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ARTICLE IV .................................................................................................1164

Taxes which, it is intended, should fall indifferently upon every

different Species of Revenue.....................................................................1164

Capitation Taxes..................................................................................1164

Taxes upon Consumable Commodities..................................................1167

Chapter III. Of Public Debts ..........................................................1222



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Introduction and Plan of the Work

he annual labour of every nation is the fund whichoriginally supplies it with all the necessaries andconveniences of life which it annually consumes, and

which consist always either in the immediate produce of thatlabour, or in what is purchased with that produce from othernations.

According therefore as this produce, or what is purchased withit, bears a greater or smaller proportion to the number of thosewho are to consume it, the nation will be better or worse suppliedwith all the necessaries and conveniences for which it hasoccasion.

But this proportion must in every nation be regulated by twodifferent circumstances; first, by the skill, dexterity, and judgmentwith which its labour is generally applied; and, secondly, by theproportion between the number of those who are employed inuseful labour, and that of those who are not so employed.Whatever be the soil, climate, or extent of territory of anyparticular nation, the abundance or scantiness of its annual supplymust, in that particular situation, depend upon those twocircumstances.

The abundance or scantiness of this supply, too, seems todepend more upon the former of those two circumstances thanupon the latter. Among the savage nations of hunters and fishers,every individual who is able to work, is more or less employed inuseful labour, and endeavours to provide, as well as he can, the

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necessaries and conveniences of life, for himself, or such of hisfamily or tribe as are either too old, or too young, or too infirm togo a hunting and fishing. Such nations, however, are so miserablypoor that, from mere want, they are frequently reduced, or, atleast, think themselves reduced, to the necessity sometimes ofdirectly destroying, and sometimes of abandoning their infants,their old people, and those afflicted with lingering diseases, toperish with hunger, or to be devoured by wild beasts. Amongcivilised and thriving nations, on the contrary, though a greatnumber of people do not labour at all, many of whom consume theproduce of ten times, frequently of a hundred times more labourthan the greater part of those who work; yet the produce of thewhole labour of the society is so great that all are often abundantlysupplied, and a workman, even of the lowest and poorest order, ifhe is frugal and industrious, may enjoy a greater share of thenecessaries and conveniences of life than it is possible for anysavage to acquire.

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

Whatever be the actual state of the skill, dexterity, andjudgment with which labour is applied in any nation, theabundance or scantiness of its annual supply must depend, duringthe continuance of that state, upon the proportion between thenumber of those who are annually employed in useful labour, andthat of those who are not so employed. The number of useful andproductive labourers, it will hereafter appear, is everywhere inproportion to the quantity of capital stock which is employed in



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setting them to work, and to the particular way in which it is soemployed. The second book, therefore, treats of the nature ofcapital 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, andjudgment, in the application of labour, have followed verydifferent plans in the general conduct or direction of it; thoseplans have not all been equally favourable to the greatness of itsproduce. The policy of some nations has given extraordinaryencouragement to the industry of the country; that of others to theindustry of towns. Scarce any nation has dealt equally andimpartially with every sort of industry. Since the downfall of theRoman empire, the policy of Europe has been more favourable toarts, manufactures, and commerce, the industry of towns, than toagriculture, the industry of the country. The circumstances whichseem to have introduced and established this policy are explainedin the third book.

Though those different plans were, perhaps, first introduced bythe private interests and prejudices of particular orders of men,without any regard to, or foresight of, their consequences upon thegeneral welfare of the society; yet they have given occasion to verydifferent theories of political economy; of which some magnify theimportance of that industry which is carried on in towns, others ofthat which is carried on in the country. Those theories have had aconsiderable influence, not only upon the opinions of men oflearning, but upon the public conduct of princes and sovereignstates. I have endeavoured, in the fourth book, to explain, as fullyand distinctly as I can, those different theories, and the principal



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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, indifferent ages and nations, have supplied their annualconsumption, is the object of these four first books. The fifth andlast book treats of the revenue of the sovereign, or commonwealth.In this book I have endeavoured to show, first, what are thenecessary expenses of the sovereign, or commonwealth; which ofthose expenses ought to be defrayed by the general contribution ofthe whole society; and which of them by that of some particularpart only, or of some particular members of it: secondly, what arethe different methods in which the whole society may be made tocontribute towards defraying the expenses incumbent on thewhole society, and what are the principal advantages andinconveniences of each of those methods: and, thirdly and lastly,what are the reasons and causes which have induced almost allmodern governments to mortgage some part of this revenue, or tocontract debts, and what have been the effects of those debts uponthe real wealth, the annual produce of the land and labour of thesociety.



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Book One

OF THE CAUSES OF IMPROVEMENT IN THEPRODUCTIVE POWERS OF LABOUR, AND OF

THE ORDER ACCORDING TO WHICH ITSPRODUCE IS NATURALLY DISTRIBUTEDAMONG THE DIFFERENT RANKS OF THE

PEOPLE



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Chapter I

Of the Division of Labour

he greatest improvement in the productive powers oflabour, and the greater part of the skill, dexterity, andjudgment 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 whatmanner it operates in some particular manufactures. It iscommonly supposed to be carried furthest in some very triflingones; not perhaps that it really is carried further in them than inothers of more importance: but in those trifling manufactureswhich are destined to supply the small wants of but a smallnumber of people, the whole number of workmen mustnecessarily be small; and those employed in every different branchof the work can often be collected into the same workhouse, andplaced at once under the view of the spectator. In those greatmanufactures, on the contrary, which are destined to supply thegreat wants of the great body of the people, every different branchof the work employs so great a number of workmen that it isimpossible to collect them all into the same workhouse. We canseldom see more, at one time, than those employed in one singlebranch. Though in such manufactures, therefore, the work mayreally be divided into a much greater number of parts than inthose of a more trifling nature, the division is not near so obvious,and has accordingly been much less observed.

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To take an example, therefore, from a very triflingmanufacture; but one in which the division of labour has beenvery often taken notice of, the trade of the pin-maker; a workmannot educated to this business (which the division of labour hasrendered a distinct trade), nor acquainted with the use of themachinery employed in it (to the invention of which the samedivision of labour has probably given occasion), could scarce,perhaps, with his utmost industry, make one pin in a day, andcertainly could not make twenty. But in the way in which thisbusiness is now carried on, not only the whole work is a peculiartrade, but it is divided into a number of branches, of which thegreater part are likewise peculiar trades. One man draws out thewire, another straights it, a third cuts it, a fourth points it, a fifthgrinds it at the top for receiving the head; to make the headrequires two or three distinct operations; to put it on is a peculiarbusiness, to whiten the pins is another; it is even a trade by itselfto put them into the paper; and the important business of makinga pin is, in this manner, divided into about eighteen distinctoperations, which, in some manufactories, are all performed bydistinct hands, though in others the same man will sometimesperform two or three of them. I have seen a small manufactory ofthis kind where ten men only were employed, and where some ofthem consequently performed two or three distinct operations.But though they were very poor, and therefore but indifferentlyaccommodated with the necessary machinery, they could, whenthey exerted themselves, make among them about twelve poundsof pins in a day. There are in a pound upwards of four thousandpins of a middling size. Those ten persons, therefore, could makeamong them upwards of forty-eight thousand pins in a day. Each



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person, therefore, making a tenth part of forty-eight thousandpins, might be considered as making four thousand eight hundredpins in a day. But if they had all wrought separately andindependently, and without any of them having been educated tothis peculiar business, they certainly could not each of them havemade twenty, perhaps not one pin in a day; that is, certainly, notthe two hundred and fortieth, perhaps not the four thousand eighthundredth part of what they are at present capable of performing,in consequence of a proper division and combination of theirdifferent operations.

In every other art and manufacture, the effects of the division oflabour are similar to what they are in this very trifling one;though, in many of them, the labour can neither be so muchsubdivided, nor reduced to so great a simplicity of operation. Thedivision of labour, however, so far as it can be introduced,occasions, in every art, a proportionable increase of the productivepowers of labour. The separation of different trades andemployments from one another seems to have taken place inconsequence of this advantage. This separation, too, is generallycalled furthest in those countries which enjoy the highest degreeof industry and improvement; what is the work of one man in arude state of society being generally that of several in an improvedone. In every improved society, the farmer is generally nothing buta farmer; the manufacturer, nothing but a manufacturer. Thelabour, too, which is necessary to produce any one completemanufacture is almost always divided among a great number ofhands. How many different trades are employed in each branch ofthe linen and woollen manufactures from the growers of the flaxand the wool, to the bleachers and smoothers of the linen, or to the



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dyers and dressers of the cloth! The nature of agriculture, indeed,does not admit of so many subdivisions of labour, nor of socomplete a separation of one business from another, asmanufactures. It is impossible to separate so entirely the businessof the grazier from that of the corn-farmer as the trade of thecarpenter is commonly separated from that of the smith. Thespinner is almost always a distinct person from the weaver; butthe ploughman, the harrower, the sower of the seed, and thereaper of the corn, are often the same.

The occasions for those different sorts of labour returning withthe different seasons of the year, it is impossible that one manshould be constantly employed in any one of them. Thisimpossibility of making so complete and entire a separation of allthe different branches of labour employed in agriculture isperhaps the reason why the improvement of the productivepowers of labour in this art does not always keep pace with theirimprovement in manufactures. The most opulent nations, indeed,generally excel all their neighbours in agriculture as well as inmanufactures; but they are commonly more distinguished by theirsuperiority in the latter than in the former. Their lands are ingeneral better cultivated, and having more labour and expensebestowed upon them, produce more in proportion to the extentand natural fertility of the ground. But this superiority of produceis seldom much more than in proportion to the superiority oflabour and expense. In agriculture, the labour of the rich countryis not always much more productive than that of the poor; or, atleast, it is never so much more productive as it commonly is inmanufactures. The corn of the rich country, therefore, will notalways, in the same degree of goodness, come cheaper to market



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than that of the poor. The corn of Poland, in the same degree ofgoodness, is as cheap as that of France, notwithstanding thesuperior opulence and improvement of the latter country. Thecorn of France is, in the corn provinces, fully as good, and in mostyears nearly about the same price with the corn of England,though, in opulence and improvement, France is perhaps inferiorto England. The corn-lands of England, however, are bettercultivated than those of France, and the corn-lands of France aresaid to be much better cultivated than those of Poland. But thoughthe poor country, notwithstanding the inferiority of its cultivation,can, in some measure, rival the rich in the cheapness andgoodness of its corn, it can pretend to no such competition in itsmanufactures; at least if those manufactures suit the soil, climate,and situation of the rich country. The silks of France are betterand cheaper than those of England, because the silk manufacture,at least under the present high duties upon the importation of rawsilk, does not so well suit the climate of England as that of France.But the hardware and the coarse woollens of England are beyondall comparison superior to those of France, and much cheaper tooin the same degree of goodness. In Poland there are said to bescarce any manufactures of any kind, a few of those coarserhousehold manufactures excepted, without which no country canwell subsist.

This great increase of the quantity of work which, inconsequence of the division of labour, the same number of peopleare capable of performing, is owing to three differentcircumstances; first, to the increase of dexterity in every particularworkman; secondly, to the saving of the time which is commonlylost in passing from one species of work to another; and lastly, to



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the invention of a great number of machines which facilitate andabridge labour, and enable one man to do the work of many.

First, the improvement of the dexterity of the workmannecessarily increases the quantity of the work he can perform; andthe division of labour, by reducing every man’s business to someone simple operation, and by making this operation the soleemployment of his life, necessarily increased very much dexterityof the workman. A common smith, who, though accustomed tohandle the hammer, has never been used to make nails, if uponsome particular occasion he is obliged to attempt it, will scarce, Iam assured, be able to make above two or three hundred nails in aday, and those too very bad ones. A smith who has beenaccustomed to make nails, but whose sole or principal businesshas not been that of a nailer, can seldom with his utmost diligencemake more than eight hundred or a thousand nails in a day. I haveseen several boys under twenty years of age who had neverexercised any other trade but that of making nails, and who, whenthey exerted themselves, could make, each of them, upwards oftwo thousand three hundred nails in a day. The making of a nail,however, is by no means one of the simplest operations. The sameperson blows the bellows, stirs or mends the fire as there isoccasion, heats the iron, and forges every part of the nail: inforging the head too he is obliged to change his tools. The differentoperations into which the making of a pin, or of a metal button, issubdivided, are all of them much more simple, and the dexterity ofthe person, of whose life it has been the sole business to performthem, is usually much greater. The rapidity with which some ofthe operations of those manufacturers are performed, exceedswhat the human hand could, by those who had never seen them,



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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 muchgreater than we should at first view be apt to imagine it. It isimpossible to pass very quickly from one kind of work to anotherthat is carried on in a different place and with quite different tools.A country weaver, who cultivates a small farm, must lose a gooddeal of time in passing from his loom to the field, and from thefield to his loom. When the two trades can be carried on in thesame workhouse, the loss of time is no doubt much less. It is evenin this case, however, very considerable. A man commonlysaunters a little in turning his hand from one sort of employmentto another. When he first begins the new work he is seldom verykeen and hearty; his mind, as they say, does not go to it, and forsome time he rather trifles than applies to good purpose. Thehabit of sauntering and of indolent careless application, which isnaturally, or rather necessarily acquired by every countryworkman who is obliged to change his work and his tools everyhalf hour, and to apply his hand in twenty different ways almostevery day of his life, renders him almost always slothful and lazy,and incapable of any vigorous application even on the mostpressing occasions. Independent, therefore, of his deficiency inpoint of dexterity, this cause alone must always reduceconsiderably the quantity of work which he is capable ofperforming.

Thirdly, and lastly, everybody must be sensible how muchlabour is facilitated and abridged by the application of propermachinery. It is unnecessary to give any example. I shall onlyobserve, therefore, that the invention of all those machines by



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which labour is so much facilitated and abridged seems to havebeen originally owing to the division of labour. Men are muchmore likely to discover easier and readier methods of attaining anyobject when the whole attention of their minds is directed towardsthat single object than when it is dissipated among a great varietyof things. But in consequence of the division of labour, the wholeof every man’s attention comes naturally to be directed towardssome one very simple object. It is naturally to be expected,therefore, that some one or other of those who are employed ineach particular branch of labour should soon find out easier andreadier methods of performing their own particular work,wherever the nature of it admits of such improvement. A greatpart of the machines made use of in those manufactures in whichlabour is most subdivided, were originally the inventions ofcommon workmen, who, being each of them employed in somevery simple operation, naturally turned their thoughts towardsfinding out easier and readier methods of performing it. Whoeverhas been much accustomed to visit such manufactures mustfrequently have been shown very pretty machines, which were theinventions of such workmen in order to facilitate and quickentheir particular part of the work. In the first fire-engines, a boywas constantly employed to open and shut alternately thecommunication between the boiler and the cylinder, according asthe piston either ascended or descended. One of those boys, wholoved to play with his companions, observed that, by tying a stringfrom the handle of the valve which opened this communication toanother part of the machine, the valve would open and shutwithout his assistance, and leave him at liberty to divert himselfwith his playfellows. One of the greatest improvements that has



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been made upon this machine, since it was first invented, was inthis manner the discovery of a boy who wanted to save his ownlabour.

All the improvements in machinery, however, have by nomeans been the inventions of those who had occasion to use themachines. Many improvements have been made by the ingenuityof the makers of the machines, when to make them became thebusiness of a peculiar trade; and some by that of those who arecalled philosophers or men of speculation, whose trade it is not todo anything, but to observe everything; and who, upon thataccount, are often capable of combining together the powers of themost 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 ofcitizens. Like every other employment too, it is subdivided into agreat number of different branches, each of which affordsoccupation to a peculiar tribe or class of philosophers; and thissubdivision of employment in philosophy, as well as in every otherbusiness, improves dexterity, and saves time. Each individualbecomes more expert in his own peculiar branch, more work isdone upon the whole, and the quantity of science is considerablyincreased by it.

It is the great multiplication of the productions of all thedifferent arts, in consequence of the division of labour, whichoccasions, in a well-governed society, that universal opulencewhich extends itself to the lowest ranks of the people. Everyworkman has a great quantity of his own work to dispose ofbeyond what he himself has occasion for; and every otherworkman being exactly in the same situation, he is enabled to



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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 oftheirs. He supplies them abundantly with what they have occasionfor, and they accommodate him as amply with what he hasoccasion for, and a general plenty diffuses itself through all thedifferent ranks of the society.

Observe the accommodation of the most common artificer orday-labourer in a civilised and thriving country, and you willperceive that the number of people of whose industry a part,though but a small part, has been employed in procuring him thisaccommodation, exceeds all computation. The woollen coat, forexample, which covers the day-labourer, as coarse and rough as itmay appear, is the produce of the joint labour of a great multitudeof 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 theirdifferent arts in order to complete even this homely production.How many merchants and carriers, besides, must have beenemployed in transporting the materials from some of thoseworkmen to others who often live in a very distant part of thecountry! How much commerce and navigation in particular, howmany ship-builders, sailors, sail-makers, rope-makers, must havebeen employed in order to bring together the different drugs madeuse of by the dyer, which often come from the remotest corners ofthe world! What a variety of labour, too, is necessary in order toproduce the tools of the meanest of those workmen! To saynothing of such complicated machines as the ship of the sailor, themill of the fuller, or even the loom of the weaver, let us consideronly what a variety of labour is requisite in order to form that very



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simple machine, the shears with which the shepherd clips thewool. The miner, the builder of the furnace for smelting the ore,the seller of the timber, the burner of the charcoal to be made useof in the smelting-house, the brick-maker, the brick-layer, theworkmen who attend the furnace, the mill-wright, the forger, thesmith, must all of them join their different arts in order to producethem. Were we to examine, in the same manner, all the differentparts of his dress and household furniture, the coarse linen shirtwhich he wears next his skin, the shoes which cover his feet, thebed which he lies on, and all the different parts which compose it,the kitchen-grate at which he prepares his victuals, the coalswhich he makes use of for that purpose, dug from the bowels ofthe earth, and brought to him perhaps by a long sea and a longland carriage, all the other utensils of his kitchen, all the furnitureof his table, the knives and forks, the earthen or pewter platesupon which he serves up and divides his victuals, the differenthands employed in preparing his bread and his beer, the glasswindow which lets in the heat and the light, and keeps out thewind and the rain, with all the knowledge and art requisite forpreparing that beautiful and happy invention, without which thesenorthern parts of the world could scarce have afforded a verycomfortable habitation, together with the tools of all the differentworkmen employed in producing those different conveniences; ifwe examine, I say, all these things, and consider what a variety oflabour is employed about each of them, we shall be sensible that,without the assistance and co-operation of many thousands, thevery meanest person in a civilised country could not be provided,even according to what we very falsely imagine the easy andsimple manner in which he is commonly accommodated.



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Compared, indeed, with the more extravagant luxury of the great,his accommodation must no doubt appear extremely simple andeasy; and yet it may be true, perhaps, that the accommodation of aEuropean prince does not always so much exceed that of anindustrious and frugal peasant as the accommodation of the latterexceeds that of many an African king, the absolute master of thelives and liberties of ten thousand naked savages.



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Chapter II

Of the Principle which gives occasion to theDivision of Labour

his division of labour, from which so many advantages arederived, 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 gradualconsequence of a certain propensity in human nature which has inview no such extensive utility; the propensity to truck, barter, andexchange one thing for another.

Whether this propensity be one of those original principles inhuman nature of which no further account can be given; orwhether, as seems more probable, it be the necessary consequenceof the faculties of reason and speech, it belongs not to our presentsubject to inquire. It is common to all men, and to be found in noother race of animals, which seem to know neither this nor anyother species of contracts. Two greyhounds, in running down thesame hare, have sometimes the appearance of acting in some sortof concert. Each turns her towards his companion, or endeavoursto intercept her when his companion turns her towards himself.This, however, is not the effect of any contract, but of theaccidental concurrence of their passions in the same object at thatparticular time. Nobody ever saw a dog make a fair and deliberateexchange of one bone for another with another dog. Nobody eversaw 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

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animal wants to obtain something either of a man or of anotheranimal, it has no other means of persuasion but to gain the favourof those whose service it requires. A puppy fawns upon its dam,and a spaniel endeavours by a thousand attractions to engage theattention of its master who is at dinner, when it wants to be fed byhim. Man sometimes uses the same arts with his brethren, andwhen he has no other means of engaging them to act according tohis inclinations, endeavours by every servile and fawningattention to obtain their good will. He has not time, however, to dothis upon every occasion. In civilised society he stands at all timesin need of the co-operation and assistance of great multitudes,while his whole life is scarce sufficient to gain the friendship of afew persons.

In almost every other race of animals each individual, when it isgrown up to maturity, is entirely independent, and in its naturalstate 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 inhis favour, and show them that it is for their own advantage to dofor him what he requires of them. Whoever offers to another abargain of any kind, proposes to do this. Give me that which Iwant, and you shall have this which you want, is the meaning ofevery such offer; and it is in this manner that we obtain from oneanother the far greater part of those good offices which we standin need of. It is not from the benevolence of the butcher, thebrewer, or the baker that we expect our dinner, but from theirregard to their own interest. We address ourselves, not to theirhumanity but to their self-love, and never talk to them of our own



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necessities but of their advantages. Nobody but a beggar choosesto depend chiefly upon the benevolence of his fellow-citizens.Even a beggar does not depend upon it entirely. The charity ofwell-disposed people, indeed, supplies him with the whole fund ofhis subsistence. But though this principle ultimately provides himwith all the necessaries of life which he has occasion for, it neitherdoes nor can provide him with them as he has occasion for them.The greater part of his occasional wants are supplied in the samemanner as those of other people, by treaty, by barter, and bypurchase. With the money which one man gives him he purchasesfood. The old clothes which another bestows upon him heexchanges for other old clothes which suit him better, or forlodging, or for food, or for money, with which he can buy eitherfood, clothes, or lodging, as he has occasion.

As it is by treaty, by barter, and by purchase that we obtainfrom one another the greater part of those mutual good officeswhich we stand in need of, so it is this same trucking dispositionwhich originally gives occasion to the division of labour. In a tribeof hunters or shepherds a particular person makes bows andarrows, for example, with more readiness and dexterity than anyother. He frequently exchanges them for cattle or for venison withhis companions; and he finds at last that he can in this manner getmore cattle and venison than if he himself went to the field tocatch them. From a regard to his own interest, therefore, themaking of bows and arrows grows to be his chief business, and hebecomes a sort of armourer. Another excels in making the framesand covers of their little huts or movable houses. He is accustomedto be of use in this way to his neighbours, who reward him in thesame manner with cattle and with venison, till at last he finds it his



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interest to dedicate himself entirely to this employment, and tobecome a sort of house-carpenter. In the same manner a thirdbecomes a smith or a brazier, a fourth a tanner or dresser of hidesor skins, the principal part of the nothing of savages. And thus thecertainty of being able to exchange all that surplus part of theproduce of his own labour, which is over and above his ownconsumption, for such parts of the produce of other men’s labouras he may have occasion for, encourages every man to applyhimself to a particular occupation, and to cultivate and bring toperfection whatever talent or genius he may possess for thatparticular 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 geniuswhich appears to distinguish men of different professions, whengrown up to maturity, is not upon many occasions so much thecause as the effect of the division of labour. The differencebetween the most dissimilar characters, between a philosopherand a common street porter, for example, seems to arise not somuch from nature as from habit, custom, and education. Whenthey came into the world, and for the first six or eight years oftheir existence, they were perhaps very much alike, and neithertheir parents nor playfellows could perceive any remarkabledifference. About that age, or soon after, they come to beemployed in very different occupations. The difference of talentscomes then to be taken notice of, and widens by degrees, till at lastthe vanity of the philosopher is willing to acknowledge scarce anyresemblance. But without the disposition to truck, barter, andexchange, every man must have procured to himself everynecessary and conveniency of life which he wanted. All must have



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had the same duties to perform, and the same work to do, andthere could have been no such difference of employment as couldalone give occasion to any great difference of talents.

As it is this disposition which forms that difference of talents, soremarkable among men of different professions, so it is this samedisposition which renders that difference useful. Many tribes ofanimals acknowledged to be all of the same species derive fromnature a much more remarkable distinction of genius, than what,antecedent to custom and education, appears to take place amongmen.

By nature a philosopher is not in genius and disposition half sodifferent from a street porter, as a mastiff is from a greyhound, ora greyhound from a spaniel, or this last from a shepherd’s dog.Those different tribes of animals, however, though all of the samespecies, are of scarce any use to one another. The strength of themastiff is not, in the least, supported either by the swiftness of thegreyhound, or by the sagacity of the spaniel, or by the docility ofthe shepherd’s dog. The effects of those different geniuses andtalents, for want of the power or disposition to barter andexchange, cannot be brought into a common stock, and do not inthe least contribute to the better accommodation and conveniencyof the species. Each animal is still obliged to support and defenditself, separately and independently, and derives no sort ofadvantage from that variety of talents with which nature hasdistinguished its fellows. Among men, on the contrary, the mostdissimilar geniuses are of use to one another; the differentproduces of their respective talents, by the general disposition totruck, barter, and exchange, being brought, as it were, into acommon stock, where every man may purchase whatever part of



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the produce of other men’s talents he has occasion for.



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Chapter III

That the Division of Labour is limited by theExtent of the Market

a it is the power of exchanging that gives occasion to thedivision of labour, so the extent of this division mustalways 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 himselfentirely to one employment, for want of the power to exchange allthat surplus part of the produce of his own labour, which is overand above his own consumption, for such parts of the produce ofother men’s labour as he has occasion for.

There are some sorts of industry, even of the lowest kind, whichcan be carried on nowhere but in a great town. A porter, forexample, can find employment and subsistence in no other place.A village is by much too narrow a sphere for him; even an ordinarymarket town is scarce large enough to afford him constantoccupation. In the lone houses and very small villages which arescattered about in so desert a country as the Highlands ofScotland, every farmer must be butcher, baker and brewer for hisown family.

In such situations we can scarce expect to find even a smith, acarpenter, or a mason, within less than twenty miles of another ofthe same trade. The scattered families that live at eight or tenmiles distance from the nearest of them must learn to performthemselves a great number of little pieces of work, for which, in

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more populous countries, they would call in the assistance of thoseworkmen. Country workmen are almost everywhere obliged toapply themselves to all the different branches of industry thathave so much affinity to one another as to be employed about thesame sort of materials. A country carpenter deals in every sort ofwork that is made of wood: a country smith in every sort of workthat is made of iron. The former is not only a carpenter, but ajoiner, a cabinet-maker, and even a carver in wood, as well as awheel-wright, a plough-wright, a cart and waggon maker. Theemployments of the latter are still more various. It is impossiblethere should be such a trade as even that of a nailer in the remoteand inland parts of the Highlands of Scotland. Such a workman atthe rate of a thousand nails a day, and three hundred workingdays in the year, will make three hundred thousand nails in theyear. But in such a situation it would be impossible to dispose ofone thousand, that is, of one day’s work in the year.

As by means of water-carriage a more extensive market isopened to every sort of industry than what land-carriage alone canafford it, so it is upon the sea-coast, and along the banks ofnavigable rivers, that industry of every kind naturally begins tosubdivide and improve itself, and it is frequently not till a longtime after that those improvements extend themselves to theinland parts of the country. A broad-wheeled waggon, attended bytwo men, and drawn by eight horses, in about six weeks’ timecarries and brings back between London and Edinburgh near fourton weight of goods. In about the same time a ship navigated bysix or eight men, and sailing between the ports of London andLeith, frequently carries and brings back two hundred ton weightof goods. Six or eight men, therefore, by the help of water-



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carriage, can carry and bring back in the same time the samequantity of goods between London and Edinburgh, as fifty broad-wheeled waggons, attended by a hundred men, and drawn by fourhundred 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 forthree weeks, and both the maintenance, and, what is nearly equalto the maintenance, the wear and tear of four hundred horses aswell as of fifty great waggons. Whereas, upon the same quantity ofgoods carried by water, there is to be charged only themaintenance of six or eight men, and the wear and tear of a ship oftwo hundred tons burden, together with the value of the superiorrisk, or the difference of the insurance between land and water-carriage. Were there no other communication between those twoplaces, therefore, but by land-carriage, as no goods could betransported from the one to the other, except such whose pricewas very considerable in proportion to their weight, they couldcarry on but a small part of that commerce which at presentsubsists between them, and consequently could give but a smallpart of that encouragement which they at present mutually affordto each other’s industry. There could be little or no commerce ofany kind between the distant parts of the world. What goods couldbear the expense of land-carriage between London and Calcutta?Or if there were any so precious as to be able to support thisexpense, with what safety could they be transported through theterritories of so many barbarous nations? Those two cities,however, at present carry on a very considerable commerce witheach other, and by mutually affording a market, give a good deal ofencouragement to each other’s industry.



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Since such, therefore, are the advantages of water-carriage, it isnatural that the first improvements of art and industry should bemade where this conveniency opens the whole world for a marketto the produce of every sort of labour, and that they should alwaysbe much later in extending themselves into the inland parts of thecountry. The inland parts of the country can for a long time haveno other market for the greater part of their goods, but the countrywhich lies round about them, and separates them from the sea-coast, and the great navigable rivers. The extent of their market,therefore, must for a long time be in proportion to the riches andpopulousness of that country, and consequently theirimprovement must always be posterior to the improvement of thatcountry. In our North American colonies the plantations haveconstantly followed either the sea-coast or the banks of thenavigable rivers, and have scarce anywhere extended themselvesto any considerable distance from both.

The nations that, according to the best authenticated history,appear to have been first civilised, were those that dwelt round thecoast of the Mediterranean Sea. That sea, by far the greatest inletthat is known in the world, having no tides, nor consequently anywaves except such as are caused by the wind only, was, by thesmoothness of its surface, as well as by the multitude of its islands,and the proximity of its neighbouring shores, extremelyfavourable to the infant navigation of the world; when, from theirignorance of the compass, men were afraid to quit the view of thecoast, and from the imperfection of the art of shipbuilding, toabandon themselves to the boisterous waves of the ocean. To passbeyond the pillars of Hercules, that is, to sail out of the Straits ofGibraltar, was, in the ancient world, long considered as a most



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wonderful and dangerous exploit of navigation. It was late beforeeven the Phoenicians and Carthaginians, the most skilfulnavigators and ship-builders of those old times, attempted it, andthey 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 ormanufactures were cultivated and improved to any considerabledegree. Upper Egypt extends itself nowhere above a few milesfrom the Nile, and in Lower Egypt that great river breaks itselfinto many different canals, which, with the assistance of a little art,seem to have afforded a communication by water-carriage, notonly between all the great towns, but between all the considerablevillages, and even to many farmhouses in the country; nearly inthe same manner as the Rhine and the Maas do in Holland atpresent. The extent and easiness of this inland navigation wasprobably one of the principal causes of the early improvement ofEgypt.

The improvements in agriculture and manufactures seemlikewise to have been of very great antiquity in the provinces ofBengal, in the East Indies, and in some of the eastern provinces ofChina; though the great extent of this antiquity is notauthenticated by any histories of whose authority we, in this partof the world, are well assured. In Bengal the Ganges and severalother great rivers form a great number of navigable canals in thesame manner as the Nile does in Egypt. In the Eastern provincesof China too, several great rivers form, by their different branches,a multitude of canals, and by communicating with one anotherafford an inland navigation much more extensive than that eitherof the Nile or the Ganges, or perhaps than both of them put



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together. It is remarkable that neither the ancient Egyptians, northe Indians, nor the Chinese, encouraged foreign commerce, butseem all to have derived their great opulence from this inlandnavigation.

All the inland parts of Africa, and all that part of Asia which liesany considerable way north of the Euxine and Caspian seas, theancient Scythia, the modern Tartary and Siberia, seem in all agesof the world to have been in the same barbarous and uncivilisedstate in which we find them at present. The Sea of Tartary is thefrozen ocean which admits of no navigation, and though some ofthe greatest rivers in the world run through that country, they areat too great a distance from one another to carry commerce andcommunication through the greater part of it. There are in Africanone of those great inlets, such as the Baltic and Adriatic seas inEurope, the Mediterranean and Euxine seas in both Europe andAsia, and the gulfs of Arabia, Persia, India, Bengal, and Siam, inAsia, to carry maritime commerce into the interior parts of thatgreat continent: and the great rivers of Africa are at too great adistance from one another to give occasion to any considerableinland navigation. The commerce besides which any nation cancarry on by means of a river which does not break itself into anygreat number of branches or canals, and which runs into anotherterritory before it reaches the sea, can never be very considerable;because it is always in the power of the nations who possess thatother territory to obstruct the communication between the uppercountry and the sea. The navigation of the Danube is of very littleuse to the different states of Bavaria, Austria and Hungary, incomparison of what it would be if any of them possessed the wholeof its course till it falls into the Black Sea.



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Chapter IV

Of the Origin and Use of Money

hen the division of labour has been once thoroughlyestablished, it is but a very small part of a man’s wantswhich the produce of his own labour can supply. He

supplies the far greater part of them by exchanging that surpluspart of the produce of his own labour, which is over and above hisown consumption, for such parts of the produce of other men’slabour as he has occasion for. Every man thus lives by exchanging,or becomes in some measure a merchant, and the society itselfgrows to be what is properly a commercial society.

But when the division of labour first began to take place, thispower of exchanging must frequently have been very muchclogged and embarrassed in its operations. One man, we shallsuppose, has more of a certain commodity than he himself hasoccasion for, while another has less. The former consequentlywould be glad to dispose of, and the latter to purchase, a part ofthis superfluity. But if this latter should chance to have nothingthat the former stands in need of, no exchange can be madebetween them. The butcher has more meat in his shop than hehimself can consume, and the brewer and the baker would each ofthem be willing to purchase a part of it. But they have nothing tooffer in exchange, except the different productions of theirrespective trades, and the butcher is already provided with all thebread and beer which he has immediate occasion for. Noexchange can, in this case, be made between them. He cannot be

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their merchant, nor they his customers; and they are all of themthus mutually less serviceable to one another. In order to avoid theinconveniency of such situations, every prudent man in everyperiod of society, after the first establishment of the division oflabour, must naturally have endeavoured to manage his affairs insuch a manner as to have at all times by him, besides the peculiarproduce of his own industry, a certain quantity of some onecommodity or other, such as he imagined few people would belikely to refuse in exchange for the produce of their industry.

Many different commodities, it is probable, were successivelyboth thought of and employed for this purpose. In the rude ages ofsociety, cattle are said to have been the common instrument ofcommerce; and, though they must have been a most inconvenientone, yet in old times we find things were frequently valuedaccording to the number of cattle which had been given inexchange for them. The armour of Diomede, says Homer, cost onlynine oxen; but that of Glaucus cost an hundred oxen. Salt is said tobe the common instrument of commerce and exchanges inAbyssinia; a species of shells in some parts of the coast of India;dried cod at Newfoundland; tobacco in Virginia; sugar in some ofour West India colonies; hides or dressed leather in some othercountries; and there is at this day a village in Scotland where it isnot uncommon, I am told, for a workman to carry nails instead ofmoney to the baker’s shop or the alehouse.

In all countries, however, men seem at last to have beendetermined by irresistible reasons to give the preference, for thisemployment, to metals above every other commodity. Metals cannot only be kept with as little loss as any other commodity, scarceanything being less perishable than they are, but they can



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likewise, without any loss, be divided into any number of parts, asby fusion those parts can easily be reunited again; a quality whichno other equally durable commodities possess, and which morethan any other quality renders them fit to be the instruments ofcommerce and circulation.

The man who wanted to buy salt, for example, and had nothingbut cattle to give in exchange for it, must have been obliged to buysalt to the value of a whole ox, or a whole sheep at a time. He couldseldom buy less than this, because what he was to give for it couldseldom 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 ortriple the quantity, the value, to wit, of two or three oxen, or of twoor three sheep. If, on the contrary, instead of sheep or oxen, hehad metals to give in exchange for it, he could easily proportionthe quantity of the metal to the precise quantity of the commoditywhich he had immediate occasion for.

Different metals have been made use of by different nations forthis purpose. Iron was the common instrument of commerceamong 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 thispurpose in rude bars, without any stamp or coinage. Thus we aretold by Pliny,1 upon the authority of Timaeus, an ancient historian,that, till the time of Servius Tullius, the Romans had no coinedmoney, but made use of unstamped bars of copper, to purchasewhatever they had occasion for. These bars, therefore, performedat this time the function of money.

1Historia naturalis, xxxiii, 3.



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The use of metals in this rude state was attended with two veryconsiderable inconveniencies; 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 differencein the value, even the business of weighing, with proper exactness,requires at least very accurate weights and scales. The weighing ofgold in particular is an operation of some nicety. In the coarsermetals, indeed, where a small error would be of little consequence,less accuracy would, no doubt, be necessary. Yet we should find itexcessively troublesome, if every time a poor man had occasioneither to buy or sell a farthing’s worth of goods, he was obliged toweigh the farthing. The operation of assaying is still more difficult,still more tedious, and, unless a part of the metal is fairly melted inthe crucible, with proper dissolvents, any conclusion that can bedrawn from it, is extremely uncertain. Before the institution ofcoined money, however, unless they went through this tedious anddifficult operation, people must always have been liable to thegrossest frauds and impositions, and instead of a pound weight ofpure silver, or pure copper, might receive in exchange for theirgoods an adulterated composition of the coarsest and cheapestmaterials, which had, however, in their outward appearance, beenmade to resemble those metals. To prevent such abuses, tofacilitate exchanges, and thereby to encourage all sorts of industryand commerce, it has been found necessary, in all countries thathave made any considerable advances towards improvement, toaffix a public stamp upon certain quantities of such particularmetals as were in those countries commonly made use of topurchase goods. Hence the origin of coined money, and of thosepublic offices called mints; institutions exactly of the same nature



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with those of the aulnagers and stamp-masters of woollen andlinen cloth. All of them are equally meant to ascertain, by means ofa public stamp, the quantity and uniform goodness of thosedifferent commodities when brought to market.

The first public stamps of this kind that were affixed to thecurrent metals, seem in many cases to have been intended toascertain, what it was both most difficult and most important toascertain, the goodness or fineness of the metal, and to haveresembled the sterling mark which is at present affixed to plateand bars of silver, or the Spanish mark which is sometimes affixedto ingots of gold, and which being struck only upon one side of thepiece, and not covering the whole surface, ascertains the fineness,but not the weight of the metal. Abraham weighs to Ephron thefour hundred shekels of silver which he had agreed to pay for thefield of Machpelah. They are said, however, to be the currentmoney of the merchant, and yet are received by weight and not bytale, in the same manner as ingots of gold and bars of silver are atpresent. The revenues of the ancient Saxon kings of England aresaid to have been paid, not in money but in kind, that is, in victualsand provisions of all sorts. William the Conqueror introduced thecustom of paying them in money. This money, however, was, for along time, received at the exchequer, by weight and not by tale.

The inconveniency and difficulty of weighing those metals withexactness gave occasion to the institution of coins, of which thestamp, covering entirely both sides of the piece and sometimes theedges too, was supposed to ascertain not only the fineness, but theweight of the metal. Such coins, therefore, were received by tale asat present, without the trouble of weighing.

The denominations of those coins seem originally to have



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expressed the weight or quantity of metal contained in them. Inthe time of Servius Tullius, who first coined money at Rome, theRoman as or pondo contained a Roman pound of good copper. Itwas divided in the same manner as our Troyes pound, into twelveounces, each of which contained a real ounce of good copper. TheEnglish pound sterling, in the time of Edward I, contained apound, Tower weight, of silver, of a known fineness. The Towerpound seems to have been something more than the Romanpound, and something less than the Troyes pound. This last wasnot introduced into the mint of England till the 18th of Henry VIII.The French livre contained in the time of Charlemagne a pound,Troyes weight, of silver of a known fineness. The fair of Troyes inChampaign was at that time frequented by all the nations ofEurope, and the weights and measures of so famous a marketwere generally known and esteemed. The Scots money poundcontained, from the time of Alexander the First to that of RobertBruce, a pound of silver of the same weight and fineness with theEnglish pound sterling. English, French, and Scots pennies, too,contained all of them originally a real pennyweight of silver, thetwentieth part of an ounce, and the two-hundred-and-fortieth partof a pound. The shilling too seems originally to have been thedenomination of a weight. When wheat is at twelve shillings thequarter, says an ancient statute of Henry III, then wastel bread of afarthing shall weigh eleven shillings and four pence. Theproportion, however, between the shilling and either the penny onthe one hand, or the pound on the other, seems not to have beenso constant and uniform as that between the penny and thepound. During the first race of the kings of France, the French souor shilling appears upon different occasions to have contained five,



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twelve, twenty, and forty pennies. Among the ancient Saxons ashilling appears at one time to have contained only five pennies,and it is not improbable that it may have been as variable amongthem as among their neighbours, the ancient Franks.

From the time of Charlemagne among the French, and fromthat of William the Conqueror among the English, the proportionbetween the pound, the shilling, and the penny, seems to havebeen uniformly the same as at present, though the value of eachhas been very different. For in every country of the world, Ibelieve, the avarice and injustice of princes and sovereign states,abusing the confidence of their subjects, have by degreesdiminished the real quantity of metal, which had been originallycontained in their coins. The Roman as, in the latter ages of theRepublic, was reduced to the twenty-fourth part of its originalvalue, and, instead of weighing a pound, came to weigh only halfan ounce. The English pound and penny contain at present abouta third only; the Scots pound and penny about a thirty-sixth; andthe French pound and penny about a sixty-sixth part of theiroriginal value. By means of those operations the princes andsovereign states which performed them were enabled, inappearance, to pay their debts and to fulfil their engagements witha smaller quantity of silver than would otherwise have beenrequisite. It was indeed in appearance only; for their creditorswere really defrauded of a part of what was due to them. All otherdebtors in the state were allowed the same privilege, and mightpay with the same nominal sum of the new and debased coinwhatever they had borrowed in the old. Such operations,therefore, have always proved favourable to the debtor, andruinous to the creditor, and have sometimes produced a greater



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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 civilisednations the universal instrument of commerce, by the interventionof which goods of all kinds are bought and sold, or exchanged forone another.

What are the rules which men naturally observe in exchangingthem either for money or for one another, I shall now proceed toexamine. These rules determine what may be called the relative orexchangeable value of goods.

The word value, it is to be observed, has two differentmeanings, and sometimes expresses the utility of some particularobject, and sometimes the power of purchasing other goods whichthe possession of that object conveys. The one may be called“value in use”; the other, “value in exchange.” The things whichhave the greatest value in use have frequently little or no value inexchange; and, on the contrary, those which have the greatestvalue in exchange have frequently little or no value in use.Nothing is more useful than water: but it will purchase scarceanything; scarce anything can be had in exchange for it. Adiamond, on the contrary, has scarce any value in use; but a verygreat quantity of other goods may frequently be had in exchangefor it.

In order to investigate the principles which regulate theexchangeable value of commodities, I shall endeavour to show:

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 iscomposed or made up.



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And, lastly, what are the different circumstances whichsometimes 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 exactlywith 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 Imust very earnestly entreat both the patience and attention of thereader: his patience in order to examine a detail which mayperhaps in some places appear unnecessarily tedious; and hisattention in order to understand what may, perhaps, after thefullest explication which I am capable of giving of it, appear still insome degree obscure. I am always willing to run some hazard ofbeing tedious in order to be sure that I am perspicuous; and aftertaking the utmost pains that I can to be perspicuous, someobscurity may still appear to remain upon a subject in its ownnature extremely abstracted.



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Chapter V

Of the Real and Nominal Price of Commodities, ortheir Price in Labour, and their Price in Money

very man is rich or poor according to the degree in whichhe can afford to enjoy the necessaries, conveniences, andamusements of human life. But after the division of labour

has once thoroughly taken place, it is but a very small part of thesewith which a man’s own labour can supply him. The far greaterpart of them he must derive from the labour of other people, andhe must be rich or poor according to the quantity of that labourwhich he can command, or which he can afford to purchase. Thevalue of any commodity, therefore, to the person who possesses it,and who means not to use or consume it himself, but to exchangeit for other commodities, is equal to the quantity of labour which itenables him to purchase or command. Labour, therefore, is thereal measure of the exchangeable value of all commodities.

The real price of everything, what everything really costs to theman who wants to acquire it, is the toil and trouble of acquiring it.What everything is really worth to the man who has acquired it,and who wants to dispose of it or exchange it for something else, isthe toil and trouble which it can save to himself, and which it canimpose upon other people. What is bought with money or withgoods is purchased by labour as much as what we acquire by thetoil of our own body. That money or those goods indeed save usthis toil. They contain the value of a certain quantity of labourwhich we exchange for what is supposed at the time to contain the

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value of an equal quantity. Labour was the first price, the originalpurchase-money that was paid for all things. It was not by gold orby silver, but by labour, that all the wealth of the world wasoriginally purchased; and its value, to those who possess it, andwho want to exchange it for some new productions, is preciselyequal to the quantity of labour which it can enable them topurchase or command.

Wealth, as Mr. Hobbes says, is power. But the person whoeither acquires, or succeeds to a great fortune, does notnecessarily acquire or succeed to any political power, either civilor military. His fortune may, perhaps, afford him the means ofacquiring both, but the mere possession of that fortune does notnecessarily convey to him either. The power which that possessionimmediately and directly conveys to him, is the power ofpurchasing; a certain command over all the labour, or over all theproduce of labour, which is then in the market. His fortune isgreater or less, precisely in proportion to the extent of this power;or to the quantity either of other men’s labour, or, what is thesame thing, of the produce of other men’s labour, which it enableshim to purchase or command. The exchangeable value ofeverything must always be precisely equal to the extent of thispower which it conveys to its owner.

But though labour be the real measure of the exchangeablevalue of all commodities, it is not that by which their value iscommonly estimated. It is of difficult to ascertain the proportionbetween two different quantities of labour. The time spent in twodifferent sorts of work will not always alone determine thisproportion. The different degrees of hardship endured, and ofingenuity exercised, must likewise be taken into account. There



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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 costten years’ labour to learn, than in a month’s industry at anordinary and obvious employment. But it is not easy to find anyaccurate measure either of hardship or ingenuity. In exchanging,indeed, the different productions of different sorts of labour forone another, some allowance is commonly made for both. It isadjusted, however, not by any accurate measure, but by thehiggling and bargaining of the market, according to that sort ofrough equality which, though not exact, is sufficient for carryingon 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 bythe quantity of some other commodity than by that of the labourwhich it can purchase. The greater part of people, too, understandbetter what is meant by a quantity of a particular commodity thanby a quantity of labour. The one is a plain palpable object; theother an abstract notion, which, though it can be made sufficientlyintelligible, is not altogether so natural and obvious.

But when barter ceases, and money has become the commoninstrument of commerce, every particular commodity is morefrequently exchanged for money than for any other commodity.The butcher seldom carries his beef or his mutton to the baker, orthe brewer, in order to exchange them for bread or for beer; buthe carries them to the market, where he exchanges them formoney, and afterwards exchanges that money for bread and forbeer. The quantity of money which he gets for them regulates, too,the quantity of bread and beer which he can afterwards purchase.



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It is more natural and obvious to him, therefore, to estimate theirvalue by the quantity of money, the commodity for which heimmediately exchanges them, than by that of bread and beer, thecommodities for which he can exchange them only by theintervention of another commodity; and rather to say that hisbutcher’s meat is worth threepence or fourpence a pound, thanthat it is worth three or four pounds of bread, or three or fourquarts of small beer. Hence it comes to pass that the exchangeablevalue of every commodity is more frequently estimated by thequantity of money, than by the quantity either of labour or of anyother commodity which can be had in exchange for it.

Gold and silver, however, like every other commodity, vary intheir value, are sometimes cheaper and sometimes dearer,sometimes of easier and sometimes of more difficult purchase. Thequantity of labour which any particular quantity of them canpurchase or command, or the quantity of other goods which it willexchange for, depends always upon the fertility or barrenness ofthe mines which happen to be known about the time when suchexchanges are made. The discovery of the abundant mines ofAmerica reduced, in the sixteenth century, the value of gold andsilver in Europe to about a third of what it had been before. As itcosts less labour to bring those metals from the mine to themarket, so when they were brought thither they could purchase orcommand less labour; and this revolution in their value, thoughperhaps the greatest, is by no means the only one of which historygives some account. But as a measure of quantity, such as thenatural foot, fathom, or handful, which is continually varying in itsown quantity, can never be an accurate measure of the quantity ofother things; so a commodity which is itself continually varying in



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its own value, can never be an accurate measure of the value ofother commodities. Equal quantities of labour, at all times andplaces, may be said to be of equal value to the labourer. In hisordinary state of health, strength and spirits; in the ordinarydegree of his skill and dexterity, he must always lay down thesame portion of his ease, his liberty, and his happiness. The pricewhich he pays must always be the same, whatever may be thequantity of goods which he receives in return for it. Of these,indeed, it may sometimes purchase a greater and sometimes asmaller quantity; but it is their value which varies, not that of thelabour which purchases them. At all times and places that is dearwhich it is difficult to come at, or which it costs much labour toacquire; and that cheap which is to be had easily, or with verylittle labour. Labour alone, therefore, never varying in its ownvalue, is alone the ultimate and real standard by which the valueof all commodities can at all times and places be estimated andcompared. It is their real price; money is their nominal price only.

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

In this popular sense, therefore, labour, like commodities, maybe said to have a real and a nominal price. Its real price may besaid to consist in the quantity of the necessaries and conveniencesof life which are given for it; its nominal price, in the quantity of



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money. The labourer is rich or poor, is well or ill rewarded, inproportion to the real, not to the nominal price of his labour.

The distinction between the real and the nominal price ofcommodities and labour is not a matter of mere speculation, butmay sometimes be of considerable use in practice. The same realprice is always of the same value; but on account of the variationsin the value of gold and silver, the same nominal price issometimes of very different values. When a landed estate,therefore, is sold with a reservation of a perpetual rent, if it isintended that this rent should always be of the same value, it is ofimportance to the family in whose favour it is reserved that itshould not consist in a particular sum of money. Its value would inthis case be liable to variations of two different kinds; first, tothose which arise from the different quantities of gold and silverwhich are contained at different times in coin of the samedenomination; and, secondly, to those which arise from thedifferent values of equal quantities of gold and silver at differenttimes.

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

The discovery of the mines of America diminished the value ofgold and silver in Europe. This diminution, it is commonlysupposed, though I apprehend without any certain proof, is still



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going on gradually, and is likely to continue to do so for a longtime. Upon this supposition, therefore, such variations are morelikely to diminish than to augment the value of a money rent, eventhough it should be stipulated to be paid, not in such a quantity ofcoined money of such a denomination (in so many pounds sterling,for example), but in so many ounces either of pure silver, or ofsilver of a certain standard.

The rents which have been reserved in corn have preservedtheir value much better than those which have been reserved inmoney, even where the denomination of the coin has not beenaltered. By the 18th of Elizabeth it was enacted that a third of therent of all college leases should be reserved in corn, to be paid,either in kind, or according to the current prices at the nearestpublic market. The money arising from this corn rent, thoughoriginally but a third of the whole, is in the present times,according to Dr. Blackstone, commonly near double of what arisesfrom the other two-thirds. The old money rents of colleges must,according to this account, have sunk almost to a fourth part oftheir ancient value; or are worth little more than a fourth part ofthe corn which they were formerly worth. But since the reign ofPhilip and Mary the denomination of the English coin hasundergone little or no alteration, and the same number of pounds,shillings and pence have contained very nearly the same quantityof pure silver. This degradation, therefore, in the value of themoney rents of colleges, has arisen altogether from thedegradation in the value of silver.

When the degradation in the value of silver is combined withthe diminution of the quantity of it contained in the coin of thesame denomination, the loss is frequently still greater. In



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Scotland, where the denomination of the coin has undergonemuch greater alterations than it ever did in England, and inFrance, where it has undergone still greater than it ever did inScotland, 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 purchasedmore nearly with equal quantities of corn, the subsistence of thelabourer, than with equal quantities of gold and silver, or perhapsof any other commodity. Equal quantities of corn, therefore, will,at distant times, be more nearly of the same real value, or enablethe possessor to purchase or command more nearly the samequantity 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. Thesubsistence of the labourer, or the real price of labour, as I shallendeavour to show hereafter, is very different upon differentoccasions; more liberal in a society advancing to opulence than inone that is standing still; and in one that is standing still than inone that is going backwards. Every other commodity, however,will at any particular time purchase a greater or smaller quantityof labour in proportion to the quantity of subsistence which it canpurchase at that time. A rent therefore reserved in corn is liableonly to the variations in the quantity of labour which a certainquantity of corn can purchase. But a rent reserved in any othercommodity is liable not only to the variations in the quantity oflabour which any particular quantity of corn can purchase, but tothe variations in the quantity of corn which can be purchased byany particular quantity of that commodity.

Though the real value of a corn rent, it is to be observed,



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however, varies much less from century to century than that of amoney rent, it varies much more from year to year. The moneyprice of labour, as I shall endeavour to show hereafter, does notfluctuate from year to year with the money price of corn, butseems to be everywhere accommodated, not to the temporary oroccasional, but to the average or ordinary price of that necessaryof life. The average or ordinary price of corn again is regulated, asI shall likewise endeavour to show hereafter, by the value of silver,by the richness or barrenness of the mines which supply themarket with that metal, or by the quantity of labour which must beemployed, and consequently of corn which must be consumed, inorder to bring any particular quantity of silver from the mine tothe market. But the value of silver, though it sometimes variesgreatly from century to century, seldom varies much from year toyear, but frequently continues the same, or very nearly the same,for half a century or a century together. The ordinary or averagemoney price of corn, therefore, may, during so long a period,continue the same or very nearly the same too, and along with itthe money price of labour, provided, at least, the society continues,in other respects, in the same or nearly in the same condition. Inthe meantime the temporary and occasional price of corn mayfrequently be double, one year, of what it had been the yearbefore, or fluctuate, for example, from five and twenty to fiftyshillings the quarter. But when corn is at the latter price, not onlythe nominal, but the real value of a corn rent will be double ofwhat it is when at the former, or will command double thequantity either of labour or of the greater part of othercommodities; the money price of labour, and along with it that ofmost other things, continuing the same during all these



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fluctuations.Labour, therefore, it appears evidently, is the only universal, as

well as the only accurate measure of value, or the only standard bywhich we can compare the values of different commodities at alltimes, and at all places. We cannot estimate, it is allowed, the realvalue of different commodities from century to century by thequantities of silver which were given for them. We cannot estimateit from year to year by the quantities of corn. By the quantities oflabour we can, with the greatest accuracy, estimate it both fromcentury to century and from year to year. From century tocentury, corn is a better measure than silver, because, fromcentury to century, equal quantities of corn will command thesame quantity of labour more nearly than equal quantities ofsilver. From year to year, on the contrary, silver is a bettermeasure than corn, because equal quantities of it will more nearlycommand the same quantity of labour.

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

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

Though at distant places, there is no regular proportion



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between the real and the money price of commodities, yet themerchant who carries goods from the one to the other has nothingto consider but their money price, or the difference between thequantity of silver for which he buys them, and that for which he islikely to sell them. Half an ounce of silver at Canton in China maycommand a greater quantity both of labour and of the necessariesand conveniences of life than an ounce at London. A commodity,therefore, which sells for half an ounce of silver at Canton maythere be really dearer, of more real importance to the man whopossesses it there, than a commodity which sells for an ounce atLondon is to the man who possesses it at London. If a Londonmerchant, 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 anounce of silver was at London exactly of the same value as atCanton. It is of no importance to him that half an ounce of silver atCanton would have given him the command of more labour and ofa greater quantity of the necessaries and conveniences of life thanan ounce can do at London. An ounce at London will always givehim the command of double the quantity of all these which half anounce could have done there, and this is precisely what he wants.

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

In such a work as this, however, it may sometimes be of use tocompare the different real values of a particular commodity atdifferent times and places, or the different degrees of power over



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the labour of other people which it may, upon different occasions,have given to those who possessed it. We must in this casecompare, not so much the different quantities of silver for which itwas commonly sold, as the different quantities of labour whichthose different quantities of silver could have purchased. But thecurrent prices of labour at distant times and places can scarce everbe known with any degree of exactness. Those of corn, thoughthey have in few places been regularly recorded, are in generalbetter known and have been more frequently taken notice of byhistorians and other writers. We must generally, therefore, contentourselves with them, not as being always exactly in the sameproportion as the current prices of labour, but as being the nearestapproximation which can commonly be had to that proportion. Ishall hereafter have occasion to make several comparisons of thiskind.

In the progress of industry, commercial nations have found itconvenient to coin several different metals into money; gold forlarger payments, silver for purchases of moderate value, andcopper, or some other coarse metal, for those of still smallerconsideration. They have always, however, considered one ofthose metals as more peculiarly the measure of value than any ofthe other two; and this preference seems generally to have beengiven to the metal which they happened first to make use of as theinstrument of commerce. Having once begun to use it as theirstandard, which they must have done when they had no othermoney, they have generally continued to do so even when thenecessity was not the same.

The Romans are said to have had nothing but copper money till



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within five years before the first Punic war,1 when they first beganto coin silver. Copper, therefore, appears to have continued alwaysthe measure of value in that republic. At Rome all accounts appearto have been kept, and the value of all estates to have beencomputed either in asses or in sestertii. The as was always thedenomination of a copper coin. The word sestertius signifies twoasses and a half. Though the sestertius, therefore, was originally asilver coin, its value was estimated in copper. At Rome, one whoowed a great deal of money was said to have a great deal of otherpeople’s copper.

The northern nations who established themselves upon theruins of the Roman empire, seem to have had silver money fromthe first beginning of their settlements, and not to have knowneither gold or copper coins for several ages thereafter. There weresilver coins in England in the time of the Saxons; but there waslittle gold coined till the time of Edward III nor any copper till thatof James I of Great Britain. In England, therefore, and for thesame reason, I believe, in all other modern nations of Europe, allaccounts are kept, and the value of all goods and of all estates isgenerally computed in silver: and when we mean to express theamount of a person’s fortune, we seldom mention the number ofguineas, but the number of pounds sterling which we supposewould be given for it.

Originally, in all countries, I believe, a legal tender of paymentcould be made only in the coin of that metal, which was peculiarlyconsidered as the standard or measure of value. In England, goldwas not considered as a legal tender for a long time after it was

1Pliny, xxxiii, 3.



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coined into money. The proportion between the values of gold andsilver money was not fixed by any public law or proclamation; butwas left to be settled by the market. If a debtor offered payment ingold, the creditor might either reject such payment altogether, oraccept of it at such a valuation of the gold as he and his debtorcould agree upon. Copper is not at present a legal tender except inthe change of the smaller silver coins. In this state of things thedistinction between the metal which was the standard, and thatwhich was not the standard, was something more than a nominaldistinction.

In process of time, and as people became gradually morefamiliar with the use of the different metals in coin, andconsequently better acquainted with the proportion between theirrespective values, it has in most countries, I believe, been foundconvenient to ascertain this proportion, and to declare by a publiclaw that a guinea, for example, of such a weight and fineness,should exchange for one-and-twenty shillings, or be a legal tenderfor a debt of that amount. In this state of things, and during thecontinuance of any one regulated proportion of this kind, thedistinction between the metal which is the standard, and thatwhich is not the standard, becomes little more than a nominaldistinction.

In consequence of any change, however, in this regulatedproportion, this distinction becomes, or at least seems to become,something more than nominal again. If the regulated value of aguinea, for example, was either reduced to twenty, or raised totwo-and-twenty shillings, all accounts being kept and almost allobligations for debt being expressed in silver money, the greaterpart of payments could in either case be made with the same



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quantity of silver money as before; but would require verydifferent quantities of gold money; a greater in the one case, and asmaller in the other. Silver would appear to be more invariable inits value than gold. Silver would appear to measure the value ofgold, and gold would not appear to measure the value of silver.The value of gold would seem to depend upon the quantity ofsilver which it would exchange for; and the value of silver wouldnot seem to depend upon the quantity of gold which it wouldexchange for. This difference, however, would be altogether owingto the custom of keeping accounts, and of expressing the amountof all great and small sums rather in silver than in gold money.One of Mr. Drummond’s notes for five-and-twenty or fifty guineaswould, after an alteration of this kind, be still payable with five-and-twenty or fifty guineas in the same manner as before. Itwould, after such an alteration, be payable with the same quantityof gold as before, but with very different quantities of silver. In thepayment of such a note, gold would appear to be more invariablein its value than silver. Gold would appear to measure the value ofsilver, and silver would not appear to measure the value of gold. Ifthe custom of keeping accounts, and of expressing promissorynotes and other obligations for money in this manner, should everbecome general, gold, and not silver, would be considered as themetal which was peculiarly the standard or measure of value.

In reality, during the continuance of any one regulatedproportion between the respective values of the different metals incoin, the value of the most precious metal regulates the value ofthe whole coin. Twelve copper pence contain half a pound,avoirdupois, of copper, of not the best quality, which, before it iscoined, is seldom worth sevenpence in silver. But as by the



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regulation twelve such pence are ordered to exchange for ashilling, they are in the market considered as worth a shilling, anda shilling can at any time be had for them. Even before the latereformation of the gold coin of Great Britain, the gold, that part ofit at least which circulated in London and its neighbourhood, wasin general less degraded below its standard weight than thegreater part of the silver. One-and-twenty worn and defacedshillings, however, were considered as equivalent to a guinea,which perhaps, indeed, was worn and defaced too, but seldom somuch so. The late regulations have brought the gold coin as nearperhaps to its standard weight as it is possible to bring the currentcoin of any nation; and the order, to receive no gold at the publicoffices but by weight, is likely to preserve it so, as long as thatorder is enforced. The silver coin still continues in the same wornand degraded state as before the reformation of the gold coin. Inthe market, however, one-and-twenty shillings of this degradedsilver coin are still considered as worth a guinea of this excellentgold coin.

The reformation of the gold coin has evidently raised the valueof 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 theguinea, is equal to forty-six pounds fourteen shillings andsixpence. An ounce of such gold coin, therefore, is worth £3 17s. 101/2d. in silver. In England no duty or seignorage is paid upon thecoinage, and he who carries a pound weight or an ounce weight ofstandard gold bullion to the mint, gets back a pound weight or anounce weight of gold in coin, without any deduction. Three poundsseventeen shillings and tenpence halfpenny an ounce, therefore, is



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said to be the mint price of gold in England, or the quantity of goldcoin which the mint gives in return for standard gold bullion.

Before the reformation of the gold coin, the price of standardgold bullion in the market had for many years been upwards of £318s. sometimes £3 19s. and very frequently £4 an ounce; that sum,it is probable, in the worn and degraded gold coin, seldomcontaining more than an ounce of standard gold. Since thereformation of the gold coin, the market price of standard goldbullion seldom exceeds £3 17s. 7d. an ounce. Before thereformation of the gold coin, the market price was always more orless above the mint price. Since that reformation, the market pricehas been constantly below the mint price. But that market price isthe same whether it is paid in gold or in silver coin. The latereformation of the gold coin, therefore, has raised not only thevalue of the gold coin, but likewise that of the silver coin inproportion to gold bullion, and probably, too, in proportion to allother commodities; through the price of the greater part of othercommodities being influenced by so many other causes, the rise inthe value either of gold or silver coin in proportion to them maynot be so distinct and sensible.

In the English mint a pound weight of standard silver bullion iscoined into sixty-two shillings, containing, in the same manner, apound weight of standard silver. Five shillings and twopence anounce, therefore, is said to be the mint price of silver in England,or the quantity of silver coin which the mint gives in return forstandard silver bullion. Before the reformation of the gold coin,the market price of standard silver bullion was, upon differentoccasions, five shillings and fourpence, five shillings andfivepence, five shillings and sixpence, five shillings and



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sevenpence, and very often five shillings and eightpence an ounce.Five shillings and sevenpence, however, seems to have been themost common price. Since the reformation of the gold coin, themarket price of standard silver bullion has fallen occasionally tofive shillings and threepence, five shillings and fourpence, and fiveshillings and fivepence an ounce, which last price it has scarceever exceeded. Though the market price of silver bullion has fallenconsiderably since the reformation of the gold coin, it has notfallen so low as the mint price.

In the proportion between the different metals in the Englishcoin, as copper is rated very much above its real value, so silver israted somewhat below it. In the market of Europe, in the Frenchcoin and in the Dutch coin, an ounce of fine gold exchanges forabout fourteen ounces of fine silver. In the English coin, itexchanges for about fifteen ounces, that is, for more silver than itis worth according to the common estimation of Europe. But asthe price of copper in bars is not, even in England, raised by thehigh price of copper in English coin, so the price of silver inbullion is not sunk by the low rate of silver in English coin. Silverin bullion still preserves its proper proportion to gold; for the samereason that copper in bars preserves its proper proportion tosilver.

Upon the reformation of the silver coin in the reign of WilliamIII the price of silver bullion still continued to be somewhat abovethe mint price. Mr. Locke imputed this high price to thepermission of exporting silver bullion, and to the prohibition ofexporting silver coin. This permission of exporting, he said,rendered the demand for silver bullion greater than the demandfor silver coin. But the number of people who want silver coin for



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the common uses of buying and selling at home, is surely muchgreater than that of those who want silver bullion either for theuse of exportation or for any other use. There subsists at present alike permission of exporting gold bullion, and a like prohibition ofexporting gold coin: and yet the price of gold bullion has fallenbelow the mint price. But in the English coin silver was then, inthe same manner as now, under-rated in proportion to gold, andthe gold coin (which at that time too was not supposed to requireany reformation) regulated then, as well as now, the real value ofthe whole coin. As the reformation of the silver coin did not thenreduce the price of silver bullion to the mint price, it is not veryprobable that a like reformation will do so now.

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

The inconveniency perhaps would be less if silver was rated inthe coin as much above its proper proportion to gold as it is atpresent rated below it; provided it was at the same time enactedthat silver should not be a legal tender for more than the change ofa guinea, in the same manner as copper is not a legal tender formore than the change of a shilling. No creditor could in this casebe cheated in consequence of the high valuation of silver in coin;as no creditor can at present be cheated in consequence of the



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high valuation of copper. The bankers only would suffer by thisregulation. When a run comes upon them they sometimesendeavour to gain time by paying in sixpences, and they would beprecluded by this regulation from this discreditable method ofevading immediate payment. They would be obliged inconsequence to keep at all times in their coffers a greater quantityof cash than at present; and though this might no doubt be aconsiderable inconveniency to them, it would at the same time bea considerable security to their creditors.

Three pounds seventeen shillings and tenpence halfpenny (themint price of gold) certainly does not contain, even in our presentexcellent gold coin, more than an ounce of standard gold, and itmay be thought, therefore, should not purchase more standardbullion. But gold in coin is more convenient than gold in bullion,and though, in England, the coinage is free, yet the gold which iscarried in bullion to the mint can seldom be returned in coin to theowner till after a delay of several weeks. In the present hurry ofthe mint, it could not be returned till after a delay of severalmonths. This delay is equivalent to a small duty, and renders goldin coin somewhat more valuable than an equal quantity of gold inbullion. If in the English coin silver was rated according to itproper proportion to gold, the price of silver bullion wouldprobably fall below the mint price even without any reformation ofthe silver coin; the value even of the present worn and defacedsilver coin being regulated by the value of the excellent gold coinfor which it can be changed.

A small seignorage or duty upon the coinage of both gold andsilver would probably increase still more the superiority of thosemetals in coin above an equal quantity of either of them in bullion.



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The coinage would in this case increase the value of the metalcoined in proportion to the extent of this small duty; for the samereason that the fashion increases the value of plate in proportionto the price of that fashion. The superiority of coin above bullionwould prevent the melting down of the coin, and would discourageits exportation. If upon any public exigency it should becomenecessary to export the coin, the greater part of it would soonreturn again of its own accord. Abroad it could sell only for itsweight in bullion. At home it would buy more than that weight.There would be a profit, therefore, in bringing it home again. InFrance a seignorage of about eight per cent is imposed upon thecoinage, and the French coin, when exported, is said to returnhome again of its own accord.

The occasional fluctuations in the market price of gold andsilver bullion arise from the same causes as the like fluctuations inthat of all other commodities. The frequent loss of those metalsfrom various accidents by sea and by land, the continual waste ofthem in gilding and plating, in lace and embroidery, in the wearand tear of coin, and in that of plate; require, in all countrieswhich possess no mines of their own, a continual importation, inorder to repair this loss and this waste. The merchant importers,like all other merchants, we may believe, endeavour, as well asthey 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 sometimesunderdo it. When they import more bullion than is wanted, ratherthan incur the risk and trouble of exporting it again, they aresometimes willing to sell a part of it for something less than theordinary or average price. When, on the other hand, they import



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less than is wanted, they get something more than this price. Butwhen, under all those occasional fluctuations, the market priceeither of gold or silver bullion continues for several years togethersteadily and constantly, either more or less above, or more or lessbelow the mint price, we may be assured that this steady andconstant, either superiority or inferiority of price, is the effect ofsomething in the state of the coin, which, at that time, renders acertain quantity of coin either of more value or of less value thanthe precise quantity of bullion which it ought to contain. Theconstancy and steadiness of the effect supposes a proportionableconstancy and steadiness in the cause.

The money of any particular country is, at any particular timeand place, more or less an accurate measure of value according asthe current coin is more or less exactly agreeable to its standard,or contains more or less exactly the precise quantity of pure goldor pure silver which it ought to contain. If in England, for example,forty-four guineas and a half contained exactly a pound weight ofstandard gold, or eleven ounces of fine gold and one ounce ofalloy, the gold coin of England would be as accurate a measure ofthe actual value of goods at any particular time and place as thenature of the thing would admit. But if, by rubbing and wearing,forty-four guineas and a half generally contain less than a poundweight of standard gold; the diminution, however, being greater insome pieces than in others; the measure of value comes to beliable to the same sort of uncertainty to which all other weightsand measures are commonly exposed. As it rarely happens thatthese are exactly agreeable to their standard, the merchant adjuststhe price of his goods, as well as he can, not to what those weightsand measures ought to be, but to what, upon an average, he finds



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by experience they actually are. In consequence of a like disorderin the coin, the price of goods comes, in the same manner, to beadjusted, not to the quantity of pure gold or silver which the cornought to contain, but to that which, upon an average, it is found byexperience, it actually does contain.

By the money-price of goods, it is to be observed, I understandalways the quantity of pure gold or silver for which they are sold,without any regard to the denomination of the coin. Six shillingsand eightpence, for example, in the time of Edward I, I consider asthe same money-price with a pound sterling in the present times;because it contained, as nearly as we can judge, the same quantityof pure silver.



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Chapter VI

Of the Component Parts of the Price ofCommodities

n that early and rude state of society which precedes both theaccumulation of stock and the appropriation of land, theproportion between the quantities of labour necessary for

acquiring different objects seems to be the only circumstancewhich can afford any rule for exchanging them for one another. Ifamong a nation of hunters, for example, it usually costs twice thelabour to kill a beaver which it does to kill a deer, one beavershould naturally exchange for or be worth two deer. It is naturalthat 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’sor one hour’s labour.

If the one species of labour should be more severe than theother, some allowance will naturally be made for this superiorhardship; and the produce of one hour’s labour in the one waymay frequently exchange for that of two hours’ labour in the other.

Or if the one species of labour requires an uncommon degree ofdexterity and ingenuity, the esteem which men have for suchtalents will naturally give a value to their produce, superior towhat would be due to the time employed about it. Such talents canseldom be acquired but in consequence of long application, andthe superior value of their produce may frequently be no morethan a reasonable compensation for the time and labour whichmust be spent in acquiring them. In the advanced state of society,

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allowances of this kind, for superior hardship and superior skill,are commonly made in the wages of labour; and something of thesame kind must probably have taken place in its earliest andrudest period.

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

As soon as stock has accumulated in the hands of particularpersons, some of them will naturally employ it in setting to workindustrious people, whom they will supply with materials andsubsistence, in order to make a profit by the sale of their work, orby what their labour adds to the value of the materials. Inexchanging the complete manufacture either for money, forlabour, or for other goods, over and above what may be sufficientto pay the price of the materials, and the wages of the workmen,something must be given for the profits of the undertaker of thework who hazards his stock in this adventure. The value which theworkmen add to the materials, therefore, resolves itself in thisease into two parts, of which the one pays their wages, the otherthe profits of their employer upon the whole stock of materials andwages which he advanced. He could have no interest to employthem, unless he expected from the sale of their work somethingmore than what was sufficient to replace his stock to him; and hecould have no interest to employ a great stock rather than a smallone, unless his profits were to bear some proportion to the extentof his stock.

The profits of stock, it may perhaps be thought are only a



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different name for the wages of a particular sort of labour, thelabour of inspection and direction. They are, however, altogetherdifferent, are regulated by quite different principles, and bear noproportion to the quantity, the hardship, or the ingenuity of thissupposed labour of inspection and direction. They are regulatedaltogether by the value of the stock employed, and are greater orsmaller in proportion to the extent of this stock. Let us suppose,for example, that in some particular place, where the commonannual profits of manufacturing stock are ten per cent, there aretwo different manufactures, in each of which twenty workmen areemployed at the rate of fifteen pounds a year each, or at theexpense of three hundred a year in each manufactory. Let ussuppose, too, that the coarse materials annually wrought up in theone cost only seven hundred pounds, while the finer materials inthe other cost seven thousand. The capital annually employed inthe one will in this case amount only to one thousand pounds;whereas that employed in the other will amount to seven thousandthree hundred pounds. At the rate of ten per cent, therefore, theundertaker of the one will expect a yearly profit of about onehundred pounds only; while that of the other will expect aboutseven hundred and thirty pounds. But though their profits are sovery different, their labour of inspection and direction may beeither altogether or very nearly the same. In many great worksalmost the whole labour of this kind is committed to someprincipal clerk. His wages properly express the value of this labourof inspection and direction. Though in settling them some regardis had commonly, not only to his labour and skill, but to the trustwhich is reposed in him, yet they never bear any regularproportion to the capital of which he oversees the management;



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and the owner of this capital, though he is thus discharged ofalmost all labour, still expects that his profits should bear a regularproportion to his capital. In the price of commodities, therefore,the profits of stock constitute a component part altogetherdifferent from the wages of labour, and regulated by quitedifferent principles.

In this state of things, the whole produce of labour does notalways belong to the labourer. He must in most cases share it withthe owner of the stock which employs him. Neither is the quantityof labour commonly employed in acquiring or producing anycommodity, the only circumstance which can regulate the quantitywhich it ought commonly to purchase, command, or exchange for.An additional quantity, it is evident, must be due for the profits ofthe stock which advanced the wages and furnished the materialsof that labour.

As soon as the land of any country has all become privateproperty, the landlords, like all other men, love to reap where theynever sowed, and demand a rent even for its natural produce. Thewood of the forest, the grass of the field, and all the natural fruitsof the earth, which, when land was in common, cost the laboureronly the trouble of gathering them, come, even to him, to have anadditional price fixed upon them. He must then pay for the licenceto gather them; and must give up to the landlord a portion of whathis labour either collects or produces. This portion, or, what comesto the same thing, the price of this portion, constitutes the rent ofland, and in the price of the greater part of commodities makes athird component part.

The real value of all the different component parts of price, itmust be observed, is measured by the quantity of labour which



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they can, each of them, purchase or command. Labour measuresthe value not only of that part of price which resolves itself intolabour, but of that which resolves itself into rent, and of that whichresolves itself into profit.

In every society the price of every commodity finally resolvesitself into some one or other, or all of those three parts; and inevery improved society, all the three enter more or less, ascomponent parts, into the price of the far greater part ofcommodities.

In the price of corn, for example, one part pays the rent of thelandlord, another pays the wages or maintenance of the labourersand labouring cattle employed in producing it, and the third paysthe profit of the farmer. These three parts seem eitherimmediately or ultimately to make up the whole price of corn. Afourth part, it may perhaps be thought, is necessary for replacingthe stock of the farmer, or for compensating the wear and tear ofhis labouring cattle, and other instruments of husbandry. But itmust be considered that the price of any instrument of husbandry,such as a labouring horse, is itself made up of the same threeparts; the rent of the land upon which he is reared, the labour oftending and rearing him, and the profits of the farmer whoadvances both the rent of this land, and the wages of this labour.Though the price of the corn, therefore, may pay the price as wellas the maintenance of the horse, the whole price still resolves itselfeither 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 thecorn, the profits of the miller, and the wages of his servants; in theprice of bread, the profits of the baker, and the wages of his



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servants; and in the price of both, the labour of transporting thecorn from the house of the farmer to that of the miller, and fromthat of the miner to that of the baker, together with the profits ofthose who advance the wages of that labour.

The price of flax resolves itself into the same three parts as thatof corn. In the price of linen we must add to this price the wages ofthe 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 profitcomes to be greater in proportion to that which resolves itself intorent. In the progress of the manufacture, not only the number ofprofits increase, but every subsequent profit is greater than theforegoing; because the capital from which it is derived mustalways be greater. The capital which employs the weavers, forexample, 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 alwaysbear some proportion to the capital.

In the most improved societies, however, there are always a fewcommodities of which the price resolves itself into two parts only,the wages of labour, and the profits of stock; and a still smallernumber, in which it consists altogether in the wages of labour. Inthe price of sea-fish, for example, one part pays the labour of thefishermen, and the other the profits of the capital employed in thefishery. Rent very seldom makes any part of it, though it doessometimes, as I shall show hereafter. It is otherwise, at leastthrough the greater part of Europe, in river fisheries. A salmonfishery pays a rent, and rent, though it cannot well be called the



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rent of land, makes a part of the price of a salmon as well as wagesand profit. In some parts of Scotland a few poor people make atrade of gathering, along the sea-shore, those little variegatedstones commonly known by the name of Scotch Pebbles. The pricewhich is paid to them by the stone-cutter is altogether the wages oftheir labour; neither rent nor profit make any part of it.

But the whole price of any commodity must still finally resolveitself into some one or other, or all of those three parts; aswhatever part of it remains after paying the rent of the land, andthe 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 particularcommodity, taken separately, resolves itself into some one or otheror all of those three parts; so that of all the commodities whichcompose the whole annual produce of the labour of every country,taken complexly, must resolve itself into the same three parts, andbe parcelled out among different inhabitants of the country, eitheras the wages of their labour, the profits of their stock, or the rentof their land. The whole of what is annually either collected orproduced by the labour of every society, or what comes to thesame thing, the whole price of it, is in this manner originallydistributed among some of its different members. Wages, profit,and rent, are the three original sources of all revenue as well as ofall exchangeable value. All other revenue is ultimately derivedfrom 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 hisland. The revenue derived from labour is called wages. Thatderived from stock, by the person who manages or employes it, is



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called profit. That derived from it by the person who does notemploy it himself, but lends it to another, is called the interest orthe use of money. It is the compensation which the borrower paysto the lender, for the profit which he has an opportunity of makingby the use of the money. Part of that profit naturally belongs to theborrower, who runs the risk and takes the trouble of employing it;and part to the lender, who affords him the opportunity of makingthis 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 ofthe money, must be paid from some other source of revenue,unless perhaps the borrower is a spendthrift, who contracts asecond debt in order to pay the interest of the first. The revenuewhich proceeds altogether from land, is called rent, and belongs tothe landlord. The revenue of the farmer is derived partly from hislabour, and partly from his stock. To him, land is only theinstrument which enables him to earn the wages of this labour,and to make the profits of this stock. All taxes, and an the revenuewhich is founded upon them, all salaries, pensions, and annuitiesof every kind, are ultimately derived from some one or other ofthose three original sources of revenue, and are paid eitherimmediately or mediately from the wages of labour, the profits ofstock, or the rent of land.

When those three different sorts of revenue belong to differentpersons, they are readily distinguished; but when they belong tothe same they are sometimes confounded with one another, atleast in common language.

A gentleman who farms a part of his own estate, after payingthe expense of cultivation, should gain both the rent of thelandlord and the profit of the farmer. He is apt to denominate,



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however, his whole gain, profit, and thus confounds rent withprofit, at least in common language. The greater part of our NorthAmerican and West Indian planters are in this situation. Theyfarm, the greater part of them, their own estates, and accordinglywe seldom hear of the rent of a plantation, but frequently of itsprofit.

Common farmers seldom employ any overseer to direct thegeneral operations of the farm. They generally, too, work a gooddeal with their own hands, as ploughmen, harrowers, etc. Whatremains of the crop after paying the rent, therefore, should notonly replace to them their stock employed in cultivation, togetherwith its ordinary profits, but pay them the wages which are due tothem, both as labourers and overseers. Whatever remains,however, after paying the rent and keeping up the stock, is calledprofit. But wages evidently make a part of it. The farmer, bysaving these wages, must necessarily gain them. Wages, therefore,are in this case confounded with profit.

An independent manufacturer, who has stock enough both topurchase materials, and to maintain himself till he can carry hiswork to market, should gain both the wages of a journeyman whoworks under a master, and the profit which that master makes bythe sale of the journeyman’s work. His whole gains, however, arecommonly 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 therent of the first, the profit of the second, and the wages of thethird. The whole, however, is commonly considered as the



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earnings of his labour. Both rent and profit are, in this case,confounded with wages.

As in a civilised country there are but few commodities of whichthe exchangeable value arises from labour only, rent and profitcontributing largely to that of the far greater part of them, so theannual produce of its labour will always be sufficient to purchaseor command a much greater quantity of labour than whatemployed in raising, preparing, and bringing that produce tomarket. If the society were annually to employ all the labour whichit can annually purchase, as the quantity of labour would increasegreatly every year, so the produce of every succeeding year wouldbe of vastly greater value than that of the foregoing. But there isno country in which the whole annual produce is employed inmaintaining the industrious. The idle everywhere consume a greatpart of it; and according to the different proportions in which it isannually divided between those two different orders of people, itsordinary or average value must either annually increase, ordiminish, or continue the same from one year to another.



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Chapter VII

Of the Natural and Market Price of Commodities

here is in every society or neighbourhood an ordinary oraverage rate both of wages and profit in every differentemployment of labour and stock. This rate is naturally

regulated, as I shall show hereafter, partly by the generalcircumstances of the society, their riches or poverty, theiradvancing, stationary, or declining condition; and partly by theparticular nature of each employment.

There is likewise in every society or neighbourhood an ordinaryor average rate of rent, which is regulated too, as I shall showhereafter, partly by the general circumstances of the society orneighbourhood in which the land is situated, and partly by thenatural or improved fertility of the land.

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

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

The commodity is then sold precisely for what it is worth, or forwhat it really costs the person who brings it to market; for thoughin common language what is called the prime cost of anycommodity does not comprehend the profit of the person who is to

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sell it again, yet if he sell it at a price which does not allow him theordinary rate of profit in his neighbourhood, he is evidently a loserby the trade; since by employing his stock in some other way hemight have made that profit. His profit, besides, is his revenue, theproper fund of his subsistence. As, while he is preparing andbringing the goods to market, he advances to his workmen theirwages, or their subsistence; so he advances to himself, in the samemanner, his own subsistence, which is generally suitable to theprofit which he may reasonably expect from the sale of his goods.Unless they yield him this profit, therefore, they do not repay himwhat they may very properly be said to have really cost him.

Though the price, therefore, which leaves him this profit is notalways the lowest at which a dealer may sometimes sell his goods,it is the lowest at which he is likely to sell them for anyconsiderable time; at least where there is perfect liberty, or wherehe may change his trade as often as he pleases.

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

The market price of every particular commodity is regulated bythe proportion between the quantity which is actually brought tomarket, and the demand of those who are willing to pay thenatural 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 theirdemand the effectual demand; since it may be sufficient toeffectuate the bringing of the commodity to market. It is differentfrom the absolute demand. A very poor man may be said in somesense to have a demand for a coach and six; he might like to have



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it; but his demand is not an effectual demand, as the commoditycan never be brought to market in order to satisfy it.

When the quantity of any commodity which is brought tomarket falls short of the effectual demand, all those who arewilling to pay the whole value of the rent, wages, and profit, whichmust be paid in order to bring it thither, cannot be supplied withthe quantity which they want. Rather than want it altogether,some of them will be willing to give more. A competition willimmediately begin among them, and the market price will risemore or less above the natural price, according as either thegreatness of the deficiency, or the wealth and wanton luxury of thecompetitors, happen to animate more or less the eagerness of thecompetition. Among competitors of equal wealth and luxury thesame deficiency will generally occasion a more or less eagercompetition, according as the acquisition of the commodityhappens to be of more or less importance to them. Hence theexorbitant price of the necessaries of life during the blockade of atown or in a famine.

When the quantity brought to market exceeds the effectualdemand, it cannot be all sold to those who are willing to pay thewhole value of the rent, wages, and profit, which must be paid inorder to bring it thither. Some part must be sold to those who arewilling to pay less, and the low price which they give for it mustreduce the price of the whole. The market price will sink more orless below the natural price, according as the greatness of theexcess increases more or less the competition of the sellers, oraccording as it happens to be more or less important to them toget immediately rid of the commodity. The same excess in theimportation of perishable, will occasion a much greater



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competition than in that of durable commodities; in theimportation of oranges, for example, than in that of old iron.

When the quantity brought to market is just sufficient to supplythe effectual demand, and no more, the market price naturallycomes to be either exactly, or as nearly as can be judged of, thesame with the natural price. The whole quantity upon hand can bedisposed of for this price, and cannot be disposed of for more. Thecompetition of the different dealers obliges them all to accept ofthis price, but does not oblige them to accept of less.

The quantity of every commodity brought to market naturallysuits itself to the effectual demand. It is the interest of all thosewho employ their land, labour, or stock, in bringing anycommodity to market, that the quantity never should exceed theeffectual demand; and it is the interest of all other people that itnever should fall short of that demand.

If at any time it exceeds the effectual demand, some of thecomponent parts of its price must be paid below their natural rate.If it is rent, the interest of the landlords will immediately promptthem 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 theiremployers in the other, will prompt them to withdraw a part oftheir labour or stock from this employment. The quantity broughtto market will soon be no more than sufficient to supply theeffectual demand. All the different parts of its price will rise totheir natural rate, and the whole price to its natural price.

If, on the contrary, the quantity brought to market should atany time fall short of the effectual demand, some of the componentparts of its price must rise above their natural rate. If it is rent, theinterest of all other landlords will naturally prompt them to



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prepare more land for the raising of this commodity; if it is wagesor profit, the interest of all other labourers and dealers will soonprompt them to employ more labour and stock in preparing andbringing it to market. The quantity brought thither will soon besufficient to supply the effectual demand. All the different parts ofits price will soon sink to their natural rate, and the whole price toits natural price.

The natural price, therefore, is, as it were, the central price, towhich the prices of all commodities are continually gravitating.Different accidents may sometimes keep them suspended a gooddeal above it, and sometimes force them down even somewhatbelow it. But whatever may be the obstacles which hinder themfrom settling in this centre of repose and continuance, they areconstantly tending towards it.

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

But in some employments the same quantity of industry will indifferent years produce very different quantities of commodities;while in others it will produce always the same, or very nearly thesame. The same number of labourers in husbandry will, indifferent years, produce very different quantities of corn, wine, oil,hops, etc. But the same number of spinners and weavers will everyyear produce the same or very nearly the same quantity of linenand woollen cloth. It is only the average produce of the one speciesof industry which can be suited in any respect to the effectualdemand; and as its actual produce is frequently much greater and



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frequently much less than its average produce, the quantity of thecommodities brought to market will sometimes exceed a gooddeal, and sometimes fall short a good deal, of the effectualdemand. Even though that demand therefore should continuealways the same, their market price will be liable to greatfluctuations, will sometimes fall a good deal below, and sometimesrise a good deal above their natural price. In the other species ofindustry, the produce of equal quantities of labour being alwaysthe same, or very nearly the same, it can be more exactly suited tothe effectual demand. While that demand continues the same,therefore, the market price of the commodities is likely to do sotoo, and to be either altogether, or as nearly as can be judged of,the same with the natural price. That the price of linen andwoollen cloth is liable neither to such frequent nor to such greatvariations as the price of corn, every man’s experience will informhim. The price of the one species of commodities varies only withthe variations in the demand: that of the other varies, not onlywith the variations in the demand, but with the much greater andmore frequent variations in the quantity of what is brought tomarket in order to supply that demand.

The occasional and temporary fluctuations in the market priceof any commodity fall chiefly upon those parts of its price whichresolve themselves into wages and profit. That part which resolvesitself into rent is less affected by them. A rent certain in money isnot in the least affected by them either in its rate or in its value. Arent which consists either in a certain proportion or in a certainquantity of the rude produce, is no doubt affected in its yearlyvalue by all the occasional and temporary fluctuations in themarket price of that rude produce; but it is seldom affected by



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them in its yearly rate. In settling the terms of the lease, thelandlord and farmer endeavour, according to their best judgment,to adjust that rate, not to the temporary and occasional, but to theaverage and ordinary price of the produce.

Such fluctuations affect both the value and the rate either ofwages or of profit, according as the market happens to be eitheroverstocked or understocked with commodities or with labour;with work done, or with work to be done. A public mourningraises the price of black cloth (with which the market is almostalways understocked upon such occasions), and augments theprofits of the merchants who possess any considerable quantity ofit. It has no effect upon the wages of the weavers. The market isunderstocked with commodities, not with labour; with work done,not with work to be done. It raises the wages of journeymentailors. The market is here understocked with labour. There is aneffectual demand for more labour, for more work to be done thancan be had. It sinks the price of coloured silks and cloths, andthereby reduces the profits of the merchants who have anyconsiderable quantity of them upon hand. It sinks, too, the wagesof the workmen employed in preparing such commodities, forwhich all demand is stopped for six months, perhaps for atwelvemonth. The market is here over-stocked both withcommodities and with labour.

But though the market price of every particular commodity isin this manner continually gravitating, if one may say so, towardsthe natural price, yet sometimes particular accidents, sometimesnatural causes, and sometimes particular regulations of police,may, in many commodities, keep up the market price, for a longtime together, a good deal above the natural price.



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

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

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



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Some natural productions require such a singularity of soil andsituation that all the land in a great country, which is fit forproducing them, may not be sufficient to supply the effectualdemand. The whole quantity brought to market, therefore, may bedisposed of to those who are willing to give more than what issufficient to pay the rent of the land which produced them,together with the wages of the labour, and the profits of the stockwhich were employed in preparing and bringing them to market,according to their natural rates. Such commodities may continuefor whole centuries together to be sold at this high price; and thatpart of it which resolves itself into the rent of land is in this casethe part which is generally paid above its natural rate. The rent ofthe land which affords such singular and esteemed productions,like the rent of some vineyards in France of a peculiarly happy soiland situation, bears no regular proportion to the rent of otherequally fertile and equally well-cultivated land in itsneighbourhood. The wages of the labour and the profits of thestock employed in bringing such commodities to market, on thecontrary, are seldom out of their natural proportion to those of theother employments of labour and stock in their neighbourhood.

Such enhancements of the market price are evidently the effectof natural causes which may hinder the effectual demand fromever being fully supplied, and which may continue, therefore, tooperate for ever.

A monopoly granted either to an individual or to a tradingcompany 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 theircommodities much above the natural price, and raise their



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emoluments, whether they consist in wages or profit, greatlyabove their natural rate.

The price of monopoly is upon every occasion the highest whichcan be got. The natural price, or the price of free competition, onthe contrary, is the lowest which can be taken, not upon everyoccasion, indeed, but for any considerable time together. The oneis upon every occasion the highest which can be squeezed out ofthe buyers, or which, it is supposed, they will consent to give: theother 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 ofapprenticeship, and all those laws which restrain, in particularemployments, the competition to a smaller number than mightotherwise go into them, have the same tendency, though in a lessdegree. They are a sort of enlarged monopolies, and mayfrequently, for ages together, and in whole classes ofemployments, keep up the market price of particular commoditiesabove the natural price, and maintain both the wages of the labourand the profits of the stock employed about them somewhat abovetheir natural rate.

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

The market price of any particular commodity, though it maycontinue long above, can seldom continue long below its naturalprice. Whatever part of it was paid below the natural rate, thepersons whose interest it affected would immediately feel the loss,and would immediately withdraw either so much land, or so muchlabour, or so much stock, from being employed about it, that thequantity brought to market would soon be no more than sufficient



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to supply the effectual demand. Its market price, therefore, wouldsoon rise to the natural price. This at least would be the casewhere there was perfect liberty.

The same statutes of apprenticeship and other corporation lawsindeed, which, when a manufacture is in prosperity, enable theworkman to raise his wages a good deal above their natural rate,sometimes oblige him, when it decays, to let them down a gooddeal below it. As in the one case they exclude many people fromhis employment, so in the other they exclude him from manyemployments. The effect of such regulations, however, is not nearso durable in sinking the workman’s wages below, as in raisingthem above their natural rate. Their operation in the one way mayendure for many centuries, but in the other it can last no longerthan the lives of some of the workmen who were bred to thebusiness in the time of its prosperity. When they are gone, thenumber of those who are afterwards educated to the trade willnaturally suit itself to the effectual demand. The police must be asviolent as that of Indostan or ancient Egypt (where every man wasbound by a principle of religion to follow the occupation of hisfather, and was supposed to commit the most horrid sacrilege if hechanged it for another), which can in any particular employment,and for several generations together, sink either the wages oflabour or the profits of stock below their natural rate.

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

The natural price itself varies with the natural rate of each of itscomponent parts, of wages, profit, and rent; and in every societythis rate varies according to their circumstances, according to



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their riches or poverty, their advancing, stationary, or decliningcondition. I shall, in the four following chapters, endeavour toexplain, as fully and distinctly as I can, the causes of thosedifferent variations.

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

Secondly, I shall endeavour to show what are the circumstanceswhich naturally determine the rate of profit, and in what manner,too, those circumstances are affected by the like variations in thestate of the society.

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

In the fourth and last place, I shall endeavour to show what arethe circumstances which regulate the rent of land, and whicheither raise or lower the real price of all the different substances



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which it produces.



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Chapter VIII

Of the Wages of Labour

he produce of labour constitutes the natural recompenseor wages of labour.

In that original state of things, which precedes both theappropriation of land and the accumulation of stock, the wholeproduce of labour belongs to the labourer. He has neither landlordnor master to share with him.

Had this state continued, the wages of labour would haveaugmented with all those improvements in its productive powersto which the division of labour gives occasion. All things wouldgradually have become cheaper. They would have been producedby a smaller quantity of labour; and as the commodities producedby equal quantities of labour would naturally in this state of thingsbe exchanged for one another, they would have been purchasedlikewise with the produce of a smaller quantity.

But though all things would have become cheaper in reality, inappearance many things might have become dearer than before,or have been exchanged for a greater quantity of other goods. Letus suppose, for example, that in the greater part of employmentsthe productive powers of labour had been improved to ten fold, orthat a day’s labour could produce ten times the quantity of workwhich it had done originally; but that in a particular employmentthey had been improved, only to double, or that a day’s labourcould produce only twice the quantity of work which it had donebefore. In exchanging the produce of a day’s labour in the greater

T



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part of employments for that of a day’s labour in this particularone, ten times the original quantity of work in them wouldpurchase only twice the original quantity in it. Any particularquantity in it, therefore, a pound weight, for example, wouldappear to be five times dearer than before. In reality, however, itwould be twice as cheap. Though it required five times thequantity of other goods to purchase it, it would require only halfthe quantity of labour either to purchase or to produce it. Theacquisition, therefore, would be twice as easy as before.

But this original state of things, in which the labourer enjoyedthe whole produce of his own labour, could not last beyond thefirst introduction of the appropriation of land and theaccumulation of stock. It was at an end, therefore, long before themost considerable improvements were made in the productivepowers of labour, and it would be to no purpose to trace furtherwhat might have been its effects upon the recompense or wages oflabour.

As soon as land becomes private property, the landlorddemands a share of almost all the produce which the labourer caneither raise, or collect from it. His rent makes the first deductionfrom the produce of the labour which is employed upon land.

It seldom happens that the person who tills the ground haswherewithal to maintain himself till he reaps the harvest. Hismaintenance is generally advanced to him from the stock of amaster, the farmer who employs him, and who would have nointerest to employ him, unless he was to share in the produce ofhis labour, or unless his stock was to be replaced to him with aprofit. This profit, makes a second deduction from the produce ofthe labour which is employed upon land.



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The produce of almost all other labour is liable to the likededuction of profit. In all arts and manufactures the greater partof the workmen stand in need of a master to advance them thematerials of their work, and their wages and maintenance till it becompleted. He shares in the produce of their labour, or in thevalue 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 independentworkman has stock sufficient both to purchase the materials of hiswork, and to maintain himself till it be completed. He is bothmaster and workman, and enjoys the whole produce of his ownlabour, or the whole value which it adds to the materials uponwhich it is bestowed. It includes what are usually two distinctrevenues, 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 ofEurope, twenty workmen serve under a master for one that isindependent; and the wages of labour are everywhere understoodto be, what they usually are, when the labourer is one person, andthe owner of the stock which employs him another.

What are the common wages of labour, depends everywhereupon the contract usually made between those two parties, whoseinterests are by no means the same. The workmen desire to get asmuch, the masters to give as little as possible. The former aredisposed to combine in order to raise, the latter in order to lowerthe wages of labour.

It is not, however, difficult to foresee which of the two partiesmust, upon all ordinary occasions, have the advantage in thedispute, and force the other into a compliance with their terms.



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The masters, being fewer in number, can combine much moreeasily; and the law, besides, authorizes, or at least does notprohibit their combinations, while it prohibits those of theworkmen. We have no acts of parliament against combining tolower the price of work; but many against combining to raise it. Inall such disputes the masters can hold out much longer. Alandlord, a farmer, a master manufacturer, a merchant, thoughthey did not employ a single workman, could generally live a yearor two upon the stocks which they have already acquired. Manyworkmen could not subsist a week, few could subsist a month, andscarce any a year without employment. In the long run theworkman may be as necessary to his master as his master is tohim; 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 ofthe world as of the subject. Masters are always and everywhere ina sort of tacit, but constant and uniform combination, not to raisethe wages of labour above their actual rate. To violate thiscombination is everywhere a most unpopular action, and a sort ofreproach to a master among his neighbours and equals. Weseldom, indeed, hear of this combination, because it is the usual,and one may say, the natural state of things, which nobody everhears of. Masters, too, sometimes enter into particularcombinations 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 theysometimes do, without resistance, though severely felt by them,they are never heard of by other people. Such combinations,



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however, are frequently resisted by a contrary defensivecombination of the workmen; who sometimes too, without anyprovocation of this kind, combine of their own accord to raise theprice of their labour. Their usual pretences are, sometimes thehigh price of provisions; sometimes the great profit which theirmasters make by their work. But whether their combinations beoffensive or defensive, they are always abundantly heard of. Inorder to bring the point to a speedy decision, they have alwaysrecourse to the loudest clamour, and sometimes to the mostshocking violence and outrage. They are desperate, and act withthe folly and extravagance of desperate men, who must eitherstarve, or frighten their masters into an immediate compliancewith their demands. The masters upon these occasions are just asclamorous upon the other side, and never cease to call aloud forthe assistance of the civil magistrate, and the rigorous execution ofthose laws which have been enacted with so much severity againstthe combinations of servants, labourers, and journeymen. Theworkmen, accordingly, very seldom derive any advantage from theviolence of those tumultuous combinations, which, partly from theinterposition of the civil magistrate, partly from the necessitysuperior steadiness of the masters, partly from the necessity whichthe greater part of the workmen are under of submitting for thesake of present subsistence, generally end in nothing, but thepunishment or ruin of the ringleaders.

But though in disputes with their workmen, masters mustgenerally have the advantage, there is, however, a certain ratebelow which it seems impossible to reduce, for any considerabletime, the ordinary wages even of the lowest species of labour.

A man must always live by his work, and his wages must at



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least be sufficient to maintain him. They must even upon mostoccasions be somewhat more; otherwise it would be impossible forhim to bring up a family, and the race of such workmen could notlast beyond the first generation. Mr. Cantillon seems, upon thisaccount, to suppose that the lowest species of common labourersmust everywhere earn at least double their own maintenance, inorder that one with another they may be enabled to bring up twochildren; the labour of the wife, on account of her necessaryattendance on the children, being supposed no more thansufficient to provide for herself. But one half the children born, itis computed, die before the age of manhood. The poorestlabourers, therefore, according to this account, must, one withanother, attempt to rear at least four children, in order that twomay have an equal chance of living to that age. But the necessarymaintenance of four children, it is supposed, may be nearly equalto that of one man. The labour of an able-bodied slave, the sameauthor adds, is computed to be worth double his maintenance; andthat of the meanest labourer, he thinks, cannot be worth less thanthat 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 wifetogether must, even in the lowest species of common labour, beable to earn something more than what is precisely necessary fortheir own maintenance; but in what proportion, whether in thatabove mentioned, or in any other, I shall not take upon me todetermine.

There are certain circumstances, however, which sometimesgive the labourers an advantage, and enable them to raise theirwages considerably above this rate; evidently the lowest which isconsistent with common humanity.



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When in any country the demand for those who live by wages,labourers, journeymen, servants of every kind, is continuallyincreasing; when every year furnishes employment for a greaternumber than had been employed the year before, the workmenhave no occasion to combine in order to raise their wages. Thescarcity of hands occasions a competition among masters, who bidagainst one another, in order to get workmen, and thus voluntarilybreak through the natural combination of masters not to raisewages.

The demand for those who live by wages, it is evident, cannotincrease but in proportion to the increase of the funds which aredestined for the payment of wages. These funds are of two kinds;first, revenue which is over and above what is necessary for themaintenance; and, secondly, the stock which is over and abovewhat is necessary for the employment of their masters.

When the landlord, annuitant, or monied man, has a greaterrevenue than what he judges sufficient to maintain his own family,he employs either the whole or a part of the surplus inmaintaining 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 orshoemaker, has got more stock than what is sufficient to purchasethe materials of his own work, and to maintain himself till he candispose of it, he naturally employs one or more journeymen withthe surplus, in order to make a profit by their work. Increase thissurplus, and he will naturally increase the number of hisjourneymen.

The demand for those who live by wages, therefore, necessarilyincreases with the increase of the revenue and stock of every



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country, and cannot possibly increase without it. The increase ofrevenue and stock is the increase of national wealth. The demandfor those who live by wages, therefore, naturally increases with theincrease of national wealth, and cannot possibly increase withoutit.

It is not the actual greatness of national wealth, but itscontinual increase, which occasions a rise in the wages of labour.It is not, accordingly, in the richest countries, but in the mostthriving, or in those which are growing rich the fastest, that thewages of labour are highest. England is certainly, in the presenttimes, a much richer country than any part of North America. Thewages of labour, however, are much higher in North America thanin any part of England. In the province of New York,* commonlabourers earn three shillings and sixpence currency, equal to twoshillings sterling, a day; ship carpenters, ten shillings and sixpencecurrency, with a pint of rum worth sixpence sterling, equal in all tosix shillings and sixpence sterling; house carpenters andbricklayers, eight shillings currency, equal to four shillings andsixpence sterling; journeymen tailors, five shillings currency,equal to about two shillings and tenpence sterling. These pricesare all above the London price; and wages are said to be as high inthe other colonies as in New York. The price of provisions iseverywhere in North America much lower than in England. Adearth has never been known there. In the worst seasons theyhave always had a sufficiency for themselves, though less forexportation. If the money price of labour, therefore, be higher thanit is anywhere in the mother country, its real price, the real

*Written in 1773.



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command of the necessaries and conveniencies of life which itconveys to the labourer must be higher in a still greaterproportion.

But though North America is not yet so rich as England, it ismuch more thriving, and advancing with much greater rapidity tothe further acquisition of riches. The most decisive mark of theprosperity of any country is the increase of the number of itsinhabitants. In Great Britain, and most other European countries,they are not supposed to double in less than five hundred years. Inthe British colonies in North America, it has been found that theydouble in twenty or five-and-twenty years. Nor in the presenttimes is this increase principally owing to the continualimportation of new inhabitants, but to the great multiplication ofthe species. Those who live to old age, it is said, frequently seethere from fifty to a hundred, and sometimes many more,descendants from their own body. Labour is there so wellrewarded that a numerous family of children, instead of being aburthen, is a source of opulence and prosperity to the parents. Thelabour of each child, before it can leave their house, is computed tobe worth a hundred pounds clear gain to them. A young widowwith four or five young children, who, among the middling orinferior ranks of people in Europe, would have so little chance fora second husband, is there frequently courted as a sort of fortune.The value of children is the greatest of all encouragements tomarriage. We cannot, therefore, wonder that the people in NorthAmerica should generally marry very young. Notwithstanding thegreat increase occasioned by such early marriages, there is acontinual complaint of the scarcity of hands in North America.The demand for labourers, the funds destined for maintaining



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them, increase, it seems, still faster than they can find labourers toemploy.

Though the wealth of a country should be very great, yet if ithas been long stationary, we must not expect to find the wages oflabour very high in it. The funds destined for the payment ofwages, the revenue and stock of its inhabitants, may be of thegreatest extent; but if they have continued for several centuries ofthe same, or very nearly of the same extent, the number oflabourers employed every year could easily supply, and even morethan supply, the number wanted the following year. There couldseldom be any scarcity of hands, nor could the masters be obligedto bid against one another in order to get them. The hands, on thecontrary, would, in this case, naturally multiply beyond theiremployment. There would be a constant scarcity of employment,and the labourers would be obliged to bid against one another inorder to get it. If in such a country the wages of labour had everbeen more than sufficient to maintain the labourer, and to enablehim to bring up a family, the competition of the labourers and theinterest of the masters would soon reduce them to this lowest ratewhich is consistent with common humanity. China has been longone of the richest, that is, one of the most fertile, best cultivated,most industrious, and most populous countries in world. It seems,however, to have been long stationary. Marco Polo, who visited itmore than five hundred years ago, describes its cultivation,industry, and populousness, almost in the same terms in whichthey are described by travellers in the present times. It hadperhaps, even long before his time, acquired that full complementof riches which the nature of its laws and institutions permits it toacquire. The accounts of all travellers, inconsistent in many other



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respects, agree in the low wages of labour, and in the difficultywhich a labourer finds in bringing up a family in China. If bydigging the ground a whole day he can get what will purchase asmall quantity of rice in the evening, he is contented. Thecondition of artificers is, if possible, still worse. Instead of waitingindolently in their workhouses, for the calls of their customers, asin Europe, they are continually running about the streets with thetools of their respective trades, offering their service, and as itwere begging employment. The poverty of the lower ranks ofpeople in China far surpasses that of the most beggarly nations inEurope. In the neighbourhood of Canton many hundred, it iscommonly said, many thousand families have no habitation on theland, but live constantly in little fishing boats upon the rivers andcanals. The subsistence which they find there is so scanty thatthey are eager to fish up the nastiest garbage thrown overboardfrom any European ship. Any carrion, the carcase of a dead dog orcat, for example, though half putrid and stinking, is as welcome tothem as the most wholesome food to the people of other countries.Marriage is encouraged in China, not by the profitableness ofchildren, but by the liberty of destroying them. In all great townsseveral are every night exposed in the street, or drowned likepuppies in the water. The performance of this horrid office is evensaid to be the avowed business by which some people earn theirsubsistence.

China, however, though it may perhaps stand still, does notseem to go backwards. Its towns are nowhere deserted by theirinhabitants. The lands which had once been cultivated arenowhere neglected. The same or very nearly the same annuallabour must therefore continue to be performed, and the funds



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destined for maintaining it must not, consequently, be sensiblydiminished. The lowest class of labourers, therefore,notwithstanding their scanty subsistence, must some way oranother make shift to continue their race so far as to keep up theirusual numbers.

But it would be otherwise in a country where the fundsdestined for the maintenance of labour were sensibly decaying.Every year the demand for servants and labourers would, in allthe different classes of employments, be less than it had been theyear before. Many who had been bred in the superior classes, notbeing able to find employment in their own business, would beglad to seek it in the lowest. The lowest class being not onlyoverstocked with its own workmen, but with the overflowings ofall the other classes, the competition for employment would be sogreat in it, as to reduce the wages of labour to the most miserableand scanty subsistence of the labourer. Many would not be able tofind employment even upon these hard terms, but would eitherstarve, or be driven to seek a subsistence either by begging, or bythe perpetration perhaps of the greatest enormities. Want, famine,and mortality would immediately prevail in that class, and fromthence extend themselves to all the superior classes, till thenumber of inhabitants in the country was reduced to what couldeasily be maintained by the revenue and stock which remained init, and which had escaped either the tyranny or calamity whichhad destroyed the rest. This perhaps is nearly the present state ofBengal, and of some other of the English settlements in the EastIndies. In a fertile country which had before been muchdepopulated, where subsistence, consequently, should not be verydifficult, and where, notwithstanding, three or four hundred



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thousand people die of hunger in one year, we may be assuredthat the funds destined for the maintenance of the labouring poorare fast decaying. The difference between the genius of the Britishconstitution which protects and governs North America, and thatof the mercantile company which oppresses and domineers in theEast Indies, cannot perhaps be better illustrated than by thedifferent state of those countries.

The liberal reward of labour, therefore, as it is the necessaryeffect, 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 theirstarving 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 thelabourer to bring up a family. In order to satisfy ourselves uponthis point it will not be necessary to enter into any tedious ordoubtful calculation of what may be the lowest sum upon which itis possible to do this. There are many plain symptoms that thewages of labour are nowhere in this country regulated by thislowest 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 winterwages. Summer wages are always highest. But on account of theextraordinary expense of fuel, the maintenance of a family is mostexpensive in winter. Wages, therefore, being highest when thisexpense is lowest, it seems evident that they are not regulated bywhat is necessary for this expense; but by the quantity andsupposed value of the work. A labourer, it may be said indeed,ought to save part of his summer wages in order to defray his



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winter expense; and that through the whole year they do notexceed what is necessary to maintain his family through the wholeyear. A slave, however, or one absolutely dependent on us forimmediate subsistence, would not be treated in this manner. Hisdaily subsistence would be proportioned to his daily necessities.

Secondly, the wages of labour do not in Great Britain fluctuatewith the price of provisions. These vary everywhere from year toyear, frequently from month to month. But in many places themoney price of labour remains uniformly the same sometimes forhalf a century together. If in these places, therefore, the labouringpoor can maintain their families in dear years, they must be attheir ease in times of moderate plenty, and in affluence in those ofextraordinary cheapness. The high price of provisions duringthese ten years past has not in many parts of the kingdom beenaccompanied with any sensible rise in the money price of labour.It has, indeed, in some, owing probably more to the increase of thedemand for labour than to that of the price of provisions.

Thirdly, as the price of provisions varies more from year to yearthan the wages of labour, so, on the other hand, the wages oflabour vary more from place to place than the price of provisions.The prices of bread and butcher’s meat are generally the same orvery nearly the same through the greater part of the UnitedKingdom. These and most other things which are sold by retail,the way in which the labouring poor buy all things, are generallyfully as cheap or cheaper in great towns than in the remoter partsof the country, for reasons which I shall have occasion to explainhereafter. But the wages of labour in a great town and itsneighbourhood are frequently a fourth or a fifth part, twenty orfive-and-twenty per cent higher than at a few miles distance.



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Eighteenpence a day may be reckoned the common price of labourin London and its neighbourhood. At a few miles distance it fallsto fourteen and fifteenpence. Tenpence may be reckoned its pricein Edinburgh and its neighbourhood. At a few miles distance itfalls to eightpence, the usual price of common labour through thegreater part of the low country of Scotland, where it varies a gooddeal less than in England. Such a difference of prices, which itseems is not always sufficient to transport a man from one parishto another, would necessarily occasion so great a transportation ofthe most bulky commodities, not only from one parish to another,but from one end of the kingdom, almost from one end of theworld to the other, as would soon reduce them more nearly to alevel. After all that has been said of the levity and inconstancy ofhuman nature, it appears evidently from experience that a man isof all sorts of luggage the most difficult to be transported. If thelabouring poor, therefore, can maintain their families in thoseparts of the kingdom where the price of labour is lowest, they mustbe in affluence where it is highest.

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

Grain, the food of the common people, is dearer in Scotlandthan in England, whence Scotland receives almost every year verylarge supplies. But English corn must be sold dearer in Scotland,the country to which it is brought, than in England, the countryfrom which it comes; and in proportion to its quality it cannot besold dearer in Scotland than the Scotch corn that comes to thesame market in competition with it. The quality of grain dependschiefly upon the quantity of flour or meal which it yields at the



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mill, and in this respect English grain is so much superior to theScotch that, though often dearer in appearance, or in proportionto the measure of its bulk, it is generally cheaper in reality, or inproportion to its quality, or even to the measure of its weight. Theprice of labour, on the contrary, is dearer in England than inScotland. If the labouring poor, therefore, can maintain theirfamilies in the one part of the United Kingdom, they must be inaffluence in the other. Oatmeal indeed supplies the commonpeople in Scotland with the greatest and the best part of theirfood, which is in general much inferior to that of their neighboursof the same rank in England. This difference, however, in themode of their subsistence is not the cause, but the effect of thedifference in their wages; though, by a strange misapprehension, Ihave frequently heard it represented as the cause. It is not becauseone man keeps a coach while his neighbour walks afoot that theone is rich and the other poor; but because the one is rich hekeeps a coach, and because the other is poor he walks afoot.

During the course of the last century, taking one year withanother, grain was dearer in both parts of the United Kingdomthan during that of the present. This is a matter of fact whichcannot now admit of any reasonable doubt; and the proof of it is, ifpossible, still more decisive with regard to Scotland than withregard to England. It is in Scotland supported by the evidence ofthe public fiars, annual valuations made upon oath, according tothe actual state of the markets, of all the different sorts of grain inevery different county of Scotland. If such direct proof couldrequire any collateral evidence to confirm it, I would observe thatthis has likewise been the case in France, and probably in mostother parts of Europe. With regard to France there is the clearest



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proof. But though it is certain that in both parts of the UnitedKingdom grain was somewhat dearer in the last century than inthe present, it is equally certain that labour was much cheaper. Ifthe labouring poor, therefore, could bring up their families then,they must be much more at their ease now. In the last century, themost usual day-wages of common labour through the greater partof Scotland were sixpence in summer and fivepence in winter.Three shillings a week, the same price very nearly, still continuesto be paid in some parts of the Highlands and Western Islands.Through the greater part of the low country the most usual wagesof common labour are now eightpence a day; tenpence, sometimesa shilling about Edinburgh, in the counties which border uponEngland, probably on account of that neighbourhood, and in a fewother places where there has lately been a considerable rise in thedemand for labour, about Glasgow, Carron, Ayrshire, etc. InEngland the improvements of agriculture, manufactures, andcommerce began much earlier than in Scotland. The demand forlabour, and consequently its price, must necessarily haveincreased with those improvements. In the last century,accordingly, as well as in the present, the wages of labour werehigher in England than in Scotland. They have risen, too,considerably since that time, though, on account of the greatervariety of wages paid there in different places, it is more difficultto ascertain how much.

In 1614, the pay of a foot soldier was the same as in the presenttimes, eightpence a day. When it was first established it wouldnaturally 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,



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computes the necessary expense of a labourer’s family, consistingof six persons, the father and mother, two children able to dosomething, and two not able, at ten shillings a week, or twenty-sixpounds a year. If they cannot earn this by their labour, they mustmake it up, he supposes, either by begging or stealing. He appearsto have inquired very carefully into this subject.1 In 1688, Mr.Gregory King, whose skill in political arithmetic is so muchextolled by Doctor Davenant, computed the ordinary income oflabourers and out-servants to be fifteen pounds a year to a family,which he supposed to consist, one with another, of three and a halfpersons. His calculation, therefore, though different inappearance, corresponds very nearly at bottom with that of JudgeHales. Both suppose the weekly expense of such families to beabout twenty pence a head. Both the pecuniary income andexpense of such families have increased considerably since thattime through the greater part of the kingdom; in some placesmore, and in some less; though perhaps scarce anywhere so muchas some exaggerated accounts of the present wages of labour havelately represented them to the public. The price of labour, it mustbe observed, cannot be ascertained very accurately anywhere,different prices being often paid at the same place and for thesame sort of labour, not only according to the different abilities ofthe workmen, but according to the easiness or hardness of themasters. Where wages are not regulated by law, all that we canpretend to determine is what are the most usual; and experienceseems to show that law can never regulate them properly, though

1See his scheme for the maintenance of the poor, in Burns’ History of the

Poor Laws.



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it has often pretended to do so.The real recompense of labour, the real quantity of the

necessaries and conveniences of life which it can procure to thelabourer, has, during the course of the present century, increasedperhaps in a still greater proportion than its money price. Not onlygrain has become somewhat cheaper, but many other things fromwhich the industrious poor derive an agreeable and wholesomevariety of food have become a great deal cheaper. Potatoes, forexample, do not at present, through the greater part of thekingdom, cost half the price which they used to do thirty or fortyyears ago. The same thing may be said of turnips, carrots,cabbages; things which were formerly never raised but by thespade, but which are now commonly raised by the plough. All sortof garden stuff, too, has become cheaper. The greater part of theapples and even of the onions consumed in Great Britain were inthe last century imported from Flanders. The great improvementsin the coarser manufactures of both linen and woollen clothfurnish the labourers with cheaper and better clothing; and thosein the manufactures of the coarser metals, with cheaper and betterinstruments of trade, as well as with many agreeable andconvenient pieces of household furniture. Soap, salt, candles,leather, and fermented liquors have, indeed, become a good dealdearer; chiefly from the taxes which have been laid upon them.The quantity of these, however, which the labouring poor areunder any necessity of consuming, is so very small, that theincrease in their price does not compensate the diminution in thatof so many other things. The common complaint that luxuryextends itself even to the lowest ranks of the people, and that thelabouring poor will not now be contented with the same food,



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clothing, and lodging which satisfied them in former times, mayconvince us that it is not the money price of labour only, but itsreal recompense, which has augmented.

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

Poverty, though it no doubt discourages, does not alwaysprevent marriage. It seems even to be favourable to generation. Ahalf-starved Highland woman frequently bears more than twentychildren, while a pampered fine lady is often incapable of bearingany, and is generally exhausted by two or three. Barrenness, sofrequent among women of fashion, is very rare among those ofinferior station. Luxury in the fair sex, while it inflames perhapsthe passion for enjoyment, seems always to weaken, andfrequently to destroy altogether, the powers of generation.

But poverty, though it does not prevent the generation, isextremely unfavourable to the rearing of children. The tenderplant is produced, but in so cold a soil and so severe a climate,soon withers and dies. It is not uncommon, I have been frequentlytold, in the Highlands of Scotland for a mother who has borne



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twenty children not to have two alive. Several officers of greatexperience have assured me, that so far from recruiting theirregiment, they have never been able to supply it with drums andfifes from all the soldiers’ children that were born in it. A greaternumber of fine children, however, is seldom seen anywhere thanabout a barrack of soldiers. Very few of them, it seems, arrive atthe age of thirteen or fourteen. In some places one half thechildren born die before they are four years of age; in many placesbefore they are seven; and in almost all places before they are nineor ten. This great mortality, however, will everywhere be foundchiefly among the children of the common people, who cannotafford to tend them with the same care as those of better station.Though their marriages are generally more fruitful than those ofpeople of fashion, a smaller proportion of their children arrive atmaturity. In foundling hospitals, and among the children broughtup by parish charities, the mortality is still greater than amongthose of the common people.

Every species of animals naturally multiplies in proportion tothe means of their subsistence, and no species can ever multiplybeyond it. But in civilised society it is only among the inferiorranks of people that the scantiness of subsistence can set limits tothe further multiplication of the human species; and it can do so inno other way than by destroying a great part of the children whichtheir fruitful marriages produce.

The liberal reward of labour, by enabling them to providebetter for their children, and consequently to bring up a greaternumber, naturally tends to widen and extend those limits. Itdeserves to be remarked, too, that it necessarily does this as nearlyas possible in the proportion which the demand for labour



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requires. If this demand is continually increasing, the reward oflabour must necessarily encourage in such a manner the marriageand multiplication of labourers, as may enable them to supply thatcontinually increasing demand by a continually increasingpopulation. If the reward should at any time be less than what wasrequisite for this purpose, the deficiency of hands would soon raiseit; and if it should at any time be more, their excessivemultiplication would soon lower it to this necessary rate. Themarket would be so much understocked with labour in the onecase, and so much overstocked in the other, as would soon forceback its price to that proper rate which the circumstances of thesociety required. It is in this manner that the demand for men, likethat for any other commodity, necessarily regulates the productionof men; quickens it when it goes on too slowly, and stops it when itadvances too fast. It is this demand which regulates anddetermines the state of propagation in all the different countries ofthe world, in North America, in Europe, and in China; whichrenders it rapidly progressive in the first, slow and gradual in thesecond, and altogether stationary in the last.

The wear and tear of a slave, it has been said, is at the expenseof his master; but that of a free servant is at his own expense. Thewear and tear of the latter, however, is, in reality, as much at theexpense of his master as that of the former. The wages paid tojourneymen and servants of every kind must be such as mayenable them, one with another, to continue the race of journeymenand servants, according as the increasing, diminishing, orstationary demand of the society may happen to require. Butthough the wear and tear of a free servant be equally at theexpense of his master, it generally costs him much less than that of



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a slave. The fund destined for replacing or repairing, if I may sayso, the wear and tear of the slave, is commonly managed by anegligent master or careless overseer. That destined forperforming the same office with regard to the free man, ismanaged by the free man himself. The disorders which generallyprevail in the economy of the rich, naturally introduce themselvesinto the management of the former: the strict frugality andparsimonious attention of the poor as naturally establishthemselves in that of the latter. Under such different management,the same purpose must require very different degrees of expenseto execute it. It appears, accordingly, from the experience of allages and nations, I believe, that the work done by freemen comescheaper in the end than that performed by slaves. It is found to doso even at Boston, New York, and Philadelphia, where the wagesof common labour are so very high.

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

It deserves to be remarked, perhaps, that it is in the progressivestate, 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 thepeople, seems to be the happiest and the most comfortable. It ishard in the stationary, and miserable in the declining state. Theprogressive state is in reality the cheerful and the hearty state toall the different orders of the society. The stationary is dull; thedeclining, melancholy.

The liberal reward of labour, as it encourages the propagation,



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so it increases the industry of the common people. The wages oflabour are the encouragement of industry, which, like every otherhuman quality, improves in proportion to the encouragement itreceives. A plentiful subsistence increases the bodily strength ofthe labourer, and the comfortable hope of bettering his condition,and of ending his days perhaps in ease and plenty, animates himto 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, forexample, than in Scotland; in the neighbourhood of great townsthan in remote country places. Some workmen, indeed, when theycan earn in four days what will maintain them through the week,will be idle the other three. This, however, is by no means the casewith the greater part. Workmen, on the contrary, when they areliberally paid by the piece, are very apt to overwork themselves,and to ruin their health and constitution in a few years. Acarpenter in London, and in some other places, is not supposed tolast in his utmost vigour above eight years. Something of the samekind happens in many other trades, in which the workmen arepaid by the piece, as they generally are in manufactures, and evenin country labour, wherever wages are higher than ordinary.Almost every class of artificers is subject to some peculiarinfirmity occasioned by excessive application to their peculiarspecies of work.

Ramuzzini, an eminent Italian physician, has written aparticular book concerning such diseases. We do not reckon oursoldiers the most industrious set of people among us. Yet whensoldiers have been employed in some particular sorts of work, andliberally paid by the piece, their officers have frequently been



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obliged to stipulate with the undertaker, that they should not beallowed to earn above a certain sum every day, according to therate at which they were paid. Till this stipulation was made,mutual emulation and the desire of greater gain frequentlyprompted them to overwork themselves, and to hurt their healthby excessive labour. Excessive application during four days of theweek is frequently the real cause of the idleness of the other three,so much and so loudly complained of. Great labour, either of mindor body, continued for several days together, is in most mennaturally followed by a great desire of relaxation, which, if notrestrained by force or by some strong necessity, is almostirresistible. It is the call of nature, which requires to be relieved bysome indulgence, sometimes of ease only, but sometimes, too, ofdissipation and diversion. If it is not complied with, theconsequences are often dangerous, and sometimes fatal, and suchas almost always, sooner or later, brings on the peculiar infirmityof the trade. If masters would always listen to the dictates ofreason and humanity, they have frequently occasion rather tomoderate than to animate the application of many of theirworkmen. It will be found, I believe, in every sort of trade, that theman who works so moderately as to be able to work constantly notonly 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 moreidle, and in dear ones more industrious than ordinary. A plentifulsubsistence, therefore, it has been concluded, relaxes, and a scantyone quickens their industry. That a little more plenty thanordinary may render some workmen idle, cannot well be doubted;but that it should have this effect upon the greater part, or that



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men in general should work better when they are ill fed than whenthey are well fed, when they are disheartened than when they arein good spirits, when they are frequently sick than when they aregenerally in good health, seems not very probable. Years of dearth,it is to be observed, are generally among the common people yearsof sickness and mortality, which cannot fail to diminish theproduce of their industry.

In years of plenty, servants frequently leave their masters, andtrust their subsistence to what they can make by their ownindustry. But the same cheapness of provisions, by increasing thefund which is destined for the maintenance of servants,encourages masters, farmers especially, to employ a greaternumber. Farmers upon such occasions expect more profit fromtheir corn by maintaining a few more labouring servants than byselling it at a low price in the market. The demand for servantsincreases, while the number of those who offer to supply thatdemand diminishes. The price of labour, therefore, frequentlyrises in cheap years.

In years of scarcity, the difficulty and uncertainty of subsistencemake all such people eager to return to service. But the high priceof provisions, by diminishing the funds destined for themaintenance of servants, disposes masters rather to diminish thanto increase the number of those they have. In dear years, too, poorindependent workmen frequently consume the little stocks withwhich they had used to supply themselves with the materials oftheir work, and are obliged to become journeymen for subsistence.More people want employment than can easily get it; many arewilling to take it upon lower terms than ordinary, and the wages ofboth servants and journeymen frequently sink in dear years.



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Masters of all sorts, therefore, frequently make better bargainswith their servants in dear than in cheap years, and find themmore humble and dependent in the former than in the latter. Theynaturally, therefore, commend the former as more favourable toindustry.

Landlords and farmers, besides, two of the largest classes ofmasters, have another reason for being pleased with dear years.The rents of the one and the profits of the other depend very muchupon the price of provisions. Nothing can be more absurd,however, than to imagine that men in general should work lesswhen they work for themselves, than when they work for otherpeople. A poor independent workman will generally be moreindustrious than even a journeyman who works by the piece. Theone enjoys the whole produce of his own industry; the othershares it with his master. The one, in his separate independentstate, is less liable to the temptations of bad company, which inlarge manufactories so frequently ruin the morals of the other.The superiority of the independent workman over those servantswho are hired by the month or by the year, and whose wages andmaintenance are the same whether they do much or do little, islikely to be still greater. Cheap years tend to increase theproportion of independent workmen to journeymen and servantsof all kinds, and dear years to diminish it.

A French author of great knowledge and ingenuity, Mr.Messance, receiver of the taillies in the election of St. Etienne,endeavours to show that the poor do more work in cheap than indear years, by comparing the quantity and value of the goodsmade upon those different occasions in three differentmanufactures; one of coarse woollens carried on at Elbeuf; one of



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linen, and another of silk, both which extend through the wholegenerality of Rouen. It appears from his account, which is copiedfrom the registers of the public offices, that the quantity and valueof the goods made in all those three manufactures has generallybeen greater in cheap than in dear years; and that it has alwaysbeen greatest in the cheapest, and least in the dearest years. Allthe three seem to be stationary manufactures, or which, thoughtheir produce may vary somewhat from year to year, are upon thewhole neither going backwards nor forwards.

The manufacture of linen in Scotland, and that of coarsewoollens in the West Riding of Yorkshire, are growingmanufactures, of which the produce is generally, though withsome variations, increasing both in quantity and value. Uponexamining, however, the accounts which have been published oftheir annual produce, I have not been able to observe that itsvariations have had any sensible connection with the dearness orcheapness of the seasons. In 1740, a year of great scarcity, bothmanufactures, indeed, appear to have declined very considerably.But in 1756, another year of great scarcity, the Scotchmanufacture made more than ordinary advances. The Yorkshiremanufacture, indeed, declined, and its produce did not rise towhat it had been in 1755 till 1766, after the repeal of the AmericanStamp Act. In that and the following year it greatly exceeded whatit had ever been before, and it has continued to advance eversince.

The produce of all great manufactures for distant sale mustnecessarily depend, not so much upon the dearness or cheapnessof the seasons in the countries where they are carried on as uponthe circumstances which affect the demand in the countries where



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they are consumed; upon peace or war, upon the prosperity ordeclension of other rival manufactures, and upon the good or badhumour of their principal customers. A great part of theextraordinary work, besides, which is probably done in cheapyears, never enters the public registers of manufactures. The menservants who leave their masters become independent labourers.The women return to their parents, and commonly spin in order tomake clothes for themselves and their families. Even theindependent workmen do not always work for public sale, but areemployed by some of their neighbours in manufactures for familyuse. The produce of their labour, therefore, frequently makes nofigure in those public registers of which the records are sometimespublished with so much parade, and from which our merchantsand manufacturers would often vainly pretend to announce theprosperity or declension of the greatest empires.

Though the variations in the price of labour not only do notalways correspond with those in the price of provisions, but arefrequently quite opposite, we must not, upon this account, imaginethat the price of provisions has no influence upon that of labour.The money price of labour is necessarily regulated by twocircumstances; the demand for labour, and the price of thenecessaries and conveniences of life. The demand for labour,according as it happens to be increasing, stationary, or declining,or to require an increasing, stationary, or declining population,determines the quantity of the necessaries and conveniencies oflife which must be given to the labourer; and the money price oflabour is determined by what is requisite for purchasing thisquantity. Though the money price of labour, therefore, issometimes high where the price of provisions is low, it would be



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still higher, the demand continuing the same, if the price ofprovisions was high.

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

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

The contrary of this happens in a year of sudden andextraordinary scarcity. The funds destined for employing industryare less than they had been the year before. A considerablenumber of people are thrown out of employment, who bid againstone another, in order to get it, which sometimes lowers both thereal and the money price of labour. In 1740, a year ofextraordinary scarcity, many people were willing to work for baresubsistence. In the succeeding years of plenty, it was more difficultto get labourers and servants.

The scarcity of a dear year, by diminishing the demand forlabour, tends to lower its price, as the high price of provisionstends to raise it. The plenty of a cheap year, on the contrary, byincreasing the demand, tends to raise the price of labour, as thecheapness of provisions tends to lower it. In the ordinaryvariations of the price of provisions those two opposite causes



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seem to counterbalance one another, which is probably in part thereason why the wages of labour are everywhere so much moresteady and permanent than the price of provisions.

The increase in the wages of labour necessarily increases theprice of many commodities, by increasing that part of it whichresolves itself into wages, and so far tends to diminish theirconsumption both at home and abroad. The same cause, however,which raises the wages of labour, the increase of stock, tends toincrease its productive powers, and to make a smaller quantity oflabour produce a greater quantity of work. The owner of the stockwhich employs a great number of labourers, necessarilyendeavours, for his own advantage, to make such a proper divisionand distribution of employment that they may be enabled toproduce the greatest quantity of work possible. For the samereason, he endeavours to supply them with the best machinerywhich either he or they can think of. What takes place among thelabourers in a particular workhouse takes place, for the samereason, among those of a great society. The greater their number,the more they naturally divide themselves into different classesand subdivisions of employment. More heads are occupied ininventing the most proper machinery for executing the work ofeach, and it is, therefore, more likely to be invented. There aremany commodities, therefore, which, in consequence of theseimprovements, come to be produced by so much less labour thanbefore that the increase of its price is more than compensated bythe diminution of its quantity.



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Chapter IX

Of the Profits of Stock

he rise and fall in the profits of stock depend upon thesame 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 verydifferently.

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

It is not easy, it has already been observed, to ascertain whatare the average wages of labour even in a particular place, and at aparticular time. We can, even in this case, seldom determine morethan what are the most usual wages. But even this can seldom bedone with regard to the profits of stock. Profit is so veryfluctuating that the person who carries on a particular tradecannot always tell you himself what is the average of his annualprofit. It is affected not only by every variation of price in thecommodities which he deals in, but by the good or bad fortuneboth of his rivals and of his customers, and by a thousand otheraccidents to which goods when carried either by sea or by land, oreven when stored in a warehouse, are liable. It varies, therefore,not only from year to year, but from day to day, and almost from

T



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hour to hour. To ascertain what is the average profit of all thedifferent trades carried on in a great kingdom must be much moredifficult; and to judge of what it may have been formerly, or inremote periods of time, with any degree of precision, must bealtogether impossible.

But though it may be impossible to determine, with any degreeof precision, what are or were the average profits of stock, eitherin the present or in ancient times, some notion may be formed ofthem 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, agreat deal will commonly be given for the use of it; and thatwherever little can be made by it, less will commonly be given forit. According, therefore, as the usual market rate of interest variesin any country, we may be assured that the ordinary profits ofstock must vary with it, must sink as it sinks, and rise as it rises.The progress of interest, therefore, may lead us to form somenotion of the progress of profit.

By the 37th of Henry VIII all interest above ten per cent wasdeclared unlawful. More, it seems, had sometimes been takenbefore that. In the reign of Edward VI religious zeal prohibited allinterest. This prohibition, however, like all others of the samekind, is said to have produced no effect, and probably ratherincreased than diminished the evil of usury. The statute of HenryVIII was revived by the 13th of Elizabeth, c. 8, and ten per centcontinued 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 percent soon after the Restoration, and by the 12th of Queen Anne tofive per cent.

All these different statutory regulations seem to have been



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made with great propriety. They seem to have followed and not tohave gone before the market rate of interest, or the rate at whichpeople of good credit usually borrowed. Since the time of QueenAnne, five per cent seems to have been rather above than belowthe market rate. Before the late war, the government borrowed atthree per cent; and people of good credit in the capital, and inmany other parts of the kingdom, at three and a half, four, andfour and a half per cent.

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

It generally requires a greater stock to carry on any sort oftrade in a great town than in a country village. The great stocksemployed in every branch of trade, and the number of richcompetitors, generally reduce the rate of profit in the formerbelow what it is in the latter But the wages of labour are generallyhigher in a great town than in a country village. In a thriving townthe people who have great stocks to employ frequently cannot getthe number of workmen they want, and therefore bid against oneanother in order to get as many as they can, which raises thewages of labour, and lowers the profits of stock. In the remoteparts of the country there is frequently not stock sufficient toemploy all the people, who therefore bid against one another inorder to get employment, which lowers the wages of labour and



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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 creditthere seldom borrow under five per cent. Even private bankers inEdinburgh give four per cent upon their promissory notes, ofwhich payment either in whole or in part may be demanded atpleasure. Private bankers in London give no interest for themoney which is deposited with them. There are few trades whichcannot be carried on with a smaller stock in Scotland than inEngland. The common rate of profit, therefore, must be somewhatgreater. The wages of labour, it has already been observed, arelower in Scotland than in England. The country, too, is not onlymuch poorer, but the steps by which it advances to a bettercondition, for it is evidently advancing, seem to be much slowerand more tardy.

The legal rate of interest in France has not, during the course ofthe present century, been always regulated by the market rate.1 In1720 interest was reduced from the twentieth to the fiftieth penny,or from five to two per cent. In 1724 it was raised to the thirtiethpenny, or to 31/3 per cent. In 1725 it was again raised to thetwentieth penny, or to five per cent. In 1766, during theadministration of Mr. Laverdy, it was reduced to the twenty-fifthpenny, or to four per cent. The Abbé Terray raised it afterwards tothe old rate of five per cent. The supposed purpose of many ofthose violent reductions of interest was to prepare the way forreducing that of the public debts; a purpose which has sometimesbeen executed. France is perhaps in the present times not so rich

1See Denifart, Article Taux des Intérêts, vol. iii, p. 18.



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a country as England; and though the legal rate of interest has inFrance frequently been lower than in England, the market ratehas generally been higher; for there, as in other countries, theyhave several very safe and easy methods of evading the law. Theprofits of trade, I have been assured by British merchants who hadtraded in both countries, are higher in France than in England;and it is no doubt upon this account that many British subjectschoose rather to employ their capitals in a country where trade isin disgrace, than in one where it is highly respected. The wages oflabour are lower in France than in England. When you go fromScotland to England, the difference which you may remarkbetween the dress and countenance of the common people in theone country and in the other sufficiently indicates the difference intheir condition. The contrast is still greater when you return fromFrance. France, though no doubt a richer country than Scotland,seems not to be going forward so fast. It is a common and even apopular opinion in the country that it is going backwards; anopinion which, apprehend, is ill founded even with regard toFrance, but which nobody can possibly entertain with regard toScotland, who sees the country now, and who saw it twenty orthirty years ago.

The province of Holland, on the other hand, in proportion tothe extent of its territory and the number of its people, is a richercountry than England. The government there borrows at two percent, and private people of good credit at three. The wages oflabour are said to be higher in Holland than in England, and theDutch, it is well known, trade upon lower profits than any peoplein Europe. The trade of Holland, it has been pretended by somepeople, is decaying, and it may perhaps be true some particular



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branches of it are so. But these symptoms seem to indicatesufficiently that there is no general decay. When profit diminishes,merchants are very apt to complain that trade decays; though thediminution of profit is the natural effect of its prosperity, or of agreater stock being employed in it than before. During the latewar* the Dutch gained the whole carrying trade of France, ofwhich they still retain a very large share. The great propertywhich they possess both in the French and English funds, aboutforty millions, it is said, in the latter (in which I suspect, however,there is a considerable exaggeration); the great sums which theylend to private people in countries where the rate of interest ishigher than in their own, are circumstances which no doubtdemonstrate the redundancy of their stock, or that it has increasedbeyond what they can employ with tolerable profit in the properbusiness of their own country: but they do not demonstrate thatthat has decreased. As the capital of a private man, thoughacquired by a particular trade, may increase beyond what he canemploy in it, and yet that trade continue to increase too; so maylikewise the capital of a great nation.

In our North American and West Indian colonies, not only thewages of labour, but the interest of money, and consequently theprofits of stock, are higher than in England. In the differentcolonies both the legal and the market rate of interest run from sixto eight per cent. High wages of labour and high profits of stock,however, are things, perhaps, which scarce ever go together,except in the peculiar circumstances of new colonies. A newcolony must always for some time be more understocked in

*The Seven Years’ War, 1756-1763.



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proportion to the extent of its territory, and more underpeopled inproportion to the extent of its stock, than the greater part of othercountries. They have more land than they have stock to cultivate.What they have, therefore, is applied to the cultivation only ofwhat is most fertile and most favourably situated, the land nearthe sea shore, and along the banks of navigable rivers. Such land,too, is frequently purchased at a price below the value even of itsnatural produce. Stock employed in the purchase andimprovement of such lands must yield a very large profit, andconsequently afford to pay a very large interest. Its rapidaccumulation in so profitable an employment enables the planterto increase the number of his hands faster than he can find themin a new settlement. Those whom he can find, therefore, are veryliberally rewarded. As the colony increases, the profits of stockgradually diminish. When the most fertile and best situated landshave been all occupied, less profit can be made by the cultivationof what is inferior both in soil and situation, and less interest canbe afforded for the stock which is so employed. In the greater partof our colonies, accordingly, both the legal and the market rate ofinterest have been considerably reduced during the course of thepresent century. As riches, improvement, and population haveincreased, interest has declined. The wages of labour do not sinkwith the profits of stock. The demand for labour increases with theincrease of stock whatever be its profits; and after these arediminished, stock may not only continue to increase, but toincrease much faster than before. It is with industrious nationswho are advancing in the acquisition of riches as with industriousindividuals. A great stock, though with small profits, generallyincreases faster than a small stock with great profits. Money, says



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the proverb, makes money. When you have got a little, it is ofteneasy to get more. The great difficulty is to get that little. Theconnection between the increase of stock and that of industry, orof the demand for useful labour, has partly been explainedalready, but will be explained more fully hereafter in treating ofthe accumulation of stock.

The acquisition of new territory, or of new branches of trade,may sometimes raise the profits of stock, and with them theinterest of money, even in a country which is fast advancing in theacquisition of riches. The stock of the country not being sufficientfor the whole accession of business, which such acquisitionspresent to the different people among whom it is divided, isapplied to those particular branches only which afford the greatestprofit. Part of what had before been employed in other trades isnecessarily withdrawn from them, and turned into some of thenew and more profitable ones.

In all those old trades, therefore, the competition comes to beless than before. The market comes to be less fully supplied withmany different sorts of goods. Their price necessarily rises more orless, and yields a greater profit to those who deal in them, whocan, therefore, afford to borrow at a higher interest. For some timeafter the conclusion of the late war, not only private people of thebest credit, but some of the greatest companies in London,commonly borrowed at five per cent, who before that had not beenused to pay more than four, and four and a half per cent. The greataccession both of territory and trade, by our acquisitions in NorthAmerica and the West Indies, will sufficiently account for this,without supposing any diminution in the capital stock of thesociety. So great an accession of new business to be carried on by



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the old stock must necessarily have diminished the quantityemployed in a great number of particular branches, in which thecompetition being less, the profits must have been greater. I shallhereafter have occasion to mention the reasons which dispose meto believe that the capital stock of Great Britain was notdiminished even by the enormous expense of the late war.

The diminution of the capital stock of the society, or of thefunds destined for the maintenance of industry, however, as itlowers the wages of labour, so it raises the profits of stock, andconsequently the interest of money. By the wages of labour beinglowered, the owners of what stock remains in the society can bringtheir goods at less expense to market than before, and less stockbeing employed in supplying the market than before, they can sellthem dearer. Their goods cost them less, and they get more forthem.

Their profits, therefore, being augmented at both ends, can wellafford a large interest. The great fortunes so suddenly and soeasily acquired in Bengal and the other British settlements in theEast Indies may satisfy us that, as the wages of labour are verylow, so the profits of stock are very high in those ruined countries.The interest of money is proportionably so. In Bengal, money isfrequently lent to the farmers at forty, fifty, and sixty per cent andthe succeeding crop is mortgaged for the payment. As the profitswhich can afford such an interest must eat up almost the wholerent of the landlord, so such enormous usury must in its turn eatup the greater part of those profits. Before the fall of the Romanrepublic, a usury of the same kind seems to have been common inthe provinces, under the ruinous administration of theirproconsuls. The virtuous Brutus lent money in Cyprus at eight-



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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 withrespect to other countries, allowed it to acquire; which could,therefore, advance no further, and which was not goingbackwards, both the wages of labour and the profits of stock wouldprobably be very low. In a country fully peopled in proportion towhat either its territory could maintain or its stock employ, thecompetition for employment would necessarily be so great as toreduce the wages of labour to what was barely sufficient to keepup the number of labourers, and, the country being already fullypeopled, that number could never be augmented. In a countryfully stocked in proportion to all the business it had to transact, asgreat a quantity of stock would be employed in every particularbranch as the nature and extent of the trade would admit. Thecompetition, therefore, would everywhere be as great, andconsequently the ordinary profit as low as possible.

But perhaps no country has ever yet arrived at this degree ofopulence. China seems to have been long stationary, and hadprobably long ago acquired that full complement of riches which isconsistent with the nature of its laws and institutions. But thiscomplement may be much inferior to what, with other laws andinstitutions, the nature of its soil, climate, and situation mightadmit of. A country which neglects or despises foreign commerce,and which admits the vessels of foreign nations into one or two ofits ports only, cannot transact the same quantity of business whichit might do with different laws and institutions. In a country too,where, though the rich or the owners of large capitals enjoy a gooddeal of security, the poor or the owners of small capitals enjoy



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scarce any, but are liable, under the pretence of justice, to bepillaged and plundered at any time by the inferior mandarins, thequantity of stock employed in all the different branches ofbusiness transacted within it can never be equal to what thenature and extent of that business might admit. In every differentbranch, the oppression of the poor must establish the monopoly ofthe rich, who, by engrossing the whole trade to themselves, will beable to make very large profits. Twelve per cent accordingly is saidto be the common interest of money in China, and the ordinaryprofits of stock must be sufficient to afford this large interest.

A defect in the law may sometimes raise the rate of interestconsiderably above what the condition of the country, as to wealthor poverty, would require. When the law does not enforce theperformance of contracts, it puts all borrowers nearly upon thesame footing with bankrupts or people of doubtful credit in betterregulated countries. The uncertainty of recovering his moneymakes the lender exact the same usurious interest which is usuallyrequired from bankrupts. Among the barbarous nations whooverran the western provinces of the Roman empire, theperformance of contracts was left for many ages to the faith of thecontracting parties. The courts of justice of their kings seldomintermeddled in it. The high rate of interest which took place inthose ancient times may perhaps be partly accounted for from thiscause.

When the law prohibits interest altogether, it does not preventit. Many people must borrow, and nobody will lend without such aconsideration for the use of their money as is suitable not only towhat can be made by the use of it, but to the difficulty and dangerof evading the law. The high rate of interest among all Mahometan



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nations is accounted for by Mr. Montesquieu, not from theirpoverty, but partly from this, and partly from the difficulty ofrecovering the money.

The lowest ordinary rate of profit must always be somethingmore than what is sufficient to compensate the occasional losses towhich every employment of stock is exposed. It is this surplus onlywhich is neat or clear profit. What is called gross profitcomprehends frequently, not only this surplus, but what isretained for compensating such extraordinary losses. The interestwhich the borrower can afford to pay is in proportion to the clearprofit only.

The lowest ordinary rate of interest must, in the same manner,be something more than sufficient to compensate the occasionallosses to which lending, even with tolerable prudence, is exposed.Were it not more, charity or friendship could be the only motivefor lending.

In a country which had acquired its full complement of riches,where in every particular branch of business there was thegreatest quantity of stock that could be employed in it, as theordinary rate of clear profit would be very small, so the usualmarket rate of interest which could be afforded out of it would beso low as to render it impossible for any but the very wealthiestpeople to live upon the interest of their money. All people of smallor middling fortunes would be obliged to superintend themselvesthe employment of their own stocks. It would be necessary thatalmost every man should be a man of business, or engage in somesort of trade. The province of Holland seems to be approachingnear to this state. It is there unfashionable not to be a man ofbusiness. Necessity makes it usual for almost every man to be so,



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and custom everywhere regulates fashion. As it is ridiculous not todress, so is it, in some measure, not to be employed, like otherpeople. As a man of a civil profession seems awkward in a camp ora garrison, and is even in some danger of being despised there, sodoes an idle man among men of business.

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

The proportion which the usual market rate of interest ought tobear to the ordinary rate of clear profit, necessarily varies as profitrises or falls. Double interest is in Great Britain reckoned what themerchants call a good, moderate, reasonable profit; terms which Iapprehend mean no more than a common and usual profit. In acountry where the ordinary rate of clear profit is eight or ten percent, it may be reasonable that one half of it should go to interest,wherever business is carried on with borrowed money. The stockis at the risk of the borrower, who, as it were, insures it to thelender; 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 asufficient recompense for the trouble of employing the stock. Butthe proportion between interest and clear profit might not be thesame in countries where the ordinary rate of profit was either a



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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 moremight be afforded if it were a good deal higher.

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

In reality high profits tend much more to raise the price of workthan high wages. If in the linen manufacture, for example, thewages of the different working people, the flax-dressers, thespinners, the weavers, etc., should, all of them, be advancedtwopence a day; it would be necessary to heighten the price of apiece of linen only by a number of twopences equal to the numberof people that had been employed about it, multiplied by thenumber of days during which they had been so employed. Thatpart of the price of the commodity which resolved itself into wageswould, through all the different stages of the manufacture, riseonly in arithmetical proportion to this rise of wages. But if theprofits of all the different employers of those working peopleshould be raised five per cent, that part of the price of thecommodity which resolved itself into profit would, through all thedifferent stages of the manufacture, rise in geometrical proportionto this rise of profit.

The employer of the flax-dressers would in selling his flaxrequire an additional five per cent upon the whole value of thematerials and wages which he advanced to his workmen. Theemployer of the spinners would require an additional five per centboth upon the advanced price of the flax and upon the wages of



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the spinners. And the employer of the weavers would require alike five per cent both upon the advanced price of the linen yarnand upon the wages of the weavers. In raising the price ofcommodities the rise of wages operates in the same manner assimple interest does in the accumulation of debt. The rise of profitoperates like compound interest. Our merchants and master-manufacturers complain much of the bad effects of high wages inraising the price, and thereby lessening the sale of their goodsboth at home and abroad. They say nothing concerning the badeffects of high profits. They are silent with regard to the perniciouseffects of their own gains. They complain only of those of otherpeople.



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Chapter X

Of Wages and Profit in the different Employmentsof Labour and Stock

he whole of the advantages and disadvantages of thedifferent employments of labour and stock must, in thesame neighbourhood, be either perfectly equal or

continually tending to equality. If in the same neighbourhood,there was any employment evidently either more or lessadvantageous than the rest, so many people would crowd into it inthe one case, and so many would desert it in the other, that itsadvantages would soon return to the level of other employments.This at least would be the case in a society where things were leftto follow their natural course, where there was perfect liberty, andwhere every man was perfectly free both to choose whatoccupation he thought proper, and to change it as often as hethought proper. Every man’s interest would prompt him to seekthe advantageous, and to shun the disadvantageous employment.

Pecuniary wages and profit, indeed, are everywhere in Europeextremely different according to the different employments oflabour and stock. But this difference arises partly from certaincircumstances in the employments themselves, which, eitherreally, or at least in the imaginations of men, make up for a smallpecuniary gain in some, and counterbalance a great one in others;and partly from the policy of Europe, which nowhere leaves thingsat perfect liberty.

The particular consideration of those circumstances and of that

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policy will divide this chapter into two parts.

PART 1

Inequalities arising from the Nature of the Employmentsthemselves

The five following are the principal circumstances which, so far asI have been able to observe, make up for a small pecuniary gain insome employments, and counterbalance a great one in others:first, the agreeableness or disagreeableness of the employmentsthemselves; secondly, the easiness and cheapness, or the difficultyand expense of learning them; thirdly, the constancy orinconstancy of employment in them; fourthly, the small or greattrust 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, thecleanliness or dirtiness, the honourableness or dishonourablenessof the employment. Thus in most places, take the year round, ajourneyman tailor earns less than a journeyman weaver. His workis much easier. A journeyman weaver earns less than ajourneyman smith. His work is not always easier, but it is muchcleanlier. A journeyman blacksmith, though an artificer, seldomearns 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, andis carried on in daylight, and above ground. Honour makes a greatpart of the reward of all honourable professions. In point ofpecuniary gain, all things considered, they are generally under-recompensed, as I shall endeavour to show by and by. Disgrace



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has the contrary effect. The trade of a butcher is a brutal and anodious business; but it is in most places more profitable than thegreater part of common trades. The most detestable of allemployments, that of public executioner, is, in proportion to thequantity of work done, better paid than any common tradewhatever.

Hunting and fishing, the most important employments ofmankind in the rude state of society, become in its advanced statetheir most agreeable amusements, and they pursue for pleasurewhat they once followed from necessity. In the advanced state ofsociety, therefore, they are all very poor people who follow as atrade what other people pursue as a pastime. Fishermen havebeen so since the time of Theocritus.1 A poacher is everywhere avery poor man in Great Britain. In countries where the rigour ofthe law suffers no poachers, the licensed hunter is not in a muchbetter condition. The natural taste for those employments makesmore people follow them than can live comfortably by them, andthe produce of their labour, in proportion to its quantity, comesalways too cheap to market to afford anything but the most scantysubsistence to the labourers.

Disagreeableness and disgrace affect the profits of stock in thesame manner as the wages of labour. The keeper of an inn ortavern, who is never master of his own house, and who is exposedto the brutality of every drunkard, exercises neither a veryagreeable nor a very creditable business. But there is scarce anycommon trade in which a small stock yields so great a profit.

Secondly, the wages of labour vary with the easiness and

1See Idyllium XXI.



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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 beexpected, will replace the capital laid out upon it, with at least theordinary profits. A man educated at the expense of much labourand time to any of those employments which requireextraordinary dexterity and skill, may be compared to one of thoseexpensive machines. The work which he learns to perform, it mustbe expected, over and above the usual wages of common labour,will replace to him the whole expense of his education, with atleast the ordinary profits of an equally valuable capital. It must dothis, too, in a reasonable time, regard being had to the veryuncertain duration of human life, in the same manner as to themore certain duration of the machine.

The difference between the wages of skilled labour and those ofcommon 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 allcountry labourers as common labour. It seems to suppose that ofthe former to be of a more nice and delicate nature than that of thelatter. It is so perhaps in some cases; but in the greater part is itquite otherwise, as I shall endeavour to show by and by. The lawsand customs of Europe, therefore, in order to qualify any personfor exercising the one species of labour, impose the necessity of anapprenticeship, though with different degrees of rigour indifferent places. They leave the other free and open to everybody.During the continuance of the apprenticeship, the whole labour ofthe apprentice belongs to his master. In the meantime he must, inmany cases, be maintained by his parents or relations, and in



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almost all cases must be clothed by them. Some money, too, iscommonly given to the master for teaching him his trade. Theywho cannot give money give time, or become bound for more thanthe usual number of years; a consideration which, though it is notalways advantageous to the master, on account of the usualidleness of apprentices, is always disadvantageous to theapprentice. In country labour, on the contrary, the labourer, whilehe is employed about the easier, learns the more difficult parts ofhis business, and his own labour maintains him through all thedifferent stages of his employment. It is reasonable, therefore, thatin Europe the wages of mechanics, artificers, and manufacturers,should be somewhat higher than those of common labourers. Theyare so accordingly, and their superior gains make them in mostplaces be considered as a superior rank of people.

This superiority, however, is generally very small; the daily orweekly earnings of journeymen in the more common sorts ofmanufactures, such as those of plain linen and woollen cloth,computed at an average, are, in most places, very little more thanthe day wages of common labourers. Their employment, indeed, ismore steady and uniform, and the superiority of their earnings,taking the whole year together, may be somewhat greater. Itseems evidently, however, to be no greater than what is sufficientto compensate the superior expense of their education.

Education in the ingenious arts and in the liberal professions isstill more tedious and expensive. The pecuniary recompense,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 theeasiness or difficulty of learning the trade in which it is employed.



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All the different ways in which stock is commonly employed ingreat towns seem, in reality, to be almost equally easy and equallydifficult to learn. One branch either of foreign or domestic tradecannot well be a much more intricate business than another.

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

Employment is much more constant in some trades than inothers. In the greater part of manufacturers, a journeyman may bepretty sure of employment almost every day in the year that he isable to work.

A mason or bricklayer, on the contrary, can work neither inhard frost nor in foul weather, and his employment at all othertimes depends upon the occasional calls of his customers. He isliable, in consequence, to be frequently without any. What heearns, therefore, while he is employed, must not only maintainhim while he is idle, but make him some compensation for thoseanxious and desponding moments which the thought of soprecarious a situation must sometimes occasion. Where thecomputed earnings of the greater part of manufacturers,accordingly, are nearly upon a level with the day wages ofcommon labourers, those of masons and bricklayers are generallyfrom one half more to double those wages. Where commonlabourers earn four and five shillings a week, masons andbricklayers frequently earn seven and eight; where the formerearn six, the latter often earn nine and ten; and where the formerearn nine and ten, as in London, the latter commonly earn fifteenand eighteen. No species of skilled labour, however, seems moreeasy to learn than that of masons and bricklayers. Chairmen inLondon, during the summer season, are said sometimes to be



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employed as bricklayers. The high wages of those workmen,therefore, are not so much the recompense of their skill, as thecompensation for the inconstancy of their employment.

A house carpenter seems to exercise rather a nicer and moreingenious trade than a mason. In most places, however, for it isnot universally so, his day-wages are somewhat lower. Hisemployment, though it depends much, does not depend so entirelyupon the occasional calls of his customers; and it is not liable to beinterrupted by the weather.

When the trades which generally afford constant employmenthappen in a particular place not to do so, the wages of theworkmen always rise a good deal above their ordinary proportionto those of common labour. In London almost all journeymenartificers are liable to be called upon and dismissed by theirmasters from day to day, and from week to week, in the samemanner as day-labourers in other places. The lowest order ofartificers, journeymen tailors, accordingly, earn there half a crowna-day, though eighteenpence may be reckoned the wages ofcommon labour. In small towns and country villages, the wages ofjourneymen tailors frequently scarce equal those of commonlabour; but in London they are often many weeks withoutemployment, particularly during the summer.

When the inconstancy of employment is combined with thehardship, disagreeableness and dirtiness of the work, it sometimesraises the wages of the most common labour above those of themost skilful artificers. A collier working by the piece is supposed,at Newcastle, to earn commonly about double, and in many partsof Scotland about three times the wages of common labour. Hishigh wages arise altogether from the hardship, disagreeableness,



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and dirtiness of his work. His employment may, upon mostoccasions, be as constant as he pleases. The coal-heavers inLondon exercise a trade which in hardship, dirtiness, anddisagreeableness, almost equals that of colliers; and from theunavoidable irregularity in the arrivals of coal-ships, theemployment of the greater part of them is necessarily veryinconstant. If colliers, therefore, commonly earn double and triplethe wages of common labour, it ought not to seem unreasonablethat coal-heavers should sometimes earn four and five times thosewages. In the inquiry made into their condition a few years ago, itwas found that at the rate at which they were then paid, they couldearn from six to ten shillings a day. Six shillings are about fourtimes the wages of common labour in London, and in everyparticular trade the lowest common earnings may always beconsidered as those of the far greater number. How extravagantsoever those earnings may appear, if they were more thansufficient to compensate all the disagreeable circumstances of thebusiness, there would soon be so great a number of competitorsas, in a trade which has no exclusive privilege, would quicklyreduce them to a lower rate.

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

Fourthly, the wages of labour vary accordingly to the small orgreat trust which must be reposed in the workmen.

The wages of goldsmiths and jewellers are everywhere superiorto those of many other workmen, not only of equal, but of muchsuperior ingenuity, on account of the precious materials with



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which they are intrusted.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 verymean or low condition. Their reward must be such, therefore, asmay give them that rank in the society which so important a trustrequires. The long time and the great expense which must be laidout 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 notrust; and the credit which he may get from other people depends,not upon the nature of his trade, but upon their opinion of hisfortune, probity, and prudence. The different rates of profit,therefore, in the different branches of trade, cannot arise from thedifferent degrees of trust reposed in the traders.

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

The probability that any particular person shall ever bequalified for the employment to which he is educated is verydifferent in different occupations. In the greater part of mechanictrades, success is almost certain; but very uncertain in the liberalprofessions. Put your son apprentice to a shoemaker, there is littledoubt of his learning to make a pair of shoes; but send him tostudy the law, it is at least twenty to one if ever he makes suchproficiency as will enable him to live by the business. In a perfectlyfair lottery, those who draw the prizes ought to gain all that is lostby those who draw the blanks. In a profession where twenty failfor one that succeeds, that one ought to gain all that should havebeen gained by the unsuccessful twenty. The counsellor-at-law



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who, perhaps, at near forty years of age, begins to make somethingby his profession, ought to receive the retribution, not only of hisown so tedious and expensive education, but that of more thantwenty others who are never likely to make anything by it. Howextravagant soever the fees of counsellors-at-law may sometimesappear, their real retribution is never equal to this. Compute inany particular place what is likely to be annually gained, and whatis likely to be annually spent, by all the different workmen in anycommon trade, such as that of shoemakers or weavers, and youwill find that the former sum will generally exceed the latter. Butmake the same computation with regard to all the counsellors andstudents of law, in all the different inns of court, and you will findthat their annual gains bear but a very small proportion to theirannual expense, even though you rate the former as high, and thelatter 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 asmany other liberal and honourable professions, are, in point ofpecuniary gain, evidently under-recompensed.

Those professions keep their level, however, with otheroccupations, and, notwithstanding these discouragements, all themost generous and liberal spirits are eager to crowd into them.Two different causes contribute to recommend them. First, thedesire of the reputation which attends upon superior excellence inany of them; and, secondly, the natural confidence which everyman has more or less, not only in his own abilities, but in his owngood fortune.

To excel in any profession, in which but few arrive atmediocrity, is the most decisive mark of what is called genius orsuperior talents. The public admiration which attends upon such



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distinguished abilities makes always a part of their reward; agreater or smaller in proportion as it is higher or lower in degree.It makes a considerable part of that reward in the profession ofphysic; a still greater perhaps in that of law; in poetry andphilosophy it makes almost the whole.

There are some very agreeable and beautiful talents of whichthe possession commands a certain sort of admiration; but ofwhich the exercise for the sake of gain is considered, whether fromreason or prejudice, as a sort of public prostitution. The pecuniaryrecompense, therefore, of those who exercise them in this mannermust be sufficient, not only to pay for the time, labour, andexpense of acquiring the talents, but for the discredit whichattends the employment of them as the means of subsistence. Theexorbitant rewards of players, opera-singers, opera-dancers, etc.,are founded upon those two principles; the rarity and beauty ofthe talents, and the discredit of employing them in this manner. Itseems absurd at first sight that we should despise their personsand yet reward their talents with the most profuse liberality. Whilewe do the one, however, we must of necessity do the other. Shouldthe public opinion or prejudice ever alter with regard to suchoccupations, their pecuniary recompense would quickly diminish.More people would apply to them, and the competition wouldquickly reduce the price of their labour. Such talents, though farfrom being common, are by no means so rare as is imagined. Manypeople possess them in great perfection, who disdain to make thisuse of them; and many more are capable of acquiring them, ifanything could be made honourably by them.

The overweening conceit which the greater part of men have oftheir own abilities is an ancient evil remarked by the philosophers



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and moralists of all ages. Their absurd presumption in their owngood fortune has been less taken notice of. It is, however, ifpossible, still more universal. There is no man living who, when intolerable health and spirits, has not some share of it. The chanceof gain is by every man more or less overvalued, and the chance ofloss is by most men undervalued, and by scarce any man, who is intolerable health and spirits, valued more than it is worth.

That the chance of gain is naturally overvalued, we may learnfrom the universal success of lotteries. The world neither eversaw, nor ever will see, a perfectly fair lottery; or one in which thewhole gain compensated the whole loss; because the undertakercould make nothing by it. In the state lotteries the tickets arereally not worth the price which is paid by the originalsubscribers, and yet commonly sell in the market for twenty,thirty, and sometimes forty per cent advance. The vain hope ofgaining 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 smallsum for the chance of gaining ten or twenty thousand pounds;though they know that even that small sum is perhaps twenty orthirty per cent more than the chance is worth. In a lottery in whichno prize exceeded twenty pounds, though in other respects itapproached much nearer to a perfectly fair one than the commonstate lotteries, there would not be the same demand for tickets. Inorder to have a better chance for some of the great prizes, somepeople purchase several tickets, and others, small share in a stillgreater number. There is not, however, a more certain propositionin mathematics than that the more tickets you adventure upon,the more likely you are to be a loser. Adventure upon all thetickets in the lottery, and you lose for certain; and the greater the



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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 a verymoderate profit of insurers. In order to make insurance, eitherfrom fire or sea-risk, a trade at all, the common premium must besufficient to compensate the common losses, to pay the expense ofmanagement, and to afford such a profit as might have beendrawn from an equal capital employed in any common trade. Theperson who pays no more than this evidently pays no more thanthe real value of the risk, or the lowest price at which he canreasonably expect to insure it. But though many people have madea little money by insurance, very few have made a great fortune;and from this consideration alone, it seems evident enough thatthe ordinary balance of profit and loss is not more advantageous inthis than in other common trades by which so many people makefortunes. Moderate, however, as the premium of insurancecommonly is, many people despise the risk too much to care to payit. Taking the whole kingdom at an average, nineteen houses intwenty, or rather perhaps ninety-nine in a hundred, are notinsured from fire. Sea risk is more alarming to the greater part ofpeople, and the proportion of ships insured to those not insured ismuch greater. Many fail, however, at all seasons, and even in timeof war, without any insurance. This may sometimes perhaps bedone without any imprudence. When a great company, or even agreat merchant, has twenty or thirty ships at sea, they may, as itwere, insure one another. The premium saved upon them all maymore than compensate such losses as they are likely to meet within the common course of chances. The neglect of insurance uponshipping, however, in the same manner as upon houses, is, in most



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cases, the effect of no such nice calculation, but of merethoughtless rashness and presumptuous contempt of the risk.

The contempt of risk and the presumptuous hope of success arein no period of life more active than at the age at which youngpeople choose their professions. How little the fear of misfortune isthen capable of balancing the hope of good luck appears still moreevidently in the readiness of the common People to enlist assoldiers, or to go to sea, than in the eagerness of those of betterfashion to enter into what are called the liberal professions.

What a common soldier may lose is obvious enough. Withoutregarding the danger, however, young volunteers never enlist soreadily as at the beginning of a new war; and though they havescarce any chance of preferment, they figure to themselves, intheir youthful fancies, a thousand occasions of acquiring honourand distinction which never occur. These romantic hopes makethe whole price of their blood. Their pay is less than that ofcommon labourers, and in actual service their fatigues are muchgreater.

The lottery of the sea is not altogether so disadvantageous asthat of the army. The son of a creditable labourer or artificer mayfrequently go to sea with his father’s consent; but if he enlists as asoldier, it is always without it. Other people see some chance of hismaking something by the one trade: nobody but himself sees anyof his making anything by the other. The great admiral is less theobject of public admiration than the great general, and the highestsuccess in the sea service promises a less brilliant fortune andreputation than equal success in the land. The same differenceruns through all the inferior degrees of preferment in both. By therules of precedency a captain in the navy ranks with a colonel in



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the army; but he does not rank with him in the commonestimation. As the great prizes in the lottery are less, the smallerones must be more numerous. Common sailors, therefore, morefrequently get some fortune and preferment than commonsoldiers; and the hope of those prizes is what principallyrecommends the trade. Though their skill and dexterity are muchsuperior to that of almost any artificers, and though their wholelife is one continual scene of hardship and danger, yet for all thisdexterity and skill, for all those hardships and dangers, while theyremain in the condition of common sailors, they receive scarce anyother recompense but the pleasure of exercising the one and ofsurmounting the other. Their wages are not greater than those ofcommon labourers at the port which regulates the rate ofseamen’s wages. As they are continually going from port to port,the monthly pay of those who sail from all the different ports ofGreat Britain is more nearly upon a level than that of any otherworkmen in those different places; and the rate of the port to andfrom which the greatest number sail, that is the port of London,regulates that of all the rest. At London the wages of the greaterpart of the different classes of workmen are about double those ofthe same classes at Edinburgh. But the sailors who sail from theport of London seldom earn above three or four shillings a monthmore than those who sail from the port of Leith, and the differenceis frequently not so great. In time of peace, and in the merchantservice, the London price is from a guinea to about seven-and-twenty shillings the calendar month. A common labourer inLondon, at the rate of nine or ten shillings a week, may earn in thecalendar month from forty to five-and-forty shillings. The sailor,indeed, over and above his pay, is supplied with provisions. Their



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value, however, may not perhaps always exceed the differencebetween his pay and that of the common labourer; and though itsometimes should, the excess will not be clear gain to the sailor,because he cannot share it with his wife and family, whom hemust maintain out of his wages at home.

The dangers and hairbreadth escapes of a life of adventures,instead of disheartening young people, seem frequently torecommend a trade to them. A tender mother, among the inferiorranks of people, is of afraid to send her son to school at a seaporttown, lest the sight of the ships and the conversation andadventures of the sailors should entice him to go to sea. Thedistant prospect of hazards, from which we can hope to extricateourselves by courage and address, is not disagreeable to us, anddoes not raise the wages of labour in any employment. It isotherwise with those in which courage and address can be of noavail. In trades which are known to be very unwholesome, thewages of labour are always remarkably high. Unwholesomeness isa species of disagreeableness, and its effects upon the wages oflabour are to be ranked under that general head.

In all the different employments of stock, the ordinary rate ofprofit varies more or less with the certainty or uncertainty of thereturns. These are in general less uncertain in the inland than inthe foreign trade, and in some branches of foreign trade than inothers; in the trade to North America, for example, than in that toJamaica. The ordinary rate of profit always rises more or less withthe risk.

It does not, however, seem to rise in proportion to it, or so as tocompensate it completely. Bankruptcies are most frequent in themost hazardous trades. The most hazardous of all trades, that of a



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smuggler, though when the adventure succeeds it is likewise themost profitable, is the infallible road to bankruptcy. Thepresumptuous hope of success seems to act here as upon all otheroccasions, and to entice so many adventurers into those hazardoustrades, that their competition reduces their profit below what issufficient to compensate the risk. To compensate it completely, thecommon returns ought, over and above the ordinary profits ofstock, not only to make up for all occasional losses, but to afford asurplus profit to the adventurers of the same nature with the profitof insurers. But if the common returns were sufficient for all this,bankruptcies would not be more frequent in these than in othertrades.

Of the five circumstances, therefore, which vary the wages oflabour, two only affect the profits of stock; the agreeableness ordisagreeableness of the business, and the risk or security withwhich it is attended. In point of agreeableness, there is little or nodifference in the far greater part of the different employments ofstock; but a great deal in those of labour; and the ordinary profit ofstock, though it rises with the risk, does not always seem to rise inproportion to it. It should follow from all this, that, in the samesociety or neighbourhood, the average and ordinary rates of profitin the different employments of stock should be more nearly upona level than the pecuniary wages of the different sorts of labour.They are so accordingly. The difference between the earnings of acommon labourer and those of a well employed lawyer orphysician, is evidently much greater than that between theordinary profits in any two different branches of trade. Theapparent difference, besides, in the profits of different trades, isgenerally a deception arising from our not always distinguishing



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what ought to be considered as wages, from what ought to beconsidered as profit.

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

In a small seaport town, a little grocer will make forty or fiftyper cent upon a stock of a single hundred pounds, while aconsiderable wholesale merchant in the same place will scarcemake eight or ten per cent upon a stock of ten thousand. The tradeof the grocer may be necessary for the conveniency of theinhabitants, and the narrowness of the market may not admit theemployment of a larger capital in the business. The man, however,must not only live by his trade, but live by it suitably to thequalifications which it requires. Besides possessing a little capital,he must be able to read, write, and account, and must be a



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tolerable judge too of, perhaps, fifty or sixty different sorts ofgoods, their prices, qualities, and the markets where they are to behad cheapest. He must have all the knowledge, in short, that isnecessary for a great merchant, which nothing hinders him frombecoming but the want of a sufficient capital. Thirty or fortypounds a year cannot be considered as too great a recompense forthe labour of a person so Accomplished. Deduct this from theseemingly great profits of his capital, and little more will remain,perhaps, than the ordinary profits of stock. The greater part of theapparent profit is, in this case too, real wages.

The difference between the apparent profit of the retail andthat of the wholesale trade, is much less in the capital than insmall towns and country villages. Where ten thousand pounds canbe employed in the grocery trade, the wages of the grocer’s labourmake but a very trifling addition to the real profits of so great astock. The apparent profits of the wealthy retailer, therefore, arethere more nearly upon a level with those of the wholesalemerchant.

It is upon this account that goods sold by retail are generally ascheap and frequently much cheaper in the capital than in smalltowns and country villages. Grocery goods, for example, aregenerally much cheaper; bread and butcher’s meat frequently ascheap. It costs no more to bring grocery goods to the great townthan to the country village; but it costs a great deal more to bringcorn and cattle, as the greater part of them must be brought froma much greater distance.

The prime cost of grocery goods, therefore, being the same inboth places, they are cheapest where the least profit is chargedupon them.



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The prime cost of bread and butcher’s meat is greater in thegreat town than in the country village; and though the profit isless, therefore, they are not always cheaper there, but oftenequally cheap.

In such articles as bread and butcher’s meat, the same cause,which diminishes apparent profit, increases prime cost. Theextent of the market, by giving employment to greater stocks,diminishes apparent profit; but by requiring supplies from agreater distance, it increases prime cost. This diminution of theone and increase of the other seem, in most cases, nearly tocounterbalance one another, which is probably the reason that,though the prices of corn and cattle are commonly very differentin different parts of the kingdom, those of bread and butcher’smeat are generally very nearly the same through the greater partof it.

Though the profits of stock both in the wholesale and retailtrade are generally less in the capital than in small towns andcountry villages, yet great fortunes are frequently acquired fromsmall beginnings in the former, and scarce ever in the latter. Insmall towns and country villages, on account of the narrowness ofthe market, trade cannot always be extended as stock extends. Insuch places, therefore, though the rate of a particular person’sprofits may be very high, the sum or amount of them can never bevery great, nor consequently that of his annual accumulation. Ingreat towns, on the contrary, trade can be extended as stockincreases, and the credit of a frugal and thriving man increasesmuch faster than his stock. His trade is extended in proportion tothe amount of both, and the sum or amount of his profits is inproportion to the extent of his trade, and his annual accumulation



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in proportion to the amount of his profits. It seldom happens,however, that great fortunes are made even in great towns by anyone regular, established, and well-known branch of business, butin consequence of a long life of industry, frugality, and attention.Sudden fortunes, indeed, are sometimes made in such places bywhat is called the trade of speculation. The speculative merchantexercises no one regular, established, or well-known branch ofbusiness. He is a corn merchant this year, and a wine merchantthe next, and a sugar, tobacco, or tea merchant the year after. Heenters into every trade when he foresees that it is likely to be morethan commonly profitable, and he quits it when he foresees that itsprofits are likely to return to the level of other trades. His profitsand losses, therefore, can bear no regular proportion to those ofany one established and well-known branch of business. A boldadventurer may sometimes acquire a considerable fortune by twoor three successful speculations; but is just as likely to lose one bytwo or three unsuccessful ones. This trade can be carried onnowhere but in great towns. It is only in places of the mostextensive commerce and correspondence that the intelligencerequisite for it can be had.

The five circumstances above mentioned, though they occasionconsiderable inequalities in the wages of labour and profits ofstock, occasion none in the whole of the advantages anddisadvantages, real or imaginary, of the different employments ofeither. The nature of those circumstances is such that they makeup for a small pecuniary gain in some, and counterbalance a greatone in others.

In order, however, that this equality may take place in thewhole of their advantages or disadvantages, three things are



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requisite even where there is the most perfect freedom. First, theemployments must be well known and long established in theneighbourhood; secondly, they must be in their ordinary, or whatmay be called their natural state; and, thirdly, they must be thesole or principal employments of those who occupy them.

First, this equality can take place only in those employmentswhich are well known, and have been long established in theneighbourhood.

Where all other circumstances are equal, wages are generallyhigher in new than in old trades. When a projector attempts toestablish a new manufacture, he must at first entice his workmenfrom other employments by higher wages than they can eitherearn in their own trades, or than the nature of his work wouldotherwise require, and a considerable time must pass away beforehe can venture to reduce them to the common level. Manufacturesfor which the demand arises altogether from fashion and fancy arecontinually changing, and seldom last long enough to beconsidered as old established manufactures. Those, on thecontrary, for which the demand arises chiefly from use ornecessity, are less liable to change, and the same form or fabricmay continue in demand for whole centuries together. The wagesof labour, therefore, are likely to be higher in manufactures of theformer than in those of the latter kind. Birmingham deals chieflyin manufactures of the former kind; Sheffield in those of the latter;and the wages of labour in those two different places are said to besuitable to this difference in the nature of their manufactures.

The establishment of any new manufacture, of any new branchof commerce, or of any new practice in agriculture, is always aspeculation, from which the projector promises himself



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extraordinary profits. These profits sometimes are very great, andsometimes, more frequently, perhaps, they are quite otherwise;but in general they bear no regular proportion to those of otherold trades in the neighbourhood. If the project succeeds, they arecommonly at first very high. When the trade or practice becomesthoroughly established and well known, the competition reducesthem to the level of other trades.

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

The demand for almost every different species of labour issometimes greater and sometimes less than usual. In the one casethe advantages of the employment rise above, in the other they fallbelow the common level. The demand for country labour isgreater at hay-time and harvest than during the greater part of theyear; and wages rise with the demand. In time of war, when fortyor fifty thousand sailors are forced from the merchant service intothat of the king, the demand for sailors to merchant shipsnecessarily rises with their scarcity, and their wages upon suchoccasions commonly rise from a guinea and seven-and-twentyshillings, to forty shillings and three pounds a month. In adecaying manufacture, on the contrary, many workmen, ratherthan quit their old trade, are contented with smaller wages thanwould otherwise be suitable to the nature of their employment.

The profits of stock vary with the price of the commodities inwhich it is employed. As the price of any commodity rises abovethe ordinary or average rate, the profits of at least some part of thestock that is employed in bringing it to market, rise above their



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proper level, and as it falls they sink below it. All commodities aremore or less liable to variations of price, but some are much moreso than others. In all commodities which are produced by humanindustry, the quantity of industry annually employed is necessarilyregulated by the annual demand, in such a manner that theaverage annual produce may, as nearly as possible, be equal to theaverage annual consumption. In some employments, it has alreadybeen observed, the same quantity of industry will always producethe same, or very nearly the same quantity of commodities. In thelinen or woollen manufactures, for example, the same number ofhands will annually work up very nearly the same quantity oflinen and woollen cloth. The variations in the market price of suchcommodities, therefore, can arise only from some accidentalvariation in the demand. A public mourning raises the price ofblack cloth. But as the demand for most sorts of plain linen andwoollen cloth is pretty uniform, so is likewise the price. But thereare other employments in which the same quantity of industry willnot always produce the same quantity of commodities. The samequantity of industry, for example, will, in different years, producevery different quantities of corn, wine, hops, sugar, tobacco, etc.The price of such commodities, therefore, varies not only with thevariations of demand, but with the much greater and morefrequent variations of quantity, and is consequently extremelyfluctuating. But the profit of some of the dealers must necessarilyfluctuate with the price of the commodities. The operations of thespeculative merchant are principally employed about suchcommodities. He endeavours to buy them up when he foreseesthat their price is likely to rise, and to sell them when it is likely tofall.



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Thirdly, this equality in the whole of the advantages anddisadvantages of the different employments of labour and stockcan take only in such as are the sole or principal employments ofthose who occupy them.

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

There still subsists in many parts of Scotland a set of peoplecalled Cotters or Cottagers, though they were more frequent someyears ago than they are now. They are a sort of outservants of thelandlords and farmers. The usual reward which they receive fromtheir masters is a house, a small garden for pot-herbs, as muchgrass as will feed a cow, and, perhaps, an acre or two of bad arableland. When their master has occasion for their labour, he givesthem, besides, two pecks of oatmeal a week, worth aboutsixteenpence sterling. During a great part of the year he has littleor no occasion for their labour, and the cultivation of their ownlittle possession is not sufficient to occupy the time which is left attheir own disposal.

When such occupiers were more numerous than they are atpresent, they are said to have been willing to give their spare timefor a very small recompense to anybody, and to have wrought forless wages than other labourers. In ancient times they seem tohave been common all over Europe. In countries ill cultivated andworse inhabited, the greater part of landlords and farmers couldnot otherwise provide themselves with the extraordinary numberof hands which country labour requires at certain season. Thedaily or weekly recompense which such labourers occasionally



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received from their masters was evidently not the whole price oftheir labour. Their small tenement made a considerable part of it.This daily or weekly recompense, however, seems to have beenconsidered as the whole of it, by many writers who have collectedthe prices of labour and provisions in ancient times, and who havetaken pleasures in representing both as wonderfully low.

The produce of such labour comes frequently cheaper tomarket than would otherwise suitable to its nature. Stockings inmany parts of Scotland are knit much cheaper than they cananywhere be wrought upon the loom. They are the work ofservants and labourers, who derive the principal part of theirsubsistence from some other employment. More than a thousandpair of Shetland stockings are annually imported into Leith, ofwhich the price is from fivepence to sevenpence a pair. AtLerwick, the small capital of the Shetland Islands, tenpence a day,I have been assured, is a common price of common labour. In thesame islands they knit worsted stockings to the value of a guinea apair and upwards.

The spinning of linen yarn is carried on in Scotland nearly inthe same way as the knitting of stockings by servants, who arechiefly hired for other purposes. They earn but a very scantysubsistence, who endeavour to get their whole livelihood by eitherof those trades. In most parts of Scotland she is a good spinnerwho can earn twentypence a week.

In opulent countries the market is generally so extensive thatany one trade is sufficient to employ the whole labour and stock ofthose who occupy it. Instances of people’s living by oneemployment, and at the same time deriving some little advantagefrom another, occur chiefly in poor countries. The following



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instance, however, of something of the same kind is to be found inthe 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 nocapital in which a furnished apartment can be hired as cheap.Lodging is not only much cheaper in London than in Paris; it ismuch cheaper than in Edinburgh of the same degree of goodness;and what may seem extraordinary, the dearness of house-rent isthe cause of the cheapness of lodging. The dearness of house-rentin London arises not only from those causes which render it dearin all great capitals, the dearness of labour, the dearness of all thematerials of building, which must generally be brought from agreat distance, and above all the dearness of ground-rent, everylandlord acting the part the part of a monopolist, and frequentlyexacting a higher rent for a single acre of bad land in a town thancan be had for a hundred of the best in the country; but it arises inpart from the peculiar manners and customs of the people, whichoblige every master of a family to hire a whole house from top tobottom. A dwelling-house in England means everything that iscontained under the same roof. In France, Scotland, and manyother parts of Europe, it frequently means no more than a singlestory. A tradesman in London is obliged to hire a whole house inthat part of the town where his customers live. His shop is uponthe ground-floor, and he and his family sleep in the garret; and heendeavours to pay a part of his house-rent by letting the twomiddle stories to lodgers. He expects to maintain his family by histrade, and not by his lodgers. Whereas, at Paris and Edinburgh,the people who let lodgings have commonly no other means ofsubsistence and the price of the lodging must pay, not only therent of the house, but the whole expense of the family.



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PART 2

Inequalities by the Policy of Europe

Such are the inequalities in the whole of advantages anddisadvantages of the different employments of labour and stock,which the defect of any of the three requisites above mentionedmust occasion, even where there is the most perfect liberty. Butthe 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, byrestraining the competition in some employments to a smallernumber than would otherwise be disposed to enter into them;secondly, by increasing it in others beyond what it naturally wouldbe; and, thirdly, by obstructing the free circulation of labour andstock, both from employment to employment and from place toplace.

First, the policy of Europe occasions a very importantinequality in the whole of the advantages and disadvantages of thedifferent employments of labour and stock, by restraining thecompetition in some employments to a smaller number than mightotherwise be disposed to enter into them.

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

The exclusive privilege of an incorporated trade necessarilyrestrains the competition, in the town where it is established, tothose who are free of the trade. To have served an apprenticeshipin the town, under a master properly qualified, is commonly thenecessary requisite for obtaining this freedom. The bye-laws of thecorporation regulate sometimes the number of apprentices which



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any master is allowed to have, and almost always the number ofyears which each apprentice is obliged to serve. The intention ofboth regulations is to restrain the competition to a much smallernumber than might otherwise be disposed to enter into the trade.The limitation of the number of apprentices restrains it directly. Along term of apprenticeship restrains it more indirectly, but aseffectually, by increasing the expense of education.

In Sheffield no master cutler can have more than oneapprentice at a time, by a bye-law of the corporation. In Norfolkand Norwich no master weaver can have more than twoapprentices, under pain of forfeiting five pounds a month to theking. No master hatter can have more than two apprenticesanywhere in England, or in the English plantations, under pain offorfeiting five pounds a month, half to the king and half to himwho 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 whichenacted the bye-law of Sheffield. The silk weavers in London hadscarce been incorporated a year when they enacted a bye-lawrestraining any master from having more than two apprentices ata time. It required a particular Act of Parliament to rescind thisbye-law.

Seven years seem anciently to have been, all over Europe, theusual term established for the duration of apprenticeships in thegreater part of incorporated trades. All such incorporations wereanciently called universities, which indeed is the proper Latinname for any incorporation whatever. The university of smiths,the university of tailors, etc., are expressions which we commonlymeet with in the old charters of ancient towns. When those



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particular incorporations which are now peculiarly calleduniversities were first established, the term of years which it wasnecessary to study, in order to obtain the degree of master of arts,appears evidently to have been copied from the terms ofapprenticeship in common trades, of which the incorporationswere much more ancient. As to have wrought seven years under amaster properly qualified was necessary in order to entitle anyperson to become a master, and to have himself apprenticed in acommon trade; so to have studied seven years under a masterproperly qualified was necessary to entitle him to become amaster, teacher, or doctor (words anciently synonymous) in theliberal arts, and to have scholars or apprentices (words likewiseoriginally synonymous) to study under him.

By the 5th of Elizabeth, commonly called the Statute ofApprenticeship, it was enacted, that no person should for thefuture exercise any trade, craft, or mystery at that time exercisedin England, unless he had previously served to it anapprenticeship of seven years at least; and what before had beenthe bye-law of many particular corporations became in Englandthe general and public law of all trades carried on in markettowns. For though the words of the statute are very general, andseem plainly to include the whole kingdom, by interpretation itsoperation has been limited to market towns, it having been heldthat in country villages a person may exercise several differenttrades, though he has not served a seven years’ apprenticeship toeach, they being necessary for the conveniency of the inhabitants,and the number of people frequently not being sufficient to supplyeach with a particular set of hands.

By a strict interpretation of the words, too, the operation of this



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statute has been limited to those trades which were established inEngland before the 5th of Elizabeth, and has never been extendedto such as have been introduced since that time. This limitationhas given occasion to several distinctions which, considered asrules of police, appear as foolish as can well be imagined. It hasbeen adjudged, for example, that a coachmaker can neitherhimself make nor employ journeymen to make his coach-wheels,but must buy them of a master wheel-wright; this latter tradehaving been exercised in England before the 5th of Elizabeth. Buta wheel-wright, though he has never served an apprenticeship to acoachmaker, may either himself make or employ journeyman tomake coaches; the trade of a coachmaker not being within thestatute, because not exercised in England at the time when it wasmade. The manufactures of Manchester, Birmingham, andWolverhampton, are many of them, upon this account, not withinthe statute, not having been exercised in England before the 5th ofElizabeth.

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

In Scotland there is no general law which regulates universallythe duration of apprenticeships. The term is different in differentcorporations. Where it is long, a part of it may generally beredeemed by paying a small fine. In most towns, too, a very smallfine is sufficient to purchase the freedom of any corporation. The



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weavers of linen and hempen cloth, the principal manufactures ofthe country, as well as all other artificers subservient to them,wheel-makers, reel-makers, etc., may exercise their trades in anytown corporate without paying any fine. In all towns corporate allpersons are free to sell butcher’s meat upon any lawful day of theweek. Three years in Scotland is a common term ofapprenticeship, even in some very nice trades; and in general Iknow of no country in Europe in which corporation laws are solittle oppressive.

The property which every man has in his own labour, as it isthe original foundation of all other property, so it is the mostsacred and inviolable. The patrimony of a poor man lies in thestrength and dexterity of his hands; and to hinder him fromemploying this strength and dexterity of his hands; and to hinderhim from employing this strength and dexterity in what mannerhe thinks proper without injury to his neighbour is a plainviolation of this most sacred property. It is a manifestencroachment upon the just liberty both of the workman and ofthose who might be disposed to employ him. As it hinders the onefrom working at what he thinks proper, so it hinders the othersfrom employing whom they think proper. To judge whether he isfit to be employed may surely be trusted to the discretion of theemployers whose interest it so much concerns. The affectedanxiety of the law-giver lest they should employ an improperperson is evidently as impertinent as it is oppressive.

The institution of long apprenticeships can give no security thatinsufficient workmanship shall not frequently be exposed to publicsale. When this is done it is generally the effect of fraud, and not ofinability; and the longest apprenticeship can give no security



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against fraud. Quite different regulations are necessary to preventthis abuse. The sterling mark upon plate, and the stamps uponlinen and woollen cloth, give the purchaser much greater securitythan any statute of apprenticeship. He generally looks at these, butnever thinks it worth while to inquire whether the workman hadserved a seven years’ apprenticeship.

The institution of long apprenticeships has no tendency to forma young people to industry. A journeyman who works by the pieceis likely to be industrious, because he derives a benefit from everyexertion of his industry. An apprentice is likely to be idle, andalmost always is so, because he has no immediate interest to beotherwise. In the inferior employments, the sweets of labourconsist altogether in the recompense of labour. They who aresoonest in a condition to enjoy the sweets of it are likely soonest toconceive a relish for it, and to acquire the early habit of industry. Ayoung man naturally conceives an aversion to labour when for along time he receives no benefit from it. The boys who are put outapprentices from public charities are generally bound for morethan the usual number of years, and they generally turn out veryidle and worthless.

Apprenticeships were altogether unknown to the ancients. Thereciprocal duties of master and apprentice make a considerablearticle in every modern code. The Roman law is perfectly silentwith regard to them. I know no Greek or Latin word (I mightventure, I believe, to assert that there is none) which expresses theidea we now annex to the word Apprentice, a servant bound towork at a particular trade for the benefit of a master, during aterm of years, upon condition that the master shall teach him thattrade.



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Long apprenticeships are altogether unnecessary. The arts,which are much superior to common trades, such as those ofmaking clocks and watches, contain no such mystery as to requirea long course of instruction. The first invention of such beautifulmachines, indeed, and even that of some of the instrumentsemployed in making them, must, no doubt, have been the work ofdeep thought and long time, and may justly be considered asamong the happiest efforts of human ingenuity. But when bothhave been fairly invented and are well understood, to explain toany young man, in the completest manner, how to apply theinstruments and how to construct the machines, cannot wellrequire more than the lessons of a few weeks: perhaps those of afew days might be sufficient. In the common mechanic trades,those of a few days might certainly be sufficient. The dexterity ofhand, indeed, even in common trades, cannot be acquired withoutmuch practice and experience. But a young man would practicewith much more diligence and attention, if from the beginning hewrought as a journeyman, being paid in proportion to the littlework which he could execute, and paying in his turn for thematerials which he might sometimes spoil through awkwardnessand inexperience. His education would generally in this way bemore effectual, and always less tedious and expensive. The master,indeed, would be a loser. He would lose all the wages of theapprentice, which he now saves, for seven years together. In theend, perhaps, the apprentice himself would be a loser. In a tradeso easily learnt he would have more competitors, and his wages,when he came to be a complete workman, would be much lessthan at present. The same increase of competition would reducethe profits of the masters as well as the wages of the workmen.



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The trades, the crafts, the mysteries, would all be losers. But thepublic would be a gainer, the work of all artificers coming in thisway much cheaper to market.

It is to prevent this reduction of price, and consequently ofwages and profit, by restraining that free competition which wouldmost certainly occasion it, that all corporations, and the greaterpart of corporation laws, have been established. In order to erect acorporation, no other authority in ancient times was requisite inmany parts of Europe, but that of the town corporate in which itwas established. In England, indeed, a charter from the king waslikewise necessary. But this prerogative of the crown seems tohave been reserved rather for extorting money from the subjectthan for the defence of the common liberty against suchoppressive monopolies. Upon paying a fine to the king, the charterseems generally to have been readily granted; and when anyparticular class of artificers or traders thought proper to act as acorporation without a charter, such adulterine guilds, as they werecalled, were not always disfranchised upon that account, butobliged to fine annually to the king for permission to exercise theirusurped privileges.1 The immediate inspection of all corporations,and of the bye-laws which they might think proper to enact fortheir own government, belonged to the town corporate in whichthey were established; and whatever discipline was exercised overthem proceeded commonly, not from the king, but from thegreater incorporation of which those subordinate ones were onlyparts or members.

The government of towns corporate was altogether in the

1See Madox, Firma Burgi, p. 26, etc.



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hands of traders and artificers, and it was the manifest interest ofevery particular class of them to prevent the market from beingoverstocked, as they commonly express it, with their ownparticular species of industry, which is in reality to keep it alwaysunderstocked. Each class was eager to establish regulationsproper for this purpose, and, provided it was allowed to do so, waswilling to consent that every other class should do the same. Inconsequence of such regulations, indeed, each class was obliged tobuy the goods they had occasion for from every other within thetown, somewhat dearer than they otherwise might have done. Butin recompense, they were enabled to sell their own just as muchdearer; so that so far it was as broad as long, as they say; and inthe dealings of the different classes within the town with oneanother, none of them were losers by these regulations. But intheir dealings with the country they were all great gainers; and inthese latter dealings consists the whole trade which supports andenriches every town.

Every town draws its whole subsistence, and all the materials ofits industry, from the country. It pays for these chiefly in two ways:first, by sending back to the country a part of those materialswrought up and manufactured; in which case their price isaugmented by the wages of the workmen, and the profits of theirmasters or immediate employers; secondly, by sending to it a partboth of the rude and manufactured produce, either of othercountries, or of distant parts of the same country, imported intothe town; in which case, too, the original price of those goods isaugmented by the wages of the carriers or sailors, and by theprofits of the merchants who employ them. In what is gained uponthe first of those two branches of commerce consists the advantage



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which the town makes by its manufactures; in what is gained uponthe second, the advantage of its inland and foreign trade. Thewages of the workmen, and the profits of their differentemployers, make up the whole of what is gained upon both.Whatever regulations, therefore, tend to increase those wages andprofits beyond what they otherwise would be, tend to enable thetown to purchase, with a smaller quantity of its labour, theproduce of a greater quantity of the labour of the country. Theygive the traders and artificers in the town an advantage over thelandlords, farmers, and labourers in the country, and break downthat natural equality which would otherwise take place in thecommerce which is carried on between them. The whole annualproduce of the labour of the society is annually divided betweenthose two different sets of people. By means of those regulations agreater share of it is given to the inhabitants of the town thanwould otherwise fall to them; and a less to those of the country.

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

That the industry which is carried on in towns is, everywhere inEurope, more advantageous than that which is carried on in thecountry, without entering into any very nice computations, wemay satisfy ourselves by one very simple and obvious observation.In every country of Europe we find, at least, a hundred people whohave acquired great fortunes from small beginnings by trade andmanufactures, the industry which properly belongs to towns, forone who has done so by that which properly belongs to the



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country, the raising of rude produce by the improvement andcultivation of land. Industry, therefore, must be better rewarded,the wages of labour and the profits of stock must evidently begreater in the one situation than in the other. But stock and labournaturally seek the most advantageous employment. Theynaturally, therefore, resort as much as they can to the town, anddesert the country.

The inhabitants of a town, being collected into one place, caneasily combine together. The most insignificant trades carried onin towns have accordingly, in some place or other, beenincorporated, and even where they have never been incorporated,yet the corporation spirit, the jealousy of strangers, the aversion totake apprentices, or to communicate the secret of their trade,generally prevail in them, and often teach them, by voluntaryassociations and agreements, to prevent that free competitionwhich they cannot prohibit by bye-laws. The trades which employbut a small number of hands run most easily into suchcombinations. Half a dozen wool-combers, perhaps, are necessaryto keep a thousand spinners and weavers at work. By combiningnot to take apprentices they can not only engross the employment,but reduce the whole manufacture into a sort of slavery tothemselves, and raise the price of their labour much above what isdue to the nature of their work.

The inhabitants of the country, dispersed in distant places,cannot easily combine together. They have not only never beenincorporated, but the corporation spirit never has prevailedamong them. No apprenticeship has ever been thought necessaryto qualify for husbandry, the great trade of the country. After whatare called the fine arts, and the liberal professions, however, there



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is perhaps no trade which requires so great a variety of knowledgeand experience.

The innumerable volumes which have been written upon it inall languages may satisfy us that, among the wisest and mostlearned nations, it has never been regarded as a matter very easilyunderstood. And from all those volumes we shall in vain attemptto collect that knowledge of its various and complicatedoperations, which is commonly possessed even by the commonfarmer; how contemptuously soever the very contemptible authorsof some of them may sometimes affect to speak of him. There isscarce any common mechanic trade, on the contrary, of which allthe operations may not be as completely and distinctly explainedin a pamphlet of a very few pages, as it is possible for wordsillustrated by figures to explain them. In the history of the arts,now publishing by the French Academy of Sciences, several ofthem are actually explained in this manner. The direction ofoperations, besides, which must be varied with every change ofthe weather, as well as with many other accidents, requires muchmore judgment and discretion than that of those which are alwaysthe same or very nearly the same.

Not only the art of the farmer, the general direction of theoperations of husbandry, but many inferior branches of countrylabour require much more skin and experience than the greaterpart of mechanic trades. The man who works upon brass and iron,works with instruments and upon materials of which the temper isalways the same, or very nearly the same. But the man whoploughs the ground with a team of horses or oxen, works withinstruments of which the health, strength, and temper, are verydifferent upon different occasions. The condition of the materials



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which he works upon, too, is as variable as that of the instrumentswhich he works with, and both require to be managed with muchjudgment and discretion. The common ploughman, thoughgenerally regarded as the pattern of stupidity and ignorance, isseldom defective in this judgment and discretion. He is lessaccustomed, indeed, to social intercourse than the mechanic wholives in a town. His voice and language are more uncouth andmore difficult to be understood by those who are not used to them.His understanding, however, being accustomed to consider agreater variety of objects, is generally much superior to that of theother, whose whole attention from morning till night is commonlyoccupied in performing one or two very simple operations. Howmuch the lower ranks of people in the country are really superiorto those of the town is well known to every man whom eitherbusiness or curiosity has led to converse much with both. In Chinaand Indostan accordingly both the rank and the wages of countrylabourers are said to be superior to those of the greater part ofartificers and manufacturers. They would probably be soeverywhere, if corporation laws and the corporation spirit did notprevent it.

The superiority which the industry of the towns haseverywhere in Europe over that of the country is not altogetherowing to corporations and corporation laws. It is supported bymany other regulations. The high duties upon foreignmanufactures and upon all goods imported by alien merchants, alltend to the same purpose.

Corporation laws enable the inhabitants of towns to raise theirprices, without fearing to be undersold by the free competition oftheir own countrymen. Those other regulations secure them



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equally against that of foreigners. The enhancement of priceoccasioned by both is everywhere finally paid by the landlords,farmers, and labourers of the country, who have seldom opposedthe establishment of such monopolies. They have commonlyneither inclination nor fitness to enter into combinations; and theclamour and sophistry of merchants and manufacturers easilypersuade them that the private interest of a part, and of asubordinate part of the society, is the general interest of the whole.

In Great Britain the superiority of the industry of the townsover that of the country seems to have been greater formerly thanin the present times. The wages of country labour approachnearer to those of manufacturing labour, and the profits of stockemployed in agriculture to those of trading and manufacturingstock, than they are said to have done in the last century, or in thebeginning of the present.

This change may be regarded as the necessary, though very lateconsequence of the extraordinary encouragement given to theindustry of the towns. The stock accumulated in them comes intime to be so great that it can no longer be employed with theancient profit in that species of industry which is peculiar to them.That industry has its limits like every other; and the increase ofstock, by increasing the competition, necessarily reduces theprofit. The lowering of profit in the town forces out stock to thecountry, where, by creating a new demand for country labour, itnecessarily raises its wages. It then spreads itself, if I may say so,over the face of the land, and by being employed in agriculture isin part restored to the country, at the expense of which, in a greatmeasure, it had originally been accumulated in the town. Thateverywhere in Europe the greatest improvements of the country



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have been owing to such overflowings of the stock originallyaccumulated in the towns, I shall endeavour to show hereafter;and at the same time to demonstrate that, though some countrieshave by this course attained to a considerable degree of opulence,it is in itself necessarily slow, uncertain, liable to be disturbed andinterrupted by innumerable accidents, and in every respectcontrary to the order of nature and of reason. The interests,prejudices, laws and customs, which have given occasion to it, Ishall endeavour to explain as fully and distinctly as I can in thethird and fourth books of this Inquiry.

People of the same trade seldom meet together, even formerriment and diversion, but the conversation ends in aconspiracy against the public, or in some contrivance to raiseprices. It is impossible indeed to prevent such meetings, by anylaw which either could be executed, or would be consistent withliberty and justice. But though the law cannot hinder people of thesame trade from sometimes assembling together, it ought to donothing to facilitate such assemblies, much less to render themnecessary.

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

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



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An incorporation not only renders them necessary, but makesthe act of the majority binding upon the whole. In a free trade aneffectual combination cannot be established but by the unanimousconsent of every single trader, and it cannot last longer than everysingle trader continues of the same mind. The majority of acorporation can enact a bye-law with proper penalties, which willlimit the competition more effectually and more durably than anyvoluntary combination whatever.

The pretence that corporations are necessary for the bettergovernment of the trade is without any foundation. The real andeffectual discipline which is exercised over a workman is not thatof his corporation, but that of his customers. It is the fear of losingtheir employment which restrains his frauds and corrects hisnegligence. An exclusive corporation necessarily weakens theforce of this discipline. A particular set of workmen must then beemployed, let them behave well or ill. It is upon this account thatin many large incorporated towns no tolerable workmen are to befound, even in some of the most necessary trades. If you wouldhave your work tolerably executed, it must be done in the suburbs,where the workmen, having no exclusive privilege, have nothingbut their character to depend upon, and you must then smuggle itinto the town as well as you can.

It is in this manner that the policy of Europe, by restraining thecompetition in some employments to a smaller number thanwould otherwise be disposed to enter into them, occasions a veryimportant inequality in the whole of the advantages anddisadvantages of the different employments of labour and stock.

Secondly, the policy of Europe, by increasing the competition insome employments beyond what it naturally would be, occasions



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another inequality of an opposite kind in the whole of theadvantages and disadvantages of the different employments oflabour and stock.

It has been considered as of so much importance that a propernumber of young people should be educated for certainprofessions, that sometimes the public and sometimes the piety ofprivate founders have established many pensions, scholarships,exhibitions, bursaries, etc., for this purpose, which draw manymore people into those trades than could otherwise pretend tofollow them. In all Christian countries, I believe, the education ofthe greater part of churchmen is paid for in this manner. Very fewof them are educated altogether at their own expense. The long,tedious, and expensive education, therefore, of those who are, willnot always procure them a suitable reward, the church beingcrowded with people who, in order to get employment, are willingto accept of a much smaller recompense than what such aneducation would otherwise have entitled them to; and in thismanner the competition of the poor takes away the reward of therich. It would be indecent, no doubt, to compare either a curate ora chaplain with a journeyman in any common trade. The pay of acurate or chaplain, however, may very properly be considered asof the same nature with the wages of a journeyman. They are, allthree, paid for their work according to the contract which theymay happen to make with their respective superiors. Till after themiddle of the fourteenth century, five merks, containing about asmuch silver as ten pounds of our present money, was in Englandthe usual pay of a curate or a stipendiary parish priest, as we findit regulated by the decrees of several different national councils.At the same period fourpence a day, containing the same quantity



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of silver as a shilling of our present money, was declared to be thepay of a master mason, and threepence a day, equal to ninepenceof our present money, that of a journeyman mason.1 The wages ofboth these labourers, therefore, supposing them to have beenconstantly employed, were much superior to those of the curate.The wages of the master mason, supposing him to have beenwithout employment one third of the year, would have fullyequalled them. By the 12th of Queen Anne, c. 12, it is declared,“That whereas for want of sufficient maintenance andencouragement to curates, the cures have in several places beenmeanly supplied, the bishop is, therefore, empowered to appointby writing under his band and seal a sufficient certain stipend orallowance, not exceeding fifty and not less than twenty pounds ayear.” Forty pounds a year is reckoned at present very good payfor a curate, and notwithstanding this Act of Parliament there aremany curacies under twenty pounds a year. There are journeymenshoemakers in London who earn forty pounds a year, and there isscarce an industrious workman of any kind in that metropolis whodoes not earn more than twenty. This last sum indeed does notexceed what is frequently earned by common labourers in manycountry parishes.

Whenever the law has attempted to regulate the wages ofworkmen, it has always been rather to lower them than to raisethem. But the law has upon many occasions attempted to raise thewages of curates, and for the dignity of the church, to oblige therectors of parishes to give them more than the wretchedmaintenance which they themselves might be willing to accept of.

1See the Statute of Labourers, 25 Ed. III.



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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 tosink those of labourers to the degree that was intended; because ithas never been able to hinder either the one from being willing toaccept of less than the legal allowance, on account of the indigenceof their situation and the multitude of their competitors; or theother from receiving more, on account of the contrary competitionof those who expected to derive either profit or pleasure fromemploying them.

The great benefices and other ecclesiastical dignities supportthe honour of the church, notwithstanding the mean circumstanceof some of its inferior members. The respect paid to theprofession, too, makes some compensation even to them for themeanness of their pecuniary recompense. In England, and in allRoman Catholic countries, the lottery of the church is in realitymuch more advantageous than is necessary. The example of thechurches of Scotland, of Geneva, and of several other Protestantchurches, may satisfy us that in so creditable a profession, inwhich education is so easily procured, the hopes of much moremoderate 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 andphysic, if an equal proportion of people were educated at thepublic expense, the competition would soon be so great as to sinkvery much their pecuniary reward. It might then not be worth anyman’s while to educate his son to either of those professions at hisown expense. They would be entirely abandoned to such as hadbeen educated by those public charities, whose numbers andnecessities would oblige them in general to content themselves



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with a very miserable recompense, to the entire degradation of thenow respectable professions of law and physic.

That unprosperous race of men commonly called men of lettersare pretty much in the situation which lawyers and physiciansprobably would be in upon the foregoing supposition. In everypart of Europe the greater part of them have been educated forthe church, but have been hindered by different reasons fromentering into holy orders. They have generally, therefore, beeneducated at the public expense, and their numbers areeverywhere so great as commonly to reduce the price of theirlabour to a very paltry recompense.

Before the invention of the art of printing, the only employmentby which a man of letters could make anything by his talents wasthat of a public or private teacher, or by communicating to otherpeople the curious and useful knowledge which he had acquiredhimself: and this is still surely a more honourable, a more useful,and in general even a more profitable employment than that otherof writing for a bookseller, to which the art of printing has givenoccasion. The time and study, the genius, knowledge, andapplication requisite to qualify an eminent teacher of the sciences,are at least equal to what is necessary for the greatestpractitioners in law and physic. But the usual reward of theeminent teacher bears no proportion to that of the lawyer orphysician; because the trade of the one is crowded with indigentpeople who have been brought up to it at the public expense;whereas those of the other two are encumbered with very few whohave not been educated at their own. The usual recompense,however, of public and private teachers, small as it may appear,would undoubtedly be less than it is, if the competition of those yet



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more indigent men of letters who write for bread was not takenout of the market. Before the invention of the art of printing, ascholar and a beggar seem to have been terms very nearlysynonymous. The different governors of the universities beforethat time appear to have often granted licences to their scholars tobeg.

In ancient times, before any charities of this kind had beenestablished for the education of indigent people to the learnedprofessions, the rewards of eminent teachers appear to have beenmuch more considerable. Isocrates, in what is called his discourseagainst the sophists, reproaches the teachers of his own times withinconsistency. “They make the most magnificent promises to theirscholars,” says he, “and undertake to teach them to be wise, to behappy, and to be just, and in return for so important a service theystipulate the paltry reward of four or five minæ. They who teachwisdom,” continues he, ought certainly to be wise themselves; butif any man were to sell such a bargain for such a price, he wouldbe convicted of the most evident folly.” He certainly does not meanhere to exaggerate the reward, and we may be assured that it wasnot less than he represents it. Four minæ were equal to thirteenpounds six shillings and eightpence: five minæ to sixteen poundsthirteen shillings and fourpence. Something not less than thelargest of those two sums, therefore, must at that time have beenusually paid to the most eminent teachers at Athens. Isocrateshimself demanded ten minæ, or thirty-three pounds six shillingsand eightpence, from each scholar. When he taught at Athens, heis said to have had a hundred scholars. I understand this to be thenumber whom he taught at one time, or who attended what wecould call one course of lectures, a number which will not appear



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extraordinary from so great a city to so famous a teacher, whotaught, too, what was at that time the most fashionable of allsciences, rhetoric. He must have made, therefore, by each courseof lectures, a thousand minæ, or £3333 6s. 8d. A thousand minæ,accordingly, is said by Plutarch in another place, to have been hisDidactron, or usual price of teaching. Many other eminentteachers in those times appear to have acquired great fortunes.Gorgias made a present to the temple of Delphi of his own statuein solid gold. We must not, I presume, suppose that it was as largeas the life. His way of living, as well as that of Hippias andProtagoras, two other eminent teachers of those times, isrepresented by Plato as splendid even to ostentation. Plato himselfis said to have lived with a good deal of magnificence. Aristotle,after having been tutor to Alexander, and most munificentlyrewarded, as it is universally agreed, both by him and his fatherPhilip, thought it worth while, notwithstanding, to return toAthens, in order to resume the teaching of his school. Teachers ofthe sciences were probably in those times less common than theycame to be in an age or two afterwards, when the competition hadprobably somewhat reduced both the price of their labour and theadmiration for their persons. The most eminent of them, however,appear always to have enjoyed a degree of consideration muchsuperior to any of the like profession in the present times. TheAthenians sent Carneades the Academic, and Diogenes the Stoic,upon a solemn embassy to Rome; and though their city had thendeclined from its former grandeur, it was still an independent andconsiderable republic. Carneades, too, was a Babylonian by birth,and as there never was a people more jealous of admittingforeigners to public offices than the Athenians, their consideration



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for him must have been very great.This inequality is upon the whole, perhaps, rather

advantageous than hurtful to the public. It may somewhat degradethe profession of a public teacher; but the cheapness of literaryeducation is surely an advantage which greatly overbalances thistrifling inconveniency. The public, too, might derive still greaterbenefit from it, if the constitution of those schools and colleges, inwhich education is carried on, was more reasonable than it is atpresent through the greater part of Europe.

Thirdly, the policy of Europe, by obstructing the freecirculation of labour and stock both from employment toemployment, and from place to place, occasions in some cases avery inconvenient inequality in the whole of the advantages anddisadvantages of their different employments.

The Statute of Apprenticeship obstructs the free circulation oflabour from one employment to another, even in the same place.The exclusive privileges of corporations obstruct it from one placeto another, even in the same employment.

It frequently happens that while high wages are given to theworkmen in one manufacture, those in another are obliged tocontent themselves with bare subsistence. The one is in anadvancing state, and has, therefore, a continual demand for newbands: the other is in a declining state, and the superabundance ofhands is continually increasing. Those two manufactures maysometimes be in the same town, and sometimes in the sameneighbourhood, without being able to lend the least assistance toone another. The Statute of Apprenticeship may oppose it in theone case, and both that and an exclusive corporation in the other.In many different manufactures, however, the operations are so



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much alike, that the workmen could easily change trades with oneanother, if those absurd laws did not hinder them. The arts ofweaving plain linen and plain silk, for example, are almost entirelythe same. That of weaving plain woollen is somewhat different;but the difference is so insignificant that either a linen or a silkweaver might become a tolerable work in a very few days. If any ofthose three capital manufactures, therefore, were decaying, theworkmen might find a resource in one of the other two which wasin a more prosperous condition; and their wages would neitherrise too high in the thriving, nor sink too low in the decayingmanufacture. The linen manufacture indeed is, in England, by aparticular statute, open to everybody; but as it is not muchcultivated through the greater part of the country, it can afford nogeneral resource to the workmen of other decaying manufactures,who, wherever the Statute of Apprenticeship takes place, have noother choice but either to come upon the parish, or to work ascommon labourers, for which, by their habits, they are muchworse qualified than for any sort of manufacture that bears anyresemblance to their own. They generally, therefore, choose tocome upon the parish.

Whatever obstructs the free circulation of labour from oneemployment to another obstructs that of stock likewise; thequantity of stock which can be employed in any branch of businessdepending very much upon that of the labour which can beemployed in it. Corporation laws, however, give less obstruction tothe free circulation of stock from one place to another than to thatof labour.

It is everywhere much easier for a wealthy merchant to obtainthe privilege of trading in a town corporate, than for a poor



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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 manfinds in obtaining a settlement, or even in being allowed toexercise his industry in any parish but that to which he belongs. Itis the labour of artificers and manufacturers only of which the freecirculation is obstructed by corporation laws. The difficulty ofobtaining settlements obstructs even that of common labour. Itmay be worth while to give some account of the rise, progress, andpresent state of this disorder, the greatest perhaps of any in thepolice of England.

When by the destruction of monasteries the poor had beendeprived of the charity of those religious houses, after some otherineffectual attempts for their relief, it was enacted by the 43rd ofElizabeth, c. 2, that every parish should be bound to provide for itsown poor; and that overseers of the poor should be annuallyappointed, who, with the churchwardens, should raise by a parishrate competent sums for this purpose.

By this statute the necessity of providing for their own poor wasindispensably imposed upon every parish. Who were to beconsidered as the poor of each parish became, therefore, aquestion of some importance. This question, after some variation,was at last determined by the 13th and 14th of Charles II when itwas enacted, that forty days’ undisturbed residence should gainany person a settlement in any parish; but that within that time itshould be lawful for two justices of the peace, upon complaintmade by the churchwardens or overseers of the poor, to remove



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any new inhabitant to the parish where he was last legally settled;unless he either rented a tenement of ten pounds a year, or couldgive such security for the discharge of the parish where he wasthen living, as those justices should judge sufficient.

Some frauds, it is said, were committed in consequence of thisstatute; parish officers sometimes bribing their own poor to goclandestinely to another parish, and by keeping themselvesconcealed for forty days to gain a settlement there, to thedischarge of that to which they properly belonged. It was enacted,therefore, by the 1st of James II that the forty days’ undisturbedresidence of any person necessary to gain a settlement should beaccounted only from the time of his delivering notice in writing, ofthe place of his abode and the number of his family, to one of thechurchwardens or overseers of the parish where he came to dwell.

But parish officers, it seems, were not always more honest withregard to their own, than they had been with regard to otherparishes, and sometimes connived at such intrusions, receivingthe notice, and taking no proper steps in consequence of it. Asevery person in a parish, therefore, was supposed to have aninterest to prevent as much as possible their being burdened bysuch intruders, it was further enacted by the 3rd of William IIIthat the forty days’ residence should be accounted only from thepublication of such notice in writing on Sunday in the church,immediately after divine service.

“After all,” says Doctor Burn, “this kind of settlement, bycontinuing forty days after publication of notice in writing, is veryseldom obtained; and the design of the acts is not so much forgaining of settlements, as for the avoiding of them, by personscoming into a parish clandestinely: for the giving of notice is only



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putting a force upon the parish to remove. But if a person’ssituation is such, that it is doubtful whether he is actuallyremovable or not, he shall by giving of notice compel the parisheither to allow him a settlement uncontested, by suffering him tocontinue forty days; or, by removing him, to try the right.”

This statute, therefore, rendered it almost impracticable for apoor man to gain a new settlement in the old way, by forty days’inhabitancy. But that it might not appear to preclude altogetherthe common people of one parish from ever establishingthemselves with security in another, it appointed four other waysby which a settlement might be gained without any noticedelivered or published. The first was, by being taxed to parishrates and paying them; the second, by being elected into an annualparish office, and serving in it a year; the third, by serving anapprenticeship in the parish; the fourth, by being hired intoservice there for a year, and continuing in the same service duringthe 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 awareof the consequences to adopt any new-comer who has nothing buthis labour to support him, either by taxing him to parish rates, orby electing him into a parish office.

No married man can well gain any settlement in either of thetwo last ways. An apprentice is scarce ever married; and it isexpressly enacted that no married servant shall gain anysettlement by being hired for a year. The principal effect ofintroducing settlement by service has been to put out in a greatmeasure the old fashion of hiring for a year, which before hadbeen so customary in England, that even at this day, if no



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particular term is agreed upon, the law intends that every servantis hired for a year. But masters are not always willing to give theirservants a settlement by hiring them in this manner; and servantsare not always willing to be so hired, because, as every lastsettlement discharges all the foregoing, they might thereby losetheir original settlement in the places of their nativity, thehabitation of their parents and relations.

No independent workman, it is evident, whether labourer orartificer, is likely to gain any new settlement either byapprenticeship 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 anychurchwarden or overseer, unless he either rented a tenement often pounds a year, a thing impossible for one who has nothing buthis labour to live by; or could give such security for the dischargeof the parish as two justices of the peace should judge sufficient.What security they shall require, indeed, is left altogether to theirdiscretion; but they cannot well require less than thirty pounds, ithaving been enacted that the purchase even of a freehold estate ofless than thirty pounds’ value shall not gain any person asettlement, as not being sufficient for the discharge of the parish.But this is a security which scarce any man who lives by labourcan give; and much greater security is frequently demanded.

In order to restore in some measure that free circulation oflabour which those different statutes had almost entirely takenaway, the invention of certificates was fallen upon. By the 8th and9th of William III it was enacted that if any person should bring acertificate from the parish where he was last legally settled,subscribed by the churchwardens and overseers of the poor, and



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allowed by two justices of the peace, that every other parishshould be obliged to receive him; that he should not be removablemerely upon account of his being likely to become chargeable, butonly upon his becoming actually chargeable, and that then theparish which granted the certificate should be obliged to pay theexpense both of his maintenance and of his removal. And in orderto give the most perfect security to the parish where suchcertificated man should come to reside, it was further enacted bythe same statute that he should gain no settlement there by anymeans whatever, except either by renting a tenement of tenpounds a year, or by serving upon his own account in an annualparish office for one whole year; and consequently neither bynotice, nor by service, nor by apprenticeship, nor by paying parishrates. By the 12th of Queen Anne, too, stat. 1, c. 18, it was furtherenacted that neither the servants nor apprentices of suchcertificated man should gain any settlement in the parish wherehe resided under such certificate.

How far this invention has restored that free circulation oflabour which the preceding statutes had almost entirely takenaway, we may learn from the following very judicious observationof Doctor Burn. “It is obvious,” says he, “that there are diversgood reasons for requiring certificates with persons coming tosettle in any place; namely, that persons residing under them cangain no settlement, neither by apprenticeship, nor by service, norby giving notice, nor by paying parish rates; that they can settleneither apprentices nor servants; that if they become chargeable,it is certainly known whither to remove them, and the parish shallbe paid for the removal, and for their maintenance in themeantime; and that if they fall sick, and cannot be removed, the



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parish which gave the certificate must maintain them: none of allwhich can be without a certificate. Which reasons will holdproportionably for parishes not granting certificates in ordinarycases; for it is far more than an equal chance, but that they willhave the certificated persons again, and in a worse condition.” Themoral of this observation seems to be that certificates oughtalways to be required by the parish where any poor man comes toreside, and that they ought very seldom to be granted by thatwhich he proposes to leave. “There is somewhat of hardship inthis matter of certificates,” says the same very intelligent author inhis History of the Poor Laws, “by putting it in the power of a parishofficer to imprison a man as it were for life; however inconvenientit may be for him to continue at that place where he has had themisfortune to acquire what is called a settlement, or whateveradvantage he may propose to himself by living elsewhere.”

Though a certificate carries along with it no testimonial of goodbehaviour, and certifies nothing but that the person belongs to theparish to which he really does belong, it is altogether discretionaryin the parish officers either to grant or to refuse it. A mandamuswas once moved for, says Doctor Burn, to compel thechurchwardens and overseers to sign a certificate; but the court ofKing’s Bench rejected the motion as a very strange attempt.

The very unequal price of labour which we frequently find inEngland in places at no great distance from one another isprobably owing to the obstruction which the law of settlementsgives to a poor man who would carry his industry from one parishto another without a certificate. A single man, indeed, who ishealthy and industrious, may sometimes reside by sufferancewithout one; but a man with a wife and family who should attempt



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to do so would in most parishes be sure of being removed, and ifthe single man should afterwards marry, he would generally beremoved likewise. The scarcity of hands in one parish, therefore,cannot always be relieved by their superabundance in another, asit is constantly in Scotland, and, I believe, in all other countrieswhere there is no difficulty of settlement. In such countries,though wages may sometimes rise a little in the neighbourhood ofa great town, or wherever else there is an extraordinary demandfor labour, and sink gradually as the distance from such placesincreases, till they fall back to the common rate of the country; yetwe never meet with those sudden and unaccountable differencesin the wages of neighbouring places which we sometimes find inEngland, where it is often more difficult for a poor man to pass theartificial boundary of a parish than an arm of the sea or a ridge ofhigh mountains, natural boundaries which sometimes separatevery distinctly different rates of wages in other countries.

To remove a man who has committed no misdemeanour fromthe parish where he chooses to reside is an evident violation ofnatural liberty and justice. The common people of England,however, so jealous of their liberty, but like the common people ofmost other countries never rightly understanding wherein itconsists, have now for more than a century together sufferedthemselves to be exposed to this oppression without a remedy.Though men of reflection, too, have sometimes complained of thelaw of settlements as a public grievance; yet it has never been theobject of any general popular clamour, such as that againstgeneral warrants, an abusive practice undoubtedly, but such a oneas was not likely to occasion any general oppression. There isscarce a poor man in England of forty years of age, I will venture



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to say, who has not in some part of his life felt himself most cruellyoppressed by this ill-contrived law of settlements.

I shall conclude this long chapter with observing that, thoughanciently it was usual to rate wages, first by general lawsextending over the whole kingdom, and afterwards by particularorders of the justices of peace in every particular county, boththese practices have now gone entirely into disuse. “By theexperience of above four hundred years,” says Doctor Burn, “itseems time to lay aside all endeavours to bring under strictregulations, what in its own nature seems incapable of minutelimitation; for if all persons in the same kind of work were toreceive equal wages, there would be no emulation, and no roomleft for industry or ingenuity.”

Particular Acts of Parliament, however, still attempt sometimesto regulate wages in particular trades and in particular places.Thus the 8th of George III prohibits under heavy penalties allmaster tailors in London, and five miles round it, from giving, andtheir workmen from accepting, more than two shillings andsevenpence halfpenny a day, except in the case of a generalmourning. Whenever the legislature attempts to regulate thedifferences between masters and their workmen, its counsellorsare always the masters. When the regulation, therefore, is infavour of the workmen, it is always just and equitable; but it issometimes otherwise when in favour of the masters. Thus the lawwhich obliges the masters in several different trades to pay theirworkmen in money and not in goods is quite just and equitable. Itimposes no real hardship upon the masters. It only obliges them topay that value in money, which they pretended to pay, but did notalways really pay, in goods. This law is in favour of the workmen:



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but the 8th of George III is in favour of the masters. When masterscombine together in order to reduce the wages of their workmen,they commonly enter into a private bond or agreement not to givemore than a certain wage under a certain penalty. Were theworkmen to enter into a contrary combination of the same kind,not to accept of a certain wage under a certain penalty, the lawwould punish them very severely; and if it dealt impartially, itwould treat the masters in the same manner. But the 8th ofGeorge III enforces by law that very regulation which masterssometimes attempt to establish by such combinations. Thecomplaint of the workmen, that it puts the ablest and mostindustrious upon the same footing with an ordinary workman,seems perfectly well founded.

In ancient times, too, it was usual to attempt to regulate theprofits of merchants and other dealers, by rating the price both ofprovisions and other goods. The assize of bread is, so far as Iknow, the only remnant of this ancient usage. Where there is anexclusive corporation, it may perhaps be proper to regulate theprice of the first necessary of life. But where there is none, thecompetition will regulate it much better than any assize. Themethod of fixing the assize of bread established by the 31st ofGeorge II could not be put in practice in Scotland, on account of adefect in the law; its execution depending upon the office of a clerkof the market, which does not exist there. This defect was notremedied till the 3rd of George III. The want of an assizeoccasioned no sensible inconveniency, and the establishment ofone, in the few places where it has yet taken place, has producedno sensible advantage. In the greater part of the towns ofScotland, however, there is an incorporation of bakers who claim



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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 notto be much affected, as has already been observed, by the riches orpoverty, the advancing, stationary, or declining state of the society.

Such revolutions in the public welfare, though they affect thegeneral rates both of wages and profit, must in the end affect themequally in all different employments. The proportion betweenthem, therefore, must remain the same, and cannot well bealtered, at least for any considerable time, by any such revolutions.



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Chapter XI

Of the Rent of Land

ent, considered as the price paid for the use of land, isnaturally the highest which the tenant can afford to pay inthe actual circumstances of the land. In adjusting the

terms of the lease, the landlord endeavours to leave him no greatershare of the produce than what is sufficient to keep up the stockfrom which he furnishes the seed, pays the labour, and purchasesand maintains the cattle and other instruments of husbandry,together with the ordinary profits of farming stock in theneighbourhood. This is evidently the smallest share with whichthe tenant can content himself without being a loser, and thelandlord seldom means to leave him any more. Whatever part ofthe produce, or, what is the same thing, whatever part of its priceis over and above this share, he naturally endeavours to reserve tohimself as the rent of his land, which is evidently the highest thetenant 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 thisportion; and sometimes too, though more rarely, the ignorance ofthe tenant makes him undertake to pay somewhat more, or tocontent himself with somewhat less than the ordinary profits offarming stock in the neighbourhood. This portion, however, maystill be considered as the natural rent of land, or the rent for whichit 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

R



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

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

The sea in the neighbourhood of the islands of Shetland is morethan commonly abundant in fish, which makes a great part of thesubsistence of their inhabitants. But in order to profit by theproduce of the water, they must have a habitation upon theneighbouring land. The rent of the landlord is in proportion, not towhat the farmer can make by the land, but to what he can makeboth by the land and by the water. It is partly paid in sea-fish; andone of the very few instances in which rent makes a part of the



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price of that commodity is to be found in that country.The rent of the land, therefore, considered as the price paid for

the use of the land, is naturally a monopoly price. It is not at allproportioned to what the landlord may have laid out upon theimprovement of the land, or to what he can afford to take; but towhat the farmer can afford to give.

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

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

Rent, it is to be observed, therefore, enters into the compositionof the price of commodities in a different way from wages andprofit. High or low wages and profit are the causes of high or lowprice; high or low rent is the effect of it. It is because high or lowwages and profit must be paid, in order to bring a particularcommodity to market, that its price is high or low. But it isbecause its price is high or low; a great deal more, or very littlemore, or no more, than what is sufficient to pay those wages and



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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 whichsometimes 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 differentsorts of rude produce, when compared both with one another andwith manufactured commodities, will divide this chapter intothree parts.

PART 1

Of the Produce of Land which always affords Rent

As men, like all other animals, naturally multiply in proportion tothe means of their subsistence, food is always, more or less, indemand. It can always purchase or command a greater or smallerquantity of labour, and somebody can always be found who iswilling to do something in order to obtain it. The quantity oflabour, indeed, which it can purchase is not always equal to whatit could maintain, if managed in the most economical manner, onaccount of the high wages which are sometimes given to labour.But it can always purchase such a quantity of labour as it canmaintain, according to the rate at which the sort of labour iscommonly maintained in the neighbourhood.

But land, in almost any situation, produces a greater quantity offood than what is sufficient to maintain all the labour necessary forbringing it to market in the most liberal way in which that labouris ever maintained. The surplus, too, is always more than sufficientto replace the stock which employed that labour, together with its



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profits. Something, therefore, always remains for a rent to thelandlord.

The most desert moors in Norway and Scotland produce somesort of pasture for cattle, of which the milk and the increase arealways more than sufficient, not only to maintain all the labournecessary for tending them, and to pay the ordinary profit to thefarmer or owner of the herd or flock; but to afford some small rentto the landlord. The rent increases in proportion to the goodnessof the pasture. The same extent of ground not only maintains agreater number of cattle, but as they are brought within a smallercompass, less labour becomes requisite to tend them, and tocollect their produce. The landlord gains both ways, by theincrease of the produce and by the diminution of the labour whichmust be maintained out of it.

The rent of land not only varies with its fertility, whatever be itsproduce, but with its situation, whatever be its fertility. Land inthe neighbourhood of a town gives a greater rent than land equallyfertile in a distant part of the country. Though it may cost no morelabour to cultivate the one than the other, it must always costmore to bring the produce of the distant land to market. A greaterquantity of labour, therefore, must be maintained out of it; and thesurplus, from which are drawn both the profit of the farmer andthe rent of the landlord, must be diminished. But in remote partsof the country the rate of profits, as has already been shown, isgenerally higher than in the neighbourhood of a large town. Asmaller proportion of this diminished surplus, therefore, mustbelong to the landlord.

Good roads, canals, and navigable rivers, by diminishing theexpense of carriage, put the remote parts of the country more



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nearly upon a level with those in the neighbourhood of the town.They are upon that account the greatest of all improvements. Theyencourage the cultivation of the remote, which must always be themost extensive circle of the country. They are advantageous to thetown, by breaking down the monopoly of the country in itsneighbourhood. They are advantageous even to that part of thecountry. Though they introduce some rival commodities into theold market, they open many new markets to its produce.Monopoly, besides, is a great enemy to good management, whichcan never be universally established but in consequence of thatfree and universal competition which forces everybody to haverecourse to it for the sake of self-defence. It is not more than fiftyyears ago that some of the counties in the neighbourhood ofLondon petitioned the Parliament against the extension of theturnpike roads into the remoter counties. Those remoter counties,they pretended, from the cheapness of labour, would be able tosell their grass and corn cheaper in the London market thanthemselves, and would thereby reduce their rents, and ruin theircultivation. Their rents, however, have risen, and their cultivationhas been improved since that time.

A cornfield of moderate fertility produces a much greaterquantity of food for man than the best pasture of equal extent.Though its cultivation requires much more labour, yet the surpluswhich remains after replacing the seed and maintaining all thatlabour, is likewise much greater. If a pound of butcher’s meat,therefore, was never supposed to be worth more than a pound ofbread, this greater surplus would everywhere be of greater value,and constitute a greater fund both for the profit of the farmer andthe rent of the landlord. It seems to have done so universally in the



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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 differentperiods of agriculture. In its rude beginnings, the unimprovedwilds, which then occupy the far greater part of the country, areall abandoned to cattle. There is more butcher’s meat than bread,and bread, therefore, is the food for which there is the greatestcompetition, and which consequently brings the greatest price. AtBuenos Ayres, we are told by Ulloa, four reals, one-and-twentypence halfpenny sterling, was, forty or fifty years ago, the ordinaryprice of an ox, chosen from a herd of two or three hundred. Hesays nothing of the price of bread, probably because he foundnothing remarkable about it. An ox there, he says, cost little morethan the labour of catching him. But corn can nowhere be raisedwithout a great deal of labour, and in a country which lies uponthe river Plate, at that time the direct road from Europe to thesilver mines of Potosi, the money price of labour could not be verycheap. It is otherwise when cultivation is extended over thegreater part of the country. There is then more bread thanbutcher’s meat. The competition changes its direction, and theprice of butcher’s meat becomes greater than the price of bread.

By the extension besides of cultivation, the unimproved wildsbecome insufficient to supply the demand for butcher’s meat. Agreat part of the cultivated lands must be employed in rearing andfattening cattle, of which the price, therefore, must be sufficient topay, not only the labour necessary for tending them, but the rentwhich the landlord and the profit which the farmer could havedrawn from such land employed in tillage. The cattle bred uponthe most uncultivated moors, when brought to the same market,



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are, in proportion to their weight or goodness, sold at the sameprice as those which are reared upon the most improved land. Theproprietors of those moors profit by it, and raise the rent of theirland in proportion to the price of their cattle. It is not more than acentury ago that in many parts of the highlands of Scotland,butcher’s meat was as cheap or cheaper than even bread made ofoatmeal. The union opened the market of England to the highlandcattle. Their ordinary price is at present about three times greaterthan at the beginning of the century, and the rents of manyhighland estates have been tripled and quadrupled in the sametime. In almost every part of Great Britain a pound of the bestbutcher’s meat is, in the present times, generally worth more thantwo pounds of the best white bread; and in plentiful years it issometimes worth three or four pounds.

It is thus that in the progress of improvement the rent andprofit of unimproved pasture come to be regulated in somemeasure by the rent and profit of what is improved, and theseagain 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 quantityof the one species of food than of the other, the inferiority of thequantity must be compensated by the superiority of the price. If itwas more than compensated, more corn land would be turned intopasture; and if it was not compensated, part of what was inpasture would be brought back into corn.

This equality, however, between the rent and profit of grass andthose of corn; of the land of which the immediate produce is foodfor cattle, and of that of which the immediate produce is food formen; must be understood to take place only through the greater



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part of the improved lands of a great country. In some particularlocal situations it is quite otherwise, and the rent and profit ofgrass are much superior to what can be made by corn.

Thus in the neighbourhood of a great town the demand for milkand for forage to horses frequently contribute, together with thehigh price of butcher’s meat, to raise the value of grass above whatmay be called its natural proportion to that of corn. This localadvantage, it is evident, cannot be communicated to the lands at adistance.

Particular circumstances have sometimes rendered somecountries so populous that the whole territory, like the lands in theneighbourhood of a great town, has not been sufficient to produceboth the grass and the corn necessary for the subsistence of theirinhabitants. Their lands, therefore, have been principallyemployed in the production of grass, the more bulky commodity,and which cannot be so easily brought from a great distance; andcorn, the food of the great body of the people, has been chieflyimported from foreign countries. Holland is at present in thissituation, and a considerable part of ancient Italy seems to havebeen so during the prosperity of the Romans.

To feed well, old Cato said, as we are told by Cicero, was thefirst and most profitable thing in the management of a privateestate; to feed tolerably well, the second; and to feed ill, the third.To plough, he ranked only in the fourth place of profit andadvantage. Tillage, indeed, in that part of ancient Italy which layin the neighbourhood of Rome, must have been very muchdiscouraged by the distributions of corn which were frequentlymade to the people, either gratuitously, or at a very low price. Thiscorn was brought from the conquered provinces, of which several,



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instead of taxes, were obliged to furnish a tenth part of theirproduce at a stated price, about sixpence a peck, to the republic.The low price at which this corn was distributed to the peoplemust necessarily have sunk the price of what could be brought tothe 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-enclosed piece of grass will frequently rent higher than anycorn field in its neighbourhood. It is convenient for themaintenance of the cattle employed in the cultivation of the corn,and its high rent is, in this case, not so properly paid from thevalue of its own produce as from that of the corn lands which arecultivated by means of it. It is likely to fall, if ever theneighbouring lands are completely enclosed. The present highrent of enclosed land in Scotland seems owing to the scarcity ofenclosure, and will probably last no longer than that scarcity. Theadvantage of enclosure is greater for pasture than for corn. Itsaves 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 andprofit of corn, or whatever else is the common vegetable food orthe people, must naturally regulate, upon the land which is fit forproducing 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 anequal quantity of land feed a greater number of cattle than whenin natural grass, should somewhat reduce, it might be expected,the superiority which, in an improved country, the price ofbutcher’s meat naturally has over that of bread. It seems



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accordingly to have done so; and there is some reason forbelieving that, at least in the London market, the price ofbutcher’s meat in proportion to the price of bread is a good deallower in the present times than it was in the beginning of the lastcentury.

In the appendix to the Life of Prince Henry, Doctor Birch hasgiven us an account of the prices of butcher’s meat as commonlypaid by that prince. It is there said that the four quarters of an oxweighing six hundred pounds usually cost him nine pounds tenshillings, or thereabouts; that is, thirty-one shillings andeightpence per hundred pounds weight. Prince Henry died on the6th of November 1612, in the nineteenth year of his age.

In March 1764, there was a Parliamentary inquiry into thecauses of the high price of provisions at that time. It was then,among other proof to the same purpose, given in evidence by aVirginia merchant, that in March 1763, he had victualled his shipsfor twenty-four or twenty-five shillings the hundredweight of beef,which he considered as the ordinary price; whereas, in that dearyear, he had paid twenty-seven shillings for the same weight andsort. This high price in 1764 is, however, four shillings andeightpence cheaper than the ordinary price paid by Prince Henry;and it is the best beef only, it must be observed, which is fit to besalted for those distant voyages.

The price paid by Prince Henry amounts to 33/4d. per poundweight of the whole carcase, coarse and choice pieces takentogether; and at that rate the choice pieces could not have beensold by retail for less than 41/2d. or 5d. the pound.

In the Parliamentary inquiry in 1764, the witnesses stated theprice of the choice pieces of the best beef to be to the consumer 4d.



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and 41/4d. the pound; and the coarse pieces in general to be fromseven farthings to 21/2d. and this they said was in general onehalfpenny dearer than the same sort of pieces had usually beensold in the month of March. But even this high price is still a gooddeal cheaper than what we can well suppose the ordinary retailprice to have been the time of Prince Henry.

During the twelve first years of the last century, the averageprice of the best wheat at the Windsor market was £1 18s. 31/6d. thequarter of nine Winchester bushels.

But in the twelve years preceding 1764, including that year, theaverage price of the same measure of the best wheat at the samemarket was £2 1s. 91/2d.

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

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

Those productions, indeed, which require either a greateroriginal expense of improvement, or a greater annual expense ofcultivation, in order to fit the land for them, appear commonly toafford, the one a greater rent, the other a greater profit than cornor pasture. This superiority, however, will seldom be found toamount to more than a reasonable interest or compensation for



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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 greaterthan in a corn or grass field. But to bring the ground into thiscondition requires more expense. Hence a greater rent becomesdue to the landlord. It requires, too, a more attentive and skilfulmanagement. Hence a greater profit becomes due to the farmer.The crop too, at least in the hop and fruit garden, is moreprecarious. Its price, therefore, besides compensating alloccasional losses, must afford something like the profit ofinsurance. The circumstances of gardeners, generally mean, andalways moderate, may satisfy us that their great ingenuity is notcommonly over-recompensed. Their delightful art is practised byso many rich people for amusement, that little advantage is to bemade by those who practise it for profit; because the persons whoshould naturally be their best customers supply themselves withall their most precious productions.

The advantage which the landlord derives from suchimprovements seems at no time to have been greater than whatwas sufficient to compensate the original expense of making them.In the ancient husbandry, after the vineyard, a well-wateredkitchen garden seems to have been the part of the farm which wassupposed to yield the most valuable produce. But Democritus,who wrote upon husbandry about two thousand years ago, andwho was regarded by the ancients as one of the fathers of the art,thought they did not act wisely who enclosed a kitchen garden.The profit, he said, would not compensate the expense of a stonewall; and bricks (he meant, I suppose, bricks baked in the sun)mouldered with the rain, and the winter storm, and required



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continual repairs. Columella, who reports this judgment ofDemocritus, does not controvert it, but proposes a very frugalmethod of enclosing with a hedge of brambles and briars, which,he says, he had found by experience to be both a lasting and animpenetrable fence; but which, it seems, was not commonlyknown in the time of Democritus. Palladius adopts the opinion ofColumella, which had before been recommended by Varro. In thejudgment of those ancient improvers, the produce of a kitchengarden had, it seems, been little more than sufficient to pay theextraordinary culture and the expense of watering; for incountries so near the sun, it was thought proper, in those times asin the present, to have the command of a stream of water whichcould be conducted to every bed in the garden. Through thegreater part of Europe a kitchen garden is not at present supposedto deserve a better enclosure than that recommended byColumella. In Great Britain, and some other northern countries,the finer fruits cannot be brought to perfection but by theassistance of a wall. Their price, therefore, in such countries mustbe sufficient to pay the expense of building and maintaining whatthey cannot be had without. The fruit-wall frequently surroundsthe kitchen garden, which thus enjoys the benefit of an enclosurewhich its own produce could seldom pay for.

That the vineyard, when properly planted and brought toperfection, was the most valuable part of the farm, seems to havebeen an undoubted maxim in the ancient agriculture, as it is in themodern through all the wine countries. But whether it wasadvantageous to plant a new vineyard was a matter of disputeamong the ancient Italian husbandmen, as we learn fromColumella. He decides, like a true lover of all curious cultivation,



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in favour of the vineyard, and endeavours to show, by acomparison of the profit and expense, that it was a mostadvantageous improvement. Such comparisons, however, betweenthe profit and expense of new projects are commonly veryfallacious, and in nothing more so than in agriculture. Had thegain actually made by such plantations been commonly as great ashe imagined it might have been, there could have been no disputeabout it. The same point is frequently at this day a matter ofcontroversy in the wine countries. Their writers on agriculture,indeed, the lovers and promoters of high cultivation, seemgenerally disposed to decide with Columella in favour of thevineyard. In France the anxiety of the proprietors of the oldvineyards to prevent the planting of any new ones, seems to favourtheir opinion, and to indicate a consciousness in those who musthave the experience that this species of cultivation is at present inthat country more profitable than any other. It seems at the sametime, however, to indicate another opinion, that this superiorprofit can last no longer than the laws which at present restrainthe free cultivation of the vine. In 1731, they obtained an order ofcouncil prohibiting both the planting of new vineyards and therenewal of those old ones, of which the cultivation had beeninterrupted for two years, without a particular permission fromthe king, to be granted only in consequence of an informationfrom the intendant of the province, certifying that he hadexamined 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 superabundancebeen real, it would, without any order of council, have effectuallyprevented the plantation of new vineyards, by reducing the profits



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of this species of cultivation below their natural proportion tothose of corn and pasture. With regard to the supposed scarcity ofcorn, occasioned by the multiplication of vineyards, corn isnowhere in France more carefully cultivated than in the wineprovinces, where the land is fit for producing it; as in Burgundy,Guienne, and the Upper Languedoc. The numerous handsemployed in the one species of cultivation necessarily encouragethe other, by affording a ready market for its produce. To diminishthe number of those who are capable of paying for it is surely amost unpromising expedient for encouraging the cultivation ofcorn. It is like the policy which would promote agriculture bydiscouraging manufactures.

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

It sometimes happens, indeed, that the quantity of land, whichcan be fitted for some particular produce, is too small to supply theeffectual demand. The whole produce can be disposed of to thosewho are willing to give somewhat more than what is sufficient topay the whole rent, wages, and profit necessary for raising andbringing it to market, according to their natural rates, oraccording to the rates at which they are paid in the greater part ofother cultivated land. The surplus part of the price which remainsafter defraying the whole expense of improvement and cultivationmay commonly, in this case, and in this case only, bear no regularproportion to the like surplus in corn or pasture, but may exceed it



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in almost any degree; and the greater part of this excess naturallygoes to the rent of the landlord.

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

The vine is more affected by the difference of soils than anyother fruit tree. From some it derives a flavour which no culture ormanagement can equal, it is supposed, upon any other. Thisflavour, real or imaginary, is sometimes peculiar to the produce ofa few vineyards; sometimes it extends through the greater part ofa small district, and sometimes through a considerable part of alarge province. The whole quantity of such wines that is broughtto market falls short of the effectual demand, or the demand ofthose who would be willing to pay the whole rent, profit, andwages, necessary for preparing and bringing them thither,according to the ordinary rate, or according to the rate at whichthey are paid in common vineyards. The whole quantity, therefore,can be disposed of to those who are willing to pay more, whichnecessarily raises the price above that of common wine. Thedifference is greater or less according as the fashionableness andscarcity of the wine render the competition of the buyers more orless eager. Whatever it be, the greater part of it goes to the rent ofthe landlord. For though such vineyards are in general more



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carefully cultivated than most others, the high price of the wineseems to be not so much the effect as the cause of this carefulcultivation. In so valuable a produce the loss occasioned bynegligence is so great as to force even the most careless toattention. A small part of this high price, therefore, is sufficient topay the wages of the extraordinary labour bestowed upon theircultivation, and the profits of the extraordinary stock which putsthat labour into motion.

The sugar colonies possessed by the European nations in theWest Indies may be compared to those precious vineyards. Theirwhole produce falls short of the effectual demand of Europe, andcan be disposed of to those who are willing to give more than whatis sufficient to pay the whole rent, profit, and wages necessary forpreparing and bringing it to market, according to the rate at whichthey are commonly paid by any other produce. In Cochin Chinathe finest white sugar commonly sells for three piasters thequintal, about thirteen shillings and sixpence of our money, as weare told by Mr. Poivre,1 a very careful observer of the agricultureof that country. What is there called the quintal weighs from ahundred and fifty to two hundred Paris pounds, or a hundred andseventy-five Paris pounds at a medium, which reduces the price ofthe hundred-weight English to about eight shillings sterling, not afourth part of what is commonly paid for the brown or muskavadasugars imported from our colonies, and not a sixth part of what ispaid for the finest white sugar. The greater part of the cultivatedlands in Cochin China are employed in producing corn and rice,the food of the great body of the people. The respective prices of

1Voyages d’un philosophe.



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corn, rice, and sugar, are there probably in the natural proportion,or in that which naturally takes place in the different crops of thegreater part of cultivated land, and which recompenses thelandlord and farmer, as nearly as can be computed according towhat is usually the original expense of improvement and theannual expense of cultivation. But in our sugar colonies the priceof sugar bears no such proportion to that of the produce of a riceor corn field either in Europe or in America. It is commonly saidthat a sugar planter expects that the rum and molasses shoulddefray the whole expense of his cultivation, and that his sugarshould be all clear profit. If this be true, for I pretend not to affirmit, it is as if a corn farmer expected to defray the expense of hiscultivation with the chaff and the straw, and that the grain shouldbe all clear profit. We see frequently societies of merchants inLondon and other trading town’s purchase waste lands in oursugar colonies, which they expect to improve and cultivate withprofit by means of factors and agents, notwithstanding the greatdistance and the uncertain returns from the defectiveadministration of justice in those countries. Nobody will attemptto improve and cultivate in the same manner the most fertile landsof Scotland, Ireland, or the corn provinces of North America,though from the more exact administration of justice in thesecountries more regular returns might be expected.

In Virginia and Maryland the cultivation of tobacco ispreferred, as more profitable, to that of corn. Tobacco might becultivated with advantage through the greater part of Europe; butin almost every part of Europe it has become a principal subject oftaxation, and to collect a tax from every different farm in thecountry where this plant might happen to be cultivated would be



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more difficult, it has been supposed, than to levy one upon itsimportation at the custom-house. The cultivation of tobacco hasupon this account been most absurdly prohibited through thegreater part of Europe, which necessarily gives a sort of monopolyto the countries where it is allowed; and as Virginia and Marylandproduce the greatest quantity of it, they share largely, though withsome competitors, in the advantage of this monopoly. Thecultivation of tobacco, however, seems not to be so advantageousas that of sugar. I have never even heard of any tobacco plantationthat was improved and cultivated by the capital of merchants whoresided in Great Britain, and our tobacco colonies send us homeno such wealthy planters as we see frequently arrive from oursugar islands. Though from the preference given in those coloniesto the cultivation of tobacco above that of corn, it would appearthat the effectual demand of Europe for tobacco is not completelysupplied, it probably is more nearly so than that for sugar; andthough the present price of tobacco is probably more thansufficient to pay the whole rent, wages, and profit necessary forpreparing and bring it to market, according to the rate at whichthey are commonly paid in corn land, it must not be so much moreas the present price of sugar. Our tobacco planters, accordingly,have shown the same fear of the superabundance of tobacco whichthe proprietors of the old vineyards in France have of thesuperabundance of wine. By act of assembly they have restrainedits cultivation to six thousand plants, supposed to yield a thousandweight of tobacco, for every negro between sixteen and sixty yearsof age. Such a negro, over and above this quantity of tobacco, canmanage, they reckon, four acres of Indian corn. To prevent themarket from being overstocked, too, they have sometimes, in



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plentiful years, we are told by Dr. Douglas1 (I suspect he has beenill informed), burnt a certain quantity of tobacco for every negro,in the same manner as the Dutch are said to do of spices. If suchviolent methods are necessary to keep up the present price oftobacco, the superior advantage of its culture over that of corn, if itstill has any, will not probably be of long continuance.

It is in this manner that the rent of the cultivated land, of whichthe produce is human food, regulates the rent of the greater partof other cultivated land. No particular produce can long affordless; because the land would immediately be turned to anotheruse. And if any particular produce commonly affords more, it isbecause the quantity of land which can be fitted for it is too smallto supply the effectual demand.

In Europe, corn is the principal produce of land which servesimmediately for human food. Except in particular situations,therefore, the rent of corn land regulates in Europe that of allother cultivated land. Britain need envy neither the vineyards ofFrance nor the olive plantations of Italy. Except in particularsituations, the value of these is regulated by that of corn, in whichthe fertility of Britain is not much inferior to that of either of thosetwo countries.

If in any country the common and favourite vegetable food ofthe people should be drawn from a plant of which the mostcommon land, with the same or nearly the same culture, produceda much greater quantity than the most fertile does of corn, therent of the landlord, or the surplus quantity of food which wouldremain to him, after paying the labour and replacing the stock of

1Douglas’ Summary, vol. ii, pp. 372-73.



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the farmer, together with its ordinary profits, would necessarily bemuch greater. Whatever was the rate at which labour wascommonly maintained in that country, this greater surplus couldalways maintain a greater quantity of it, and consequently enablethe landlord to purchase or command a greater quantity of it. Thereal value of his rent, his real power and authority, his commandof the necessaries and conveniencies of life with which the labourof other people could supply him, would necessarily be muchgreater.

A rice field produces a much greater quantity of food than themost fertile corn field. Two crops in the year from thirty to sixtybushels each, are said to be the ordinary produce of an acre.Though its cultivation, therefore, requires more labour, a muchgreater surplus remains after maintaining all that labour. In thoserice countries, therefore, where rice is the common and favouritevegetable food of the people, and where the cultivators are chieflymaintained with it, a greater share of this greater surplus shouldbelong to the landlord than in corn countries. In Carolina, wherethe planters, as in other British colonies, are generally bothfarmers and landlords, and where rent consequently isconfounded with profit, the cultivation of rice is found to be moreprofitable than that of corn, though their fields produce only onecrop in the year, and though, from the prevalence of the customsof Europe, rice is not there the common and favourite vegetablefood of the people.

A good rice field is a bog at all seasons, and at one season a bogcovered with water. It is unfit either for corn, or pasture, orvineyard, or, indeed, for any other vegetable produce that is veryuseful to men; and the lands which are fit for those purposes are



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not fit for rice. Even in the rice countries, therefore, the rent ofrice 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 inquantity to that produced by a field of rice, and much superior towhat is produced by a field of wheat. Twelve thousand weight ofpotatoes from an acre of land is not a greater produce than twothousand weight of wheat. The food or solid nourishment, indeed,which can be drawn from each of those two plants, is notaltogether in proportion to their weight, on account of the waterynature of potatoes. Allowing, however, half the weight of this rootto go to water, a very large allowance, such an acre of potatoes willstill produce six thousand weight of solid nourishment, three timesthe quantity produced by the acre of wheat. An acre of potatoes iscultivated with less expense than an acre of wheat; the fallow,which generally precedes the sowing of wheat, more thancompensating the hoeing and other extraordinary culture which isalways given to potatoes. Should this root ever become in any partof Europe, like rice in some rice countries, the common andfavourite vegetable food of the people, so as to occupy the sameproportion of the lands in tillage which wheat and other sorts ofgrain for human food do at present, the same quantity ofcultivated land would maintain a much greater number of people,and the labourers being generally fed with potatoes, a greatersurplus would remain after replacing all the stock and maintainingall the labour employed in cultivation. A greater share of thissurplus, too, would belong to the landlord. Population wouldincrease, and rents would rise much beyond what they are atpresent.



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

In some parts of Lancashire it is pretended, I have been told,that bread of oatmeal is a heartier food for labouring people thanwheaten bread, and I have frequently heard the same doctrineheld in Scotland. I am, however, somewhat doubtful of the truth ofit. The common people in Scotland, who are fed with oatmeal, arein general neither so strong, nor so handsome as the same rank ofpeople in England who are fed with wheaten bread. They neitherwork so well, nor look so well; and as there is not the samedifference between the people of fashion in the two countries,experience would seem to show that the food of the commonpeople in Scotland is not so suitable to the human constitution asthat of their neighbours of the same rank in England. But it seemsto be otherwise with potatoes. The chairmen, porters, and coal-heavers in London, and those unfortunate women who live byprostitution, the strongest men and the most beautiful womenperhaps in the British dominions, are said to be the greater part ofthem from the lowest rank of people in Ireland, who are generallyfed with this root. No food can afford a more decisive proof of itsnourishing quality, or of its being peculiarly suitable to the healthof the human constitution.

It is difficult to preserve potatoes through the year, andimpossible to store them like corn, for two or three years together.The fear of not being able to sell them before they rot discouragestheir cultivation, and is, perhaps, the chief obstacle to their ever



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becoming in any great country, like bread, the principal vegetablefood of all the different ranks of the people.

PART 2

Of the Produce of Land which sometimes does, and sometimesdoes not, afford Rent

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

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

Land in its original rude state can afford the materials ofclothing and lodging to a much greater number of people than itcan feed. In its improved state it can sometimes feed a greaternumber of people than it can supply with those materials; at leastin the way in which they require them, and are willing to pay forthem. In the one state, therefore, there is always asuperabundance of those materials, which are frequently, uponthat account, of little or no value. In the other there is often ascarcity, which necessarily augments their value. In the one state agreat part of them is thrown away as useless, and the price of whatis used is considered as equal only to the labour and expense offitting 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 ademand for more than can be had. Somebody is always willing togive more for every part of them than what is sufficient to pay theexpense of bringing them to market. Their price, therefore, can



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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 thematerials of more clothing than he can wear. If there was noforeign commerce, the greater part of them would be thrown awayas things of no value.

This was probably the case among the hunting nations of NorthAmerica 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 presentcommercial state of the known world, the most barbarous nations,I believe, among whom land property is established, have someforeign commerce of this kind, and find among their wealthierneighbours such a demand for all the materials of clothing whichtheir land produces, and which can neither be wrought up norconsumed at home, as raises their price above what it costs tosend them to those wealthier neighbours. It affords, therefore,some rent to the landlord. When the greater part of the highlandcattle were consumed on their own hills, the exportation of theirhides made the most considerable article of the commerce of thatcountry, and what they were exchanged for afforded someaddition to the rent of the highland estates. The wool of England,which in old times could neither be consumed nor wrought up athome, found a market in the then wealthier and more industriouscountry of Flanders, and its price afforded something to the rent ofthe land which produced it. In countries not better cultivated thanEngland was then, or than the highlands of Scotland are now, and



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which had no foreign commerce, the materials of clothing wouldevidently be so superabundant that a great part of them would bethrown away as useless, and no part could afford any rent to thelandlord.

The materials of lodging cannot always be transported to sogreat a distance as those of clothing, and do not so readily becomean object of foreign commerce. When they are superabundant inthe country which produces them, it frequently happens, even inthe present commercial state of the world, that they are of novalue to the landlord. A good stone quarry in the neighbourhoodof London would afford a considerable rent. In many parts ofScotland and Wales it affords none. Barren timber for building isof great value in a populous and well-cultivated country, and theland which produces it affords a considerable rent. But in manyparts of North America the landlord would be much obliged toanybody who would carry away the greater part of his large trees.In some parts of the highlands of Scotland the bark is the only partof the wood which, for want of roads and water-carriage, can besent to market. The timber is left to rot upon the ground. Whenthe materials of lodging are so superabundant, the part made useof is worth only the labour and expense of fitting it for that use. Itaffords no rent to the landlord, who generally grants the use of itto whoever takes the trouble of asking it. The demand of wealthiernations, however, sometimes enables him to get a rent for it. Thepaving of the streets of London has enabled the owners of somebarren rocks on the coast of Scotland to draw a rent from whatnever afforded any before. The woods of Norway and of the coastsof the Baltic find a market in many parts of Great Britain whichthey could not find at home, and thereby afford some rent to their



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proprietors.Countries are populous not in proportion to the number of

people whom their produce can clothe and lodge, but inproportion to that of those whom it can feed. When food isprovided, it is easy to find the necessary clothing and lodging. Butthough these are at hand, it may often be difficult to find food. Insome parts even of the British dominions what is called a housemay be built by one day’s labour of one man. The simplest speciesof clothing, the skins of animals, require somewhat more labour todress and prepare them for use. They do not, however, require agreat deal. Among savage and barbarous nations, a hundredth orlittle more than a hundredth part of the labour of the whole yearwill be sufficient to provide them with such clothing and lodgingas satisfy the greater part of the people. All the other ninety-nineparts are frequently no more than enough to provide them withfood.

But when by the improvement and cultivation of land thelabour of one family can provide food for two, the labour of halfthe society becomes sufficient to provide food for the whole. Theother half, therefore, or at least the greater part of them, can beemployed in providing other things, or in satisfying the otherwants and fancies of mankind. Clothing and lodging, householdfurniture, and what is called Equipage, are the principal objects ofthe greater part of those wants and fancies. The rich manconsumes no more food than his poor neighbour. In quality it maybe very different, and to select and prepare it may require morelabour and art; but in quantity it is very nearly the same. Butcompare the spacious palace and great wardrobe of the one withthe hovel and the few rags of the other, and you will be sensible



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that the difference between their clothing, lodging, and householdfurniture is almost as great in quantity as it is in quality. Thedesire of food is limited in every man by the narrow capacity of thehuman stomach; but the desire of the conveniences andornaments of building, dress, equipage, and household furniture,seems to have no limit or certain boundary. Those, therefore, whohave the command of more food than they themselves canconsume, are always willing to exchange the surplus, or, what isthe same thing, the price of it, for gratifications of this other kind.What is over and above satisfying the limited desire is given forthe amusement of those desires which cannot be satisfied, butseem to be altogether endless. The poor, in order to obtain food,exert themselves to gratify those fancies of the rich, and to obtainit more certainly they vie with one another in the cheapness andperfection of their work. The number of workmen increases withthe increasing quantity of food, or with the growing improvementand cultivation of the lands; and as the nature of their businessadmits of the utmost subdivisions of labour, the quantity ofmaterials which they can work up increases in a much greaterproportion than their numbers. Hence arises a demand for everysort of material which human invention can employ, eitherusefully or ornamentally, in building, dress, equipage, orhousehold furniture; for the fossils and minerals contained in thebowels of the earth; the precious metals, and the precious stones.

Food is in this manner not only the original source of rent, butevery other part of the produce of land which afterwards affordsrent derives that part of its value from the improvement of thepowers of labour in producing food by means of the improvementand cultivation of land.



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Those other parts of the produce of land, however, whichafterwards afford rent, do not afford it always. Even in improvedand cultivated countries, the demand for them is not always suchas to afford a greater price than what is sufficient to pay thelabour, and replace, together with it ordinary profits, the stockwhich must be employed in bringing them to market. Whether it isor is not such depends upon different circumstances.

Whether a coal-mine, for example, can afford any rent dependspartly 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 itby a certain quantity of labour is greater or less than what can bebrought by an equal quantity from the greater part of other minesof the same kind.

Some coal-mines advantageously situated cannot be wroughton account of their barrenness. The produce does not pay theexpense. They can afford neither profit nor rent.

There are some of which the produce is barely sufficient to paythe labour, and replace, together with it ordinary profits, the stockemployed in working them. They afford some profit to theundertaker of the work, but no rent to the landlord. They can bewrought advantageously by nobody but the landlord, who, beinghimself undertaker of the work, gets the ordinary profit of thecapital which he employs in it. Many coal-mines in Scotland arewrought in this manner, and can be wrought in no other. Thelandlord will allow nobody else to work them without paying somerent, 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



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mineral sufficient to defray the expense of working could bebrought from the mine by the ordinary, or even less than theordinary, quantity of labour; but in an inland country, thinlyinhabited, and without either good roads or water-carriage, thisquantity could not be sold.

Coals are a less agreeable fuel than wood: they are said, too, tobe less wholesome. The expense of coals, therefore, at the placewhere they are consumed, must generally be somewhat less thanthat 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 theprice of cattle. In its rude beginnings the greater part of everycountry is covered with wood, which is then a mere encumbranceof no value to the landlord, who would gladly give it to anybody forthe cutting. As agriculture advances, the woods are partly clearedby the progress of tillage, and partly go to decay in consequence ofthe increased number of cattle. These, though they do not increasein the same proportion as corn, which is altogether the acquisitionof human industry, yet multiply under the care and protection ofmen, who store up in the season of plenty what may maintainthem in that of scarcity, who through the whole year furnish themwith a greater quantity of food than uncultivated nature providesfor 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 thewoods, though they do not destroy the old trees, hinder any youngones from coming up so that in the course of a century or two thewhole forest goes to ruin. The scarcity of wood then raises itsprice. It affords a good rent, and the landlord sometimes finds that



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he can scarce employ his best lands more advantageously than ingrowing barren timber, of which the greatness of the profit oftencompensates the lateness of the returns. This seems in the presenttimes to be nearly the state of things in several parts of GreatBritain, where the profit of planting is found to be equal to that ofeither corn or pasture. The advantage which the landlord derivesfrom planting can nowhere exceed, at least for any considerabletime, the rent which these could afford him; and in an inlandcountry which is highly cultivated, it will frequently not fall muchshort of this rent. Upon the sea-coast of a well improved country,indeed, if coals can conveniently be had for fuel, it may sometimesbe cheaper to bring barren timber for building from less cultivatedforeign countries than to raise it at home. In the new town ofEdinburgh, built within these few years, there is not, perhaps, asingle stick of Scotch timber.

Whatever may be the price of wood, if that of coals is such thatthe expense of a coal fire is nearly equal to that of a wood one, wemay be assured that at that place, and in these circumstances, theprice of coals is as high as it can be. It seems to be so in some ofthe inland parts of England, particularly in Oxfordshire, where itis usual, even in the fires of the common people, to mix coals andwood together, and where the difference in the expense of thosetwo sorts of fuel cannot, therefore, be very great.

Coals, in the coal countries, are everywhere much below thishighest price. If they were not, they could not bear the expense ofa distant carriage, either by land or by water. A small quantityonly could be sold, and the coal masters and coal proprietors findit more for their interest to sell a great quantity at a pricesomewhat above the lowest, than a small quantity at the highest.



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The most fertile coal-mine, too, regulates the price of coals at allthe other mines in its neighbourhood. Both the proprietor and theundertaker of the work find, the one that he can get a greater rent,the other that he can get a greater profit, by somewhatunderselling all their neighbours. Their neighbours are soonobliged to sell at the same price, though they cannot so well affordit, and though it always diminishes, and sometimes takes awayaltogether both their rent and their profit. Some works areabandoned altogether; others can afford no rent, and can bewrought only by the proprietor.

The lowest price at which coals can be sold for any considerabletime is, like that of all other commodities, the price which is barelysufficient to replace, together with its ordinary profits, the stockwhich must be employed in bringing them to market. At as coal-mine for which the landlord can get no rent, but which he musteither work himself or let it alone altogether, the price of coalsmust generally be nearly about this price.

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



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The value of a coal-mine to the proprietor frequently dependsas much upon its situation as upon its fertility. That of a metallicmine depends more upon its fertility, and less upon its situation.The coarse, and still more the precious metals, when separatedfrom the ore, are so valuable that they can generally bear theexpense of a very long land, and of the most distant sea carriage.Their market is not confined to the countries in theneighbourhood of the mine, but extends to the whole world. Thecopper of Japan makes an article of commerce in Europe; the ironof 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 havelittle effect on their price at Newcastle; and their price in theLionnois can have none at all. The productions of such distantcoal-mines can never be brought into competition with oneanother. But the productions of the most distant metallic minesfrequently may, and in fact commonly are. The price, therefore, ofthe coarse, and still more that of the precious metals, at the mostfertile mines in the world, must necessarily more or less affecttheir price at every other in it. The price of copper in Japan musthave some influence upon its price at the copper mines in Europe.The price of silver in Peru, or the quantity either of labour or ofother goods which it will purchase there, must have someinfluence on its price, not only at the silver mines of Europe, but atthose of China. After the discovery of the mines of Peru, the silvermines of Europe were, the greater part of them, abandoned. Thevalue of was so much reduced that their produce could no longerpay the expense of working them, or replace, with a profit, thefood, clothes, lodging, and other necessaries which were



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consumed in that operation. This was the case, too, with the minesof Cuba and St. Domingo, and even with the ancient mines ofPeru, after the discovery of those of Potosi.

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

A sixth part of the gross produce may be reckoned the averagerent of the tin mines of Cornwall the most fertile that are known inthe world, as we are told by the Reverend Mr. Borlace, vice-warden of the stannaries. Some, he says, afford more, and some donot 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 fromthe undertaker of the mine, but that he will grind the ore at hismill, paying him the ordinary multure or price of grinding. Till1736, indeed, the tax of the King of Spain amounted to one-fifth ofthe standard silver, which till then might be considered as the realrent of the greater part of the silver mines of Peru, the richestwhich have been known in the world. If there had been no tax thisfifth would naturally have belonged to the landlord, and manymines might have been wrought which could not then be wrought,because they could not afford this tax. The tax of the Duke of



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Cornwall upon tin is supposed to amount to more than five percent or one-twentieth part of the value, and whatever may be hisproportion, it would naturally, too, belong to the proprietor of themine, 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 ofCornwall was to the whole average rent of the silver mines of Peruas thirteen to twelve. But the silver mines of Peru are not now ableto 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-twentiethupon tin; and smuggling must be much easier in the precious thanin the bulky commodity. The tax of the King of Spain accordinglyis said to be very ill paid, and that of the Duke of Cornwall verywell. Rent, therefore, it is probable, makes a greater part of theprice of tin at the most fertile tin mines than it does of silver at themost fertile silver mines in the world. After replacing the stockemployed in working those different mines, together with itsordinary profits, the residue which remains to the proprietor isgreater, it seems, in the coarse than in the precious metal.

Neither are the profits of the undertakers of silver minescommonly very great in Peru. The same most respectable andwell-informed authors acquaint us, that when any personundertakes to work a new mine in Peru, he is universally lookedupon as a man destined to bankruptcy and ruin, and is upon thataccount shunned and avoided by everybody. Mining, it seems, isconsidered there in the same light as here, as a lottery, in whichthe prizes do not compensate the blanks, though the greatness ofsome tempts many adventurers to throw away their fortunes insuch unprosperous projects.



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As the sovereign, however, derives a considerable part of hisrevenue from the produce of silver mines, the law in Peru givesevery possible encouragement to the discovery and working ofnew ones.

Whoever discovers a new mine is entitled to measure off twohundred and forty-six feet in length, according to what hesupposes to be the direction of the vein, and half as much inbreadth. He becomes proprietor of this portion of the mine, andcan work it without paying any acknowledgment to the landlord.The interest of the Duke of Cornwall has given occasion to aregulation nearly of the same kind in that ancient duchy. In wasteand unenclosed lands any person who discovers a tin mine maymark its limits to a certain extent, which is called bounding amine. The bounder becomes the real proprietor of the mine, andmay either work it himself, or give it in lease to another, withoutthe consent of the owner of the land, to whom, however, a verysmall acknowledgment must be paid upon working it. In bothregulations the sacred rights of private property are sacrificed tothe supposed interests of public revenue.

The same encouragement is given in Peru to the discovery andworking of new gold mines; and in gold the king’s tax amountsonly to a twentieth part of the standard metal. It was once a fifth,and afterwards a tenth, as in silver; but it was found that the workcould not bear even the lowest of these two taxes. If it is rare,however, say the same authors, Frezier and Ulloa, to find a personwho has made his fortune by a silver, it is still much rarer to findone who has done so by a gold mine. This twentieth part seems tobe the whole rent which is paid by the greater part of the goldmines in Chili and Peru.



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Gold, too, is much more liable to be smuggled than even silver;not only on account of the superior value of the metal inproportion to its bulk, but on account of the peculiar way in whichnature produces it. Silver is very seldom found virgin, but, likemost other metals, is generally mineralized with some other body,from which it is impossible to separate it in such quantities as willpay for the expense, but by a very laborious and tedious operation,which cannot well be carried on but in workhouses erected for thepurpose, and therefore exposed to the inspection of the king’sofficers. Gold, on the contrary, is almost always found virgin. It issometimes found in pieces of some bulk; and even when mixed insmall and almost insensible particles with sand, earth, and otherextraneous bodies, it can be separated from them by a very shortand simple operation, which can be carried on in any privatehouse by anybody who is possessed of a small quantity of mercury.If the king’s tax, therefore, is but ill paid upon silver, it is likely tobe much worse paid upon gold; and rent, must make a muchsmaller part of the price of gold than even of that of silver.

The lowest price at which the precious metals can be sold, orthe smallest quantity of other goods for which they can beexchanged during any considerable time, is regulated by the sameprinciples which fix the lowest ordinary price of all other goods.The stock which must commonly be employed, the food, theclothes, and lodging which must commonly be consumed inbringing them from the mine to the market, determine it. It mustat least be sufficient to replace that stock, with the ordinaryprofits.

Their highest price, however, seems not to be necessarilydetermined by anything but the actual scarcity or plenty of those



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metals themselves. It is not determined by that of any othercommodity, in the same manner as the price of coals is by that ofwood, beyond which no scarcity can ever raise it. Increase thescarcity of gold to a certain degree, and the smallest bit of it maybecome more precious than a diamond, and exchange for agreater quantity of other goods.

The demand for those metals arises partly from their utility andpartly from their beauty. If you except iron, they are more usefulthan, perhaps, any other metal. As they are less liable to rust andimpurity, they can more easily be kept clean, and the utensilseither of the table or the kitchen are often upon that account moreagreeable when made of them. A silver boiler is more cleanly thana lead, copper, or tin one; and the same quality would render agold boiler still better than a silver one. Their principal merit,however, arises from their beauty, which renders them peculiarlyfit for the ornaments of dress and furniture. No paint or dye cangive so splendid a colour as gilding. The merit of their beauty isgreatly enhanced by their scarcity. With the greater part of richpeople, the chief enjoyment of riches consists in the parade ofriches, which in their eye is never so complete as when theyappear to possess those decisive marks of opulence which nobodycan possess but themselves. In their eyes the merit of an objectwhich is in any degree either useful or beautiful is greatlyenhanced by its scarcity, or by the great labour which it requiresto collect any considerable quantity of it, a labour which nobodycan afford to pay but themselves. Such objects they are willing topurchase at a higher price than things much more beautiful anduseful, but more common. These qualities of utility, beauty, andscarcity, are the original foundation of the high price of those



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metals, or of the great quantity of other goods for which they caneverywhere be exchanged. This value was antecedent to andindependent of their being employed as coin, and was the qualitywhich fitted them for that employment. That employment,however, by occasioning a new demand, and by diminishing thequantity which could be employed in any other way, may haveafterwards contributed to keep up or increase their value.

The demand for the precious stones arises altogether from theirbeauty. They are of no use but as ornaments; and the merit oftheir beauty is greatly enhanced by their scarcity, or by thedifficulty and expense of getting them from the mine. Wages andprofit accordingly make up, upon most occasions, almost thewhole of their high price. Rent comes in but for a very small share;frequently for no share; and the most fertile mines only afford anyconsiderable rent. When Tavernier, a jeweller, visited the diamondmines of Golconda and Visiapour, he was informed that thesovereign of the country, for whose benefit they were wrought,had ordered all of them to be shut up, except those which yield thelargest and finest stones. The others, it seems, were to theproprietor not worth the working.

As the price both of the precious metals and of the preciousstones is regulated all over the world by their price at the mostfertile mine in it, the rent which a mine of either can afford to itsproprietor is in proportion, not to its absolute, but to what may becalled its relative fertility, or to its superiority over other mines ofthe same kind. If new mines were discovered as much superior tothose of Potosi as they were superior to those Europe, the value ofsilver might be so much degraded as to render even the mines ofPotosi not worth the working. Before the discovery of the Spanish



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West Indies, the most fertile mines in Europe may have affordedas great a rent to their proprietor as the richest mines in Peru doat present. Though the quantity of silver was much less, it mighthave exchanged for an equal quantity of other goods, and theproprietor’s share might have enabled him to purchase orcommand an equal quantity either of labour or of commodities.The value both of the produce and of the rent, the real revenuewhich they afforded both to the public and to the proprietor, mighthave been the same.

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

It is otherwise in estates above ground. The value both of theirproduce and of their rent is in proportion to their absolute, andnot to their relative fertility. The land which produces a certainquantity of food, clothes, and lodging, can always feed, clothe, andlodge a certain number of people; and whatever may be theproportion of the landlord, it will always give him a proportionablecommand of the labour of those people, and of the commoditieswith which that labour can supply him. The value of the mostbarren lands is not diminished by the neighbourhood of the mostfertile. On the contrary, it is generally increased by it. The greatnumber of people maintained by the fertile lands afford a marketto many parts of the produce of the barren, which they could



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never have found among those whom their own produce couldmaintain.

Whatever increases the fertility of land in producing foodincreases not only the value of the lands upon which theimprovement is bestowed, but contributes likewise to increasethat of many other lands by creating a new demand for theirproduce. That abundance of food, of which, in consequence of theimprovement of land, many people have the disposal beyond whatthey themselves can consume, is the great cause of the demandboth for the precious metals and the precious stone, as well as forevery other conveniency and ornament of dress, lodging,household furniture, and equipage. Food not only constitutes theprincipal part of the riches of the world, but it is the abundance offood which gives the principal part of their value to many othersorts of riches. The poor inhabitants of Cuba and St. Domingo,when they were first discovered by the Spaniards, used to wearlittle bits of gold as ornaments in their hair and other parts of theirdress. They seemed to value them as we would do any littlepebbles of somewhat more than ordinary beauty, and to considerthem as just worth the picking up, but not worth the refusing toanybody who asked them. They gave them to their new guests atthe first request, without seeming to think that they had madethem any very valuable present. They were astonished to observethe rage of the Spaniards to obtain them; and had no notion thatthere could anywhere be a country in which many people had thedisposal of so great a superfluity of food, so scanty always amongthemselves, that for a very small quantity of those glitteringbaubles they would willingly give as much as might maintain awhole family for many years. Could they have been made to



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understand this, the passion of the Spaniards would not havesurprised them.

PART 3

Of the Variations in the Proportion between the respectiveValues of that Sort of Produce which always affords Rent,

and of that which sometimes does and sometimes doesnot afford Rent

The increasing abundance of food, in consequence of increasingimprovement and cultivation, must necessarily increase thedemand for every part of the produce of land which is not food,and which can be applied either to use or to ornament. In thewhole progress of improvement, it might therefore be expected,there should be only one variation in the comparative values ofthose two different sorts of produce. The value of that sort whichsometimes does and sometimes does not afford rent, shouldconstantly rise in proportion to that which always affords somerent. As art and industry advance, the materials of clothing andlodging, the useful fossils and minerals of the earth, the preciousmetals and the precious stones should gradually come to be moreand more in demand, should gradually exchange for a greater anda greater quantity of food, or in other words, should graduallybecome dearer and dearer. This accordingly has been the casewith most of these things upon most occasions, and would havebeen the case with all of them upon all occasions, if particularaccidents had not upon some occasions increased the supply ofsome of them in a still greater proportion than the demand.

The value of a free-stone quarry, for example, will necessarily



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increase with the increasing improvement and population of thecountry round about it, especially if it should be the only one inthe neighbourhood. But the value of a silver mine, even thoughthere should not be another within a thousand miles of it, will notnecessarily increase with the improvement of the country in whichit is situated. The market for the produce of a freestone quarry canseldom extend more than a few miles round about it, and thedemand must generally be in proportion to the improvement andpopulation of that small district. But the market for the produce ofa silver mine may extend over the whole known world. Unless theworld in general, therefore, be advancing in improvement andpopulation, the demand for silver might not be at all increased bythe improvement even of a large country in the neighbourhood ofthe mine. Even though the world in general were improving, yet if,in the course of its improvement, new mines should be discovered,much more fertile than any which had been known before, thoughthe demand for silver would necessarily increase, yet the supplymight increase in so much a greater proportion that the real priceof that metal might gradually fall; that is, any given quantity, apound weight of it, for example, might gradually purchase orcommand a smaller and a smaller quantity of labour, or exchangefor a smaller and a smaller quantity of corn, the principal part ofthe subsistence of the labourer.

The great market for silver is the commercial and civilised partof the world.

If by the general progress of improvement the demand of thismarket should increase, while at the same time the supply did notincrease in the same proportion, the value of silver wouldgradually rise in proportion to that of corn. Any given quantity of



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silver would exchange for a greater and a greater quantity of corn;or, in other words, the average money price of corn wouldgradually become cheaper and cheaper.

If, on the contrary, the supply by some accident should increasefor many years together in a greater proportion than the demand,that metal would gradually become cheaper and cheaper; or, inother words, the average money price of corn would, in spite of allimprovements, gradually become dearer and dearer. But if, on theother hand, the supply of the metal should increase nearly in thesame proportion as the demand, it would continue to purchase orexchange for nearly the same quantity of corn, and the averagemoney price of corn would, in spite of all improvements, continuevery nearly the same.

These three seem to exhaust all the possible combinations ofevents which can happen in the progress of improvement; andduring the course of the four centuries preceding the present, ifwe may judge by what has happened both in France and GreatBritain, each of those three different combinations seem to havetaken place in the European market, and nearly in the same order,too, in which I have here set them down.



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DIGRESSION CONCERNING THE VARIATIONS IN THEVALUE OF SILVER DURING THE COURSE OF THE

FOUR LAST CENTURIESFirst Period

In 1350, and for some time before, the average price of the quarterof wheat in England seems not to have been estimated lower thanfour ounces of silver, Tower weight, equal to about twentyshillings of our present money. From this price it seems to havefallen gradually to two ounces of silver, equal to about ten shillingsof our present money, the price at which we find it estimated inthe beginning of the sixteenth century, and at which it seems tohave continued to be estimated till about 1570.

In 1350, being the 25th of Edward III, was enacted what iscalled The Statute of Labourers. In the preamble it complainsmuch of the insolence of servants, who endeavoured to raise theirwages upon their masters. It therefore ordains that all servantsand labourers should for the future be contented with the samewages and liveries (liveries in those times signified not only clothesbut provisions) which they had been accustomed to receive in the20th year of the king, and the four preceding years; that upon thisaccount their livery wheat should nowhere be estimated higherthan tenpence a bushel, and that it should always be in the optionof the master to deliver them either the wheat or the money.Tenpence a bushel, therefore, had, in the 25th of Edward III, beenreckoned a very moderate price of wheat, since it required aparticular statute to oblige servants to accept of it in exchange fortheir usual livery of provisions; and it had been reckoned areasonable price ten years before that, or in the 16th year of theking, the term to which the statute refers. But in the 16th year of



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Edward III, tenpence contained about half an ounce of silver,Tower weight, and was nearly equal to half-a-crown of our presentmoney. Four ounces of silver, Tower weight, therefore, equal to sixshillings and eightpence of the money of those times, and to neartwenty shillings of that of the present, must have been reckoned amoderate price for the quarter of eight bushels.

This statute is surely a better evidence of what was reckoned inthose times a moderate price of grain than the prices of someparticular years which have generally been recorded by historiansand other writers on account of their extraordinary dearness orcheapness, and from which, therefore, it is difficult to form anyjudgment concerning what may have been the ordinary price.There are, besides, other reasons for believing that in thebeginning of the fourteenth century, and for some time before, thecommon price of wheat was not less than four ounces of silver thequarter, 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 haspreserved not only the bill of fare but the prices of manyparticulars. In that feast were consumed, first, fifty-three quartersof wheat, which cost nineteen pounds, or seven shillings andtwopence a quarter, equal to about one-and-twenty shillings andsixpence of our present money; secondly, fifty-eight quarters ofmalt, which cost seventeen pounds ten shillings, or six shillings aquarter, equal to about eighteen shillings of our present money;thirdly, twenty quarters of oats, which cost four pounds, or fourshillings a quarter, equal to about twelve shillings of our presentmoney. The prices of malt and oats seem here to be higher thantheir ordinary proportion to the price of wheat.



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These prices are not recorded on account of their extraordinarydearness or cheapness, but are mentioned accidentally as theprices actually paid for large quantities of grain consumed at afeast which was famous for its magnificence.

In 1262, being the 51st of Henry III, was revived an ancientstatute called The Assize of Bread and Ale, which the king says inthe preamble had been made in the times of his progenitors,sometime kings of England. It is probably, therefore, as old at leastas the time of his grandfather Henry II, and may have been as oldas the Conquest.

It regulates the price of bread according as the prices of wheatmay happen to be, from one shilling to twenty shillings the quarterof the money of those times. But statutes of this kind are generallypresumed to provide with equal care for all deviations from themiddle price, for those below it as well as for those above it. Tenshillings, 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 thequarter of wheat when this statute was first enacted, and musthave continued to be so in the 51st of Henry III. We cannottherefore be very wrong in supposing that the middle price wasnot less than one-third of the highest price at which this statuteregulates the price of bread, or than six shillings and eightpence ofthe money of those times, containing four ounces of silver, Towerweight.

From these different facts, therefore, we seem to have somereason to conclude that, about the middle of the fourteenthcentury, and for a considerable time before, the average orordinary price of the quarter of wheat was not supposed to be less



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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 andmoderate, that is the ordinary or average price of wheat, seems tohave sunk gradually to about one-half of this price; so as at last tohave fallen to about two ounces of silver, Tower weight, equal toabout ten shillings of our present money. It continued to beestimated at this price till about 1570.

In the household book of Henry, the fifth Earl ofNorthumberland, drawn up in 1512, there are two differentestimations of wheat. In one of them it is computed at six shillingsand eightpence the quarter, in the other at five shillings andeightpence only. In 1512, six shillings and eightpence containedonly two ounces of silver, Tower weight, and were equal to aboutten shillings of our present money.

From the 25th of Edward III to the beginning of the reign ofElizabeth, during the space of more than two hundred years, sixshillings and eightpence, it appears from several different statutes,had continued to be considered as what is called the moderate andreasonable, that is the ordinary or average price of wheat. Thequantity of silver, however, contained in that nominal sum was,during the course of this period, continually diminishing, inconsequence of some alterations which were made in the coin. Butthe increase of the value of silver had, it seems, so farcompensated the diminution of the quantity of it contained in thesame nominal sum that the legislature did not think it worth whileto attend to this circumstance.

Thus in 1436 it was enacted that wheat might be exportedwithout a licence when the price was so low as six shillings and



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eightpence; and in 1463 it was enacted that no wheat should beimported if the price was not above six shillings and eightpencethe quarter. The legislature had imagined that when the price wasso low there could be no inconveniency in exportation, but thatwhen it rose higher it became prudent to allow importation. Sixshillings and eightpence, therefore, containing about the samequantity of silver as thirteen shillings and fourpence of our presentmoney (one third part less than the same nominal sum containedin the time of Edward III), had in those times been considered aswhat is called the moderate and reasonable price of wheat.

In 1554, by the 1st and 2nd of Philip and Mary; and in 1558, bythe 1st of Elizabeth, the exportation of wheat was in the samemanner prohibited, whenever the price of the quarter shouldexceed six shillings and eightpence, which did not then containtwo pennyworth more silver than the same nominal sum does atpresent. But it had soon been found that to restrain theexportation 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 wheneverthe price of the quarter should not exceed ten shillings, containingnearly the same quantity of silver as the like nominal sum does atpresent. This price had at this time, therefore, been considered aswhat is called the moderate and reasonable price of wheat. Itagrees nearly with the estimation of the Northumberland book in1512.

That in France the average price of grain was, in the samemanner, much lower in the end of the fifteenth and beginning ofthe sixteenth century than in the two centuries preceding hasbeen observed both by Mr. Dupré de St. Maur, and by the elegant



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author of the Essay on the police of grain. Its price, during thesame period, had probably sunk in the same manner through thegreater part of Europe.

This rise in the value of silver in proportion to that of corn, mayeither have been owing altogether to the increase of the demandfor that metal, in consequence of increasing improvement andcultivation, the supply in the meantime continuing the same asbefore; or, the demand continuing the same as before, it may havebeen owing altogether to the gradual diminution of the supply; thegreater part of the mines which were then known in the worldbeing much exhausted, and consequently the expense of workingthem much increased; or it may have been owing partly to theother of those two circumstances. In the end of the fifteenth andbeginning of the sixteenth centuries, the greater part of Europewas approaching towards a more settled form of government thanit had enjoyed for several ages before. The increase of securitywould naturally increase industry and improvement; and thedemand for the precious metals, as well as for every other luxuryand ornament, would naturally increase with the increase ofriches. A greater annual produce would require a greater quantityof coin to circulate it; and a greater number of rich people wouldrequire a greater quantity of plate and other ornaments of silver. Itis natural to suppose, too, that the greater part of the mines whichthen supplied the European market with silver might be a gooddeal exhausted, and have become more expensive in the working.They had been wrought many of them from the time of theRomans.

It has been the opinion, however, of the greater part of thosewho have written upon the price of commodities in ancient times



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that, from the Conquest, perhaps from the invasion of JuliusCaesar till the discovery of the mines of America, the value ofsilver was continually diminishing. This opinion they seem to havebeen led into, partly by the observations which they had occasionto make upon the prices both of corn and of some other parts ofthe rude produce of land; and partly by the popular notion that asthe quantity of silver naturally increases in every country with theincrease of wealth, so its value diminishes as its quantityincreases.

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

First, in ancient times almost all rents were paid in kind; in acertain quantity of corn, cattle, poultry, etc. It sometimeshappened, however, that the landlord would stipulate that heshould be at liberty to demand of the tenant, either the annualpayment in kind, or a certain sum of money instead of it. The priceat which the payment in kind was in this manner exchanged for acertain sum of money is in Scotland called the conversion price.As the option is always in the landlord to take either the substanceor the price, it is necessary for the safety of the tenant that theconversion price should rather be below than above the averagemarket price. In many places, accordingly, it is not much aboveone-half of this price. Through the greater part of Scotland thiscustom still continues with regard to poultry, and in some placeswith regard to cattle. It might probably have continued to takeplace, too, with regard to corn, had not the institution of the publicfiars put an end to it. These are annual valuations, according tothe judgment of an assize, of the average price of all the differentsorts of grain, and of all the different qualities of each, according to



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the actual market price in every different county. This institutionrendered it sufficiently safe for the tenant, and much moreconvenient for the landlord, to convert, as they call it, the cornrent, rather at what should happen to be the price of the fiars ofeach year, than at any certain fixed price. But the writers whohave collected the prices of corn in ancient times seem frequentlyto have mistaken what is called in Scotland the conversion pricefor the actual market price.

Fleetwood acknowledges, upon one occasion, that he had madethis mistake. As he wrote his book, however, for a particularpurpose, he does not think proper to make this acknowledgmenttill after transcribing this conversion price fifteen times. The priceis eight shillings the quarter of wheat. This sum in 1423, the yearat which he begins with it, contained the same quantity of silver assixteen shillings of our present money. But in 1562, the year atwhich he ends with it, it contained no more than the same nominalsum does at present.

Secondly, they have been misled by the slovenly manner inwhich some ancient statutes of assize had been sometimestranscribed by lazy copiers; and sometimes perhaps actuallycomposed by the legislature.

The ancient statutes of assize seem to have begun always withdetermining what ought to be the price of bread and ale when theprice of wheat and barley were at the lowest, and to haveproceeded gradually to determine what it ought to be, accordingas the prices of those two sorts of grain should gradually riseabove this lowest price. But the transcribers of those statutes seemfrequently to have thought it sufficient to copy the regulation asfar as the three or four first and lowest prices, saving in this



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manner their own labour, and judging, I suppose, that this wasenough to show what proportion ought to be observed in all higherprices.

Thus in the Assize of Bread and Ale, of the 51st of Henry III, theprice of bread was regulated according to the different prices ofwheat, from one shilling to twenty shillings the quarter, of themoney of those times. But in the manuscripts from which all thedifferent editions of the statutes, preceding that of Mr. Ruffhead,were printed, the copiers had never transcribed this regulationbeyond the price of twelve shillings. Several writers, therefore,being misled by this faulty transcription, very naturally concludedthat the middle price, or six shillings the quarter, equal to abouteighteen shillings of our present money, was the ordinary oraverage price of wheat at that time.

In the Statute of Tumbrel and Pillory, enacted nearly about thesame time, the price of ale is regulated according to everysixpence rise in the price of barley, from two shillings to fourshillings the quarter. That four shillings, however, was notconsidered as the highest price to which barley might frequentlyrise in those times, and that these prices were only given as anexample of the proportion which ought to be observed in all otherprices, whether higher or lower, we may infer from the last wordsof the statute: et sic deinceps crescetur vel diminuetur per sexdenarios. The expression is very slovenly, but the meaning is plainenough: “That the price of ale is in this manner to be increased ordiminished according to every sixpence rise or fall in the price ofbarley.” In the composition of this statute the legislature itselfseems to have been as negligent as the copiers were in thetranscription of the others.



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In an ancient manuscript of the Regiam Majestatem, an oldScotch law book, there is a statute of assize in which the price ofbread is regulated according to all the different prices of wheat,from tenpence to three shillings the Scotch boll, equal to abouthalf an English quarter. Three shillings Scotch, at the time whenthis assize is supposed to have been enacted were equal to aboutnine shillings sterling of our present money. Mr. Ruddiman seemsto conclude from this, that three shillings was the highest price towhich wheat ever rose in those times, and that tenpence, ashilling, or at most two shillings, were the ordinary prices. Uponconsulting the manuscript, however, it appears evidently1 that allthese prices are only set down as examples of the proportionwhich ought to be observed between the respective prices ofwheat and bread. The last words of the statute are: reliquajudicabis secundum proescripta habendo respectum ad pretiumbladi. “You shall judge of the remaining cases according to what isabove written, having a respect to the price of corn.”

Thirdly, they seem to have been misled, too, by the very lowprice at which wheat was sometimes sold in very ancient times;and to have imagined that as its lowest price was then much lowerthan in later times, its ordinary price must likewise have beenmuch lower. They might have found, however, that in thoseancient times its highest price was fully as much above, as itslowest price was below anything that had even been known inlater times. Thus in 1270, Fleetwood gives us two prices of thequarter of wheat. The one is four pounds sixteen shillings of themoney of those times, equal to fourteen pounds eight shillings of

1See his preface to Anderson’s Diplomata, etc., Scotiæ.



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that of the present; the other is six pounds eight shillings, equal tonineteen pounds four shillings of our present money. No price canbe found in the end of the fifteenth, or beginning of the sixteenthcentury, which approaches to the extravagance of these. The priceof corn, though at all times liable to variation, varies most in thoseturbulent and disorderly societies, in which the interruption of allcommerce and communication hinders the plenty of one part ofthe country from relieving the scarcity of another. In thedisorderly state of England under the Plantagenets, who governedit from about the middle of the twelfth till towards the end of thefifteenth century, one district might be in plenty, while another atno great distance, by having its crop destroyed either by someaccident of the seasons, or by the incursion of some neighbouringbaron, might be suffering all the horrors of a famine; and yet if thelands of some hostile lord were interposed between them, the onemight not be able to give the least assistance to the other. Underthe vigorous administration of the Tudors, who governed Englandduring the latter part of the fifteenth and through the whole of thesixteenth century, no baron was powerful enough to dare todisturb the public security.

The reader will find at the end of this chapter all the prices ofwheat which have been collected by Fleetwood from 1202 to 1597,both inclusive, reduced to the money of the present times, anddigested according to the order of time, into seven divisions oftwelve years each. At the end of each division, too, he will find theaverage price of the twelve years of which it consists. In that longperiod of time, Fleetwood has been able to collect the prices of nomore than eighty years, so that four years are wanting to make outthe last twelve years. I have added, therefore, from the accounts of



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Eton college, the prices of 1598, 1599, 1600, and 1601. It is the onlyaddition which I have made. The reader will see that from thebeginning of the thirteenth till after the middle of the sixteenthcentury the average price of each twelve years grows graduallylower and lower; and that towards the end of the sixteenth centuryit begins to rise again. The prices, indeed, which Fleetwood hasbeen able to collect, seem to have been those chiefly which wereremarkable for extraordinary dearness or cheapness; and I do notpretend that any very certain conclusion can be drawn from them.So far, however, as they prove anything at all, they confirm theaccount which I have been endeavouring to give. Fleetwoodhimself, however, seems, with most other writers, to have believedthat during all this period the value of silver, in consequence of itsincreasing abundance, was continually diminishing. The prices ofcorn which he himself has collected certainly do not agree withthis 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 authorswho seem to have collected, with the greatest diligence andfidelity, the prices of things in ancient times. It is somewhatcurious that, though their opinions are so very different, theirfacts, so far as they relate to the price of corn at least, shouldcoincide so very exactly.

It is not, however, so much from the low price of corn as fromthat of some other parts of the rude produce of land that the mostjudicious writers have inferred the great value of silver in thosevery ancient times. Corn, it has been said, being a sort ofmanufacture, was, in those rude ages, much dearer in proportionthan the greater part of other commodities; it is meant, I suppose,



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than the greater part of unmanufactured commodities, such ascattle, poultry, game of all kinds, etc. That in those times ofpoverty and barbarism these were proportionably much cheaperthan corn is undoubtedly true. But this cheapness was not theeffect of the high value of silver, but of the low value of thosecommodities. It was not because silver would in such timespurchase or represent a greater quantity of labour, but becausesuch commodities would purchase or represent a much smallerquantity than in times of more opulence and improvement. Silvermust certainly be cheaper in Spanish America than in Europe; inthe country where it is produced than in the country to which it isbrought, at the expense of a long carriage both by land and by sea,of a freight and an insurance. One-and-twenty pence halfpennysterling, 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 orfour hundred. Sixteen shillings sterling, we are told by Mr. Byronwas the price of a good horse in the capital of Chili. In a countrynaturally fertile, but of which the far greater part is altogetheruncultivated, cattle, poultry, game of all kinds, etc., as they can beacquired with a very small quantity of labour, so they willpurchase or command but a very small quantity. The low moneyprice for which they may be sold is no proof that the real value ofsilver is there very high, but that the real value of thosecommodities is very low.

Labour, it must always be remembered, and not any particularcommodity or set of commodities, is the real measure of the valueboth 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



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productions of nature, so she frequently produces them in muchgreater quantities than the consumption of the inhabitantsrequires. In such a state of things the supply commonly exceedsthe demand. In different states of society, in different stages ofimprovement, therefore, such commodities will represent, or beequivalent to, very different quantities of labour.

In every state of society, in every stage of improvement, corn isthe production of human industry. But the average produce ofevery sort of industry is always suited, more or less exactly, to theaverage consumption; the average supply to the average demand.In every different stage of improvement, besides, the raising ofequal quantities of corn in the same soil and climate will, at anaverage, require nearly equal quantities of labour; or what comesto the same thing, the price of nearly equal quantities; thecontinual increase of the productive powers of labour in animproving state of cultivation being more or less counterbalancedby the continually increasing price of cattle, the principalinstruments of agriculture. Upon all these accounts, therefore, wemay rest assured that equal quantities of corn will, in every stateof society, in every stage of improvement, more nearly represent,or be equivalent to, equal quantities of labour than equalquantities of any other part of the rude produce of land.

Corn, accordingly, it has already been observed, is, in all thedifferent stages of wealth and improvement, a more accuratemeasure of value than any other commodity or set of commodities.In all those different stages, therefore, we can judge better of thereal value of silver by comparing it with corn than by comparing itwith any other commodity or set of commodities.

Corn, besides, or whatever else is the common and favourite



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vegetable food of the people, constitutes, in every civilised country,the principal part of the subsistence of the labourer. Inconsequence of the extension of agriculture, the land of everycountry produces a much greater quantity of vegetable than ofanimal food, and the labourer everywhere lives chiefly upon thewholesome food that is cheapest and most abundant. Butcher’smeat, except in the most thriving countries, or where labour ismost highly rewarded, makes but an insignificant part of hissubsistence; poultry makes a still smaller part of it, and game nopart of it. In France, and even in Scotland, where labour issomewhat better rewarded than in France, the labouring poorseldom eat butcher’s meat, except upon holidays, and otherextraordinary occasions. The money price of labour, therefore,depends much more upon the average money price of corn, thesubsistence of the labourer, than upon that of butcher’s meat, or ofany other part of the rude produce of land. The real value of goldand silver, therefore, the real quantity of labour which they canpurchase or command, depends much more upon the quantity ofcorn which they can purchase or command than upon that ofbutcher’s meat, or any other part of the rude produce of land.

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

The quantity of the precious metals may increase in anycountry from two different causes; either, first, from the increased



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abundance of the mines which supply it; or, secondly, from theincreased wealth of the people, from the increased produce oftheir annual labour. The first of these causes is no doubtnecessarily connected with the diminution of the value of theprecious metals, but the second is not.

When more abundant mines are discovered, a greater quantityof the precious metals is brought to market, and the quantity ofthe necessaries and conveniencies of life for which they must beexchanged being the same as before, equal quantities of the metalsmust be exchanged for smaller quantities of commodities. So far,therefore, as the increase of the quantity of the precious metals inany country arises from the increased abundance of the mines, itis 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 greaterand greater, a greater quantity of coin becomes necessary in orderto circulate a greater quantity of commodities; and the people, asthey 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; thequantity of their plate from vanity and ostentation, or from thesame reason that the quantity of fine statues, pictures, and ofevery other luxury and curiosity, is likely to increase among them.But as statuaries and painters are not likely to be worse rewardedin times of wealth and prosperity than in times of poverty anddepression, so gold and silver are not likely to be worse paid for.

The price of gold and silver, when the accidental discovery ofmore abundant mines does not keep it down, as it naturally riseswith the wealth of every country, so, whatever be the state of the



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mines, it is at all times naturally higher in a rich than in a poorcountry. Gold and silver, like all other commodities, naturally seekthe market where the best price is given for them, and the bestprice is commonly given for every thing in the country which canbest afford it. Labour, it must be remembered, is the ultimateprice which is paid for everything, and in countries where labouris equally well regarded, the money price of labour will be inproportion to that of the subsistence of the labourer. But gold andsilver will naturally exchange for a greater quantity of subsistencein a rich than in a poor country, in a country which abounds withsubsistence than in one which is but indifferently supplied with it.If the two countries are at a great distance, the difference may bevery great; because though the metals naturally fly from the worseto the better market, yet it may be difficult to transport them insuch quantities as to bring their price nearly to a level in both. Ifthe countries are near, the difference will be smaller, and maysometimes be scarce perceptible; because in this case thetransportation will be easy. China is a much richer country thanany part of Europe, and the difference between the price ofsubsistence in China and in Europe is very great. Rice in China ismuch cheaper than wheat is anywhere in Europe. England is amuch richer country than Scotland; but the difference betweenthe money-price of corn in those two countries is much smaller,and is but just perceptible. In proportion to the quantity ormeasure, Scotch corn generally appears to be a good deal cheaperthan English; but in proportion to its quality, it is certainlysomewhat dearer. Scotland receives almost every year very largesupplies from England, and every commodity must commonly besomewhat dearer in the country to which it is brought than in that



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from which it comes. English corn, therefore, must be dearer inScotland than in England, and yet in proportion to its quality, or tothe quantity and goodness of the flour or meal which can be madefrom it, it cannot commonly be sold higher there than the Scotchcorn which comes to market in competition with it.

The difference between the money price of labour in China andin Europe is still greater than that between the money price ofsubsistence; because the real recompense of labour is higher inEurope than in China, the greater part of Europe being in animproving state, while China seems to be standing still. Themoney price of labour is lower in Scotland than in Englandbecause the real recompense of labour is much lower; Scotland,though advancing to greater wealth, advancing much more slowlythan England. The frequency of emigration from Scotland, and therarity of it from England, sufficiently prove that the demand forlabour is very different in the two countries. The proportionbetween the real recompense of labour in different countries, itmust be remembered, is naturally regulated not by their actualwealth or poverty, but by their advancing, stationary, or decliningcondition.

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

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



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In some very rich and commercial countries, such as Hollandand the territory of Genoa, corn is dear for the same reason that itis dear in great towns. They do not produce enough to maintaintheir inhabitants. They are rich in the industry and skill of theirartificers and manufacturers; in every sort of machinery which canfacilitate and abridge labour; in shipping, and in all the otherinstruments and means of carriage and commerce: but they arepoor in corn, which, as it must be brought to them from distantcountries, must, by an addition to its price, pay for the carriagefrom those countries. It does not cost less labour to bring silver toAmsterdam than to Dantzic; but it costs a great deal more to bringcorn. The real cost of silver must be nearly the same in bothplaces; but that of corn must be very different. Diminish the realopulence either of Holland or of the territory of Genoa, while thenumber of their inhabitants remains the same: diminish theirpower of supplying themselves from distant countries; and theprice of corn, instead of sinking with that diminution in thequantity of their silver, which must necessarily accompany thisdeclension either as its cause or as its effect, will rise to the priceof a famine. When we are in want of necessaries we must part withall superfluities, of which the value, as it rises in times of opulenceand prosperity, so it sinks in times of poverty and distress. It isotherwise with necessaries. Their real price, the quantity of labourwhich they can purchase or command, rises in times of povertyand distress, and sinks in times of opulence and prosperity, whichare always times of great abundance; for they could not otherwisebe times of opulence and prosperity. Corn is a necessary, silver isonly a superfluity.

Whatever, therefore, may have been the increase in the



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quantity of the precious metals, which, during the period betweenthe middle of the fourteenth and that of the sixteenth century,arose from the increase of wealth and improvement, it could haveno tendency to diminish their value either in Great Britain or inany other part of Europe. If those who have collected the prices ofthings in ancient times, therefore, had, during this period, noreason to infer the diminution of the value of silver, from anyobservations which they had made upon the prices either of cornor of other commodities, they had still less reason to infer it fromany supposed increase of wealth and improvement.

Second PeriodBut how various soever may have been the opinions of the learnedconcerning the progress of the value of silver during this firstperiod, they are unanimous concerning it during the second.

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

The discovery of the abundant mines of America seems to havebeen the sole cause of this diminution in the value of silver inproportion to that of corn. It is accounted for accordingly in thesame manner by everybody; and there never has been any disputeeither about the fact or about the cause of it. The greater part of



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Europe was, during this period, advancing in industry andimprovement, and the demand for silver must consequently havebeen increasing.

But the increase of the supply had, it seems, so far exceededthat of the demand, that the value of that metal sunk considerably.The discovery of the mines of America, it is to be observed, doesnot seem to have had any very sensible effect upon the prices ofthings in England till after 1570; though even the mines of Potosihad been discovered more than twenty years before.

From 1595 to 1620, both inclusive, the average price of thequarter of nine bushels of the best wheat at Windsor marketappears, from the accounts of Eton College, to have been £2 1s. 63/4d. From which sum, neglecting the fraction, and deducting aninth, or 4s. 7 1\3d., the price of the quarter of eight bushels comesout to have been £1 16s. 10 2/3d. And from this sum, neglectinglikewise the fraction, and deducting a ninth, or 4s. 1d., for thedifference between the price of the best wheat and that of themiddle wheat, the price of the middle wheat comes out to havebeen about £1 12s. 9d., or about six ounces and one-third of anounce of silver.

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



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

From 1637 to 1700, both inclusive, being the sixty-four last yearsof the last century, the average price of the quarter of nine bushelsof the best wheat at Windsor market appears, from the sameaccounts, to have been £2 11s. 01\3d., which is only 1s 01\3d. dearerthan it had been during the sixteen years before. But in the courseof these sixty-four years there happened two events which musthave produced a much greater scarcity of corn than what thecourse of the seasons would otherwise have occasioned, andwhich, therefore, without supposing any further reduction in thevalue of silver, will much more than account for this very smallenhancement of price.

The first of these events was the civil war, which, bydiscouraging tillage and interrupting commerce, must have raisedthe price of corn much above what the course of the seasons wouldotherwise have occasioned. It must have had this effect more orless at all the different markets in the kingdom, but particularly atthose in the neighbourhood of London, which require to besupplied from the greatest distance. In 1648, accordingly, the priceof the best wheat at Windsor market appears, from the sameaccounts, to have been £4 5s., and in 1649 to have been £4 thequarter of nine bushels. The excess of those two years above £2



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10s. (the average price of the sixteen years preceding 1637) is £35s.; which divided among the sixty-four last years of the lastcentury will alone very nearly account for that small enhancementof price which seems to have taken place in them. These, however,though the highest, are by no means the only high prices whichseem to have been occasioned by the civil wars.

The second event was the bounty upon the exportation of corngranted in 1688. The bounty, it has been thought by many people,by encouraging tillage, may, in a long course of years, haveoccasioned a greater abundance, and consequently a greatercheapness of corn in the home-market than what would otherwisehave taken place there. How far the bounty could produce thiseffect at any time, I shall examine hereafter; I shall only observe atpresent that, between 1688 and 1700, it had not time to produceany such effect. During this short period its only effect must havebeen, by encouraging the exportation of the surplus produce ofevery year, and thereby hindering the abundance of one year fromcompensating the scarcity of another, to raise the price in thehome-market. The scarcity which prevailed in England from 1693to 1699, both inclusive, though no doubt principally owing to thebadness of the seasons, and, therefore, extending through aconsiderable part of Europe, must have been somewhat enhancedby the bounty. In 1699, accordingly, the further exportation of cornwas prohibited for nine months.

There was a third event which occurred in the course of thesame period, and which, though it could not occasion any scarcityof corn, nor, perhaps, any augmentation in the real quantity ofsilver which was usually paid for it, must necessarily haveoccasioned some augmentation in the nominal sum. This event



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was the great debasement of the silver coin, by clipping andwearing. This evil had begun in the reign of Charles II and hadgone on continually increasing till 1695; at which time, as we maylearn from Mr. Lowndes, the current silver coin was, at anaverage, near five-and-twenty per cent below its standard value.But the nominal sum which constitutes the market price of everycommodity is necessarily regulated, not so much by the quantity ofsilver, which, according to the standard, ought to be contained init, as by that which, it is found by experience, actually is containedin it. This nominal sum, therefore, is necessarily higher when thecoin is much debased by clipping and wearing than when near toits standard value.

In the course of the present century, the silver coin has not atany time been more below its standard weight than it is at present.

But though very much defaced, its value has been kept up bythat of the gold coin for which it is exchanged. For though beforethe late recoinage, the gold coin was a good deal defaced too, itwas less so than the silver. In 1695, on the contrary, the value ofthe silver coin was not kept up by the gold coin; a guinea thencommonly exchanging for thirty shillings of the worn and cliptsilver. Before the late recoinage of the gold, the price of silverbullion was seldom higher than five shillings and sevenpence anounce, which is but fivepence above the mint price. But in 1695,the common price of silver bullion was six shillings and fivepencean ounce,1 which is fifteenpence above the mint price. Even beforethe late recoinage of the gold, therefore, the coin, gold and silvertogether, when compared with silver bullion, was not supposed to

1Lowndes’ Essay on the Silver Coin, p. 68.



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be more than eight per cent below its standard value. In 1695, onthe contrary, it had been supposed to be near five-and-twenty percent below that value. But in the beginning of the present century,that is, immediately after the great recoinage in King William’stime. the greater part of the current silver coin must have beenstill nearer to its standard weight than it is at present. In thecourse of the present century, too, there has been no great publiccalamity, such as the civil war, which could either discouragetillage, or interrupt the interior commerce of the country. Andthough the bounty, which has taken place through the greater partof this century, must always raise the price of corn somewhathigher than it otherwise would be in the actual state of tillage; yetas, in the course of this century, the bounty has had full time toproduce all the good effects commonly imputed to it, to encouragetillage, and thereby to increase the quantity of corn in the homemarket, it may, upon the principles of a system which I shallexplain and examine hereafter, be supposed to have donesomething to lower the price of that commodity the one way, aswell as to raise it the other. It is by many people supposed to havedone more. In the sixty-four first years of the present centuryaccordingly the average price of the quarter of nine bushels of thebest wheat at Windsor market appears, by the accounts of EtonCollege, to have been £2 0s. 6 1/2d., which is about ten shillingsand sixpence, or more than five-and-twenty per cent, cheaper thanit had been during the sixty-four last years of the last century; andabout 9s. 6d. cheaper than it had been during the sixteen yearspreceding 1636, when the discovery of the abundant mines ofAmerica may be supposed to have produced its full effect; andabout one shilling cheaper than it had been in the twenty-six years



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preceding 1620, before that discovery can well be supposed tohave produced its full effect. According to this account, theaverage price of middle wheat, during these sixty-four first yearsof the present century, comes out to have been about thirty-twoshillings the quarter of eight bushels.

The value of silver, therefore, seems to have risen somewhat inproportion to that of corn during the course of the presentcentury, and it had probably begun to do so even some time beforethe end of the last.

In 1687, the price of the quarter of nine bushels of the bestwheat at Windsor market was £1 5s. 2d. the lowest price at which ithad ever been from 1595.

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

In 1688 was granted the Parliamentary bounty upon theexportation of corn. The country gentlemen, who then composed astill greater proportion of the legislature than they do at present,



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had felt that the money price of corn was falling. The bounty wasan expedient to raise it artificially to the high price at which it hadfrequently been sold in the times of Charles I and III. It was totake place, therefore, till wheat was so high as forty-eight shillingsthe quarter, that is, twenty shillings, or five-sevenths dearer thanMr. King had in that very year estimated the grower’s price to bein times of moderate plenty. If his calculations deserve any part ofthe reputation which they have obtained very universally, eight-and-forty shillings the quarter was a price which, without somesuch expedient as the bounty, could not at that time be expected,except in years of extraordinary scarcity. But the government ofKing William was not then fully settled. It was in no condition torefuse anything to the country gentlemen, from whom it was atthat very time soliciting the first establishment of the annual land-tax.

The value of silver, therefore, in proportion to that of corn, hadprobably risen somewhat before the end of the last century; and itseems to have continued to do so during the course of the greaterpart of the present; though the necessary operation of the bountymust have hindered that rise from being so sensible as it otherwisewould have been in the actual state of tillage.

In plentiful years the bounty, by occasioning an extraordinaryexportation, necessarily raises the price of corn above what itotherwise would be in those years. To encourage tillage, bykeeping up the price of corn even in the most plentiful years, wasthe avowed end of the institution.

In years of great scarcity, indeed, the bounty has generally beensuspended. It must, however, have had some effect even upon theprices of many of those years. By the extraordinary exportation



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which it occasions in years of plenty, it must frequently hinder theplenty of one year from compensating the scarcity of another.

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

But without the bounty, it may be said, the state of tillage wouldnot have been the same. What may have been the effects of thisinstitution upon the agriculture of the country, I shall endeavourto 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. Ithas been observed to have taken place in France, during the sameperiod, and nearly in the same proportion too, by three veryfaithful, diligent, and laborious collectors of the prices of corn, Mr.Dupré de St. Maur, Mr. Messance, and the author of the Essay onthe police of grain. But in France, till 1764, the exportation of grainwas by law prohibited; and it is somewhat difficult to suppose thatnearly the same diminution of price which took place in onecountry, notwithstanding this prohibition, should in another beowing to the extraordinary encouragement given to exportation.

It would be more proper, perhaps, to consider this variation inthe average money price of corn as the effect rather of somegradual rise in the real value of silver in the European marketthan of any fall in the real average value of corn. Corn, it hasalready been observed, is at distant periods of time a more



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accurate measure of value than either silver, or perhaps any othercommodity. When, after the discovery of the abundant mines ofAmerica, corn rose to three and four times its former money price,this change was universally ascribed, not to any rise in the realvalue of corn, but to a fall in the real value of silver. If during thesixty-four first years of the present century, therefore, the averagemoney price of corn has fallen somewhat below what it had beenduring the greater part of the last century, we should in the samemanner impute this change, not to any fall in the real value ofcorn, but to some rise in the real value of silver in the Europeanmarket.

The high price of corn during these ten or twelve years past,indeed, has occasioned a suspicion that the real value of silver stillcontinues to fall in the European market. This high price of corn,however, seems evidently to have been the effect of theextraordinary unfavourableness of the seasons, and oughttherefore to be regarded, not as a permanent, but as a transitoryand occasional event. The seasons for these ten or twelve yearspast have been unfavourable through the greater part of Europe;and the disorders of Poland have very much increased the scarcityin all those countries which, in dear years, used to be suppliedfrom that market. So long a course of bad seasons, though not avery common event, is by no means a singular one; and whoeverhas inquired much into the history of the prices of corn in formertimes will be at no loss to recollect several other examples of thesame kind. Ten years of extraordinary scarcity, besides, are notmore wonderful than ten years of extraordinary plenty. The lowprice of corn from 1741 to 1750, both inclusive, may very well beset in opposition to its high price during these last eight or ten



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years. From 1741 to 1750, the average price of the quarter of ninebushels of the best wheat at Windsor market, it appears from theaccounts of Eton College, was only £1 13s. 91/2d., which is nearly 6s.3d. below the average price of the sixty-four first years of thepresent century. The average price of the quarter of eight bushelsof middle wheat comes out, according to this account, to havebeen, during these ten years, only £1 6s. 8d.

Between 1741 and 1750, however, the bounty must havehindered the price of corn from falling so low in the home marketas it naturally would have done. During these ten years thequantity of all sorts of grain exported, it appears from the custom-house books, amounted to no less than eight millions twenty-ninethousand one hundred and fifty-six quarters one bushel. Thebounty paid for this amounted to £1,514,962 17s. 41/2d. In 1749accordingly, Mr. Pelham, at that time Prime Minister, observed tothe House of Commons that for the three years preceding a veryextraordinary sum had been paid as bounty for the exportation ofcorn. He had good reason to make this observation, and in thefollowing year he might have had still better. In that single yearthe bounty paid amounted to no less than £324,176 10s. 6d.1 It isunnecessary to observe how much this forced exportation musthave raised the price of corn above what it otherwise would havebeen in the home market.

At the end of the accounts annexed to this chapter the readerwill find the particular account of those ten years separated fromthe rest. He will find there, too, the particular account of thepreceding ten years, of which the average is likewise below,

1See Tracts on the Corn Trade, Tract 3.



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though not so much below, the general average of the sixty-fourfirst years of the century. The year 1740, however, was a year ofextraordinary scarcity. These twenty years preceding 1750 mayvery well be set in opposition to the twenty preceding 1770. As theformer were a good deal below the general average of the century,notwithstanding the intervention of one or two dear years; so thelatter have been a good deal above it, notwithstanding theintervention of one or two cheap ones, of 1759, for example. If theformer have not been as much below the general average as thelatter have been above it, we ought probably to impute it to thebounty. The change has evidently been too sudden to be ascribedto any change in the value of silver, which is always slow andgradual. The suddenness of the effect can be accounted for only bya cause which can operate suddenly, the accidental variation ofthe seasons.

The money price of labour in Great Britain has, indeed, risenduring the course of the present century. This, however, seems tobe the effect, not so much of any diminution in the value of silverin the European market, as of an increase in the demand forlabour in Great Britain, arising from the great, and almostuniversal prosperity of the country. In France, a country notaltogether so prosperous, the money price of labour has, since themiddle of the last century, been observed to sink gradually withthe average money price of corn. Both in the last century and inthe present the day-wages of common labour are there said tohave been pretty uniformly about the twentieth part of theaverage price of the septier of wheat, a measure which contains alittle more than four Winchester bushels. In Great Britain the realrecompense of labour, it has already been shown, the real



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quantities of the necessaries and conveniencies of life which aregiven to the labourer, has increased considerably during thecourse of the present century. The rise in its money price seems tohave been the effect, not of any diminution of the value of silver inthe general market of Europe, but of a rise in the real price oflabour in the particular market of Great Britain, owing to thepeculiarly happy circumstances of the country.

For some time after the first discovery of America, silver wouldcontinue to sell at its former, or not much below its former price.The profits of mining would for some time be very great, andmuch above their natural rate. Those who imported that metalinto Europe, however, would soon find that the whole annualimportation could not be disposed of at this high price. Silverwould gradually exchange for a smaller and a smaller quantity ofgoods. Its price would sink gradually lower and lower till it fell toits natural price, or to what was just sufficient to pay, according totheir 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 itfrom the mine to the market. In the greater part of the silver minesof Peru, the tax of the King of Spain, amounting to a tenth of thegross produce, eats up, it has already been observed, the wholerent of the land. This tax was originally a half; it soon afterwardsfell to a third, then to a fifth, and at last to a tenth, at which rate itstill continues. In the greater part of the silver mines of Peru this,it seems, is all that remains after replacing the stock of theundertaker of the work, together with its ordinary profits; and itseems to be universally acknowledged that these profits, whichwere once very high, are now as low as they can well be,consistently with carrying on their works.



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The tax of the King of Spain was reduced to a fifth part of theregistered silver in 1504,1 one-and-forty years before 1545, the dateof the discovery of the mines of Potosi. In the course of ninetyyears, or before 1636, these mines, the most fertile in all America,had time sufficient to produce their full effect, or to reduce thevalue 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. Ninetyyears is time sufficient to reduce any commodity, of which there isno 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 anyconsiderable time together.

The price of silver in the European market might perhaps havefallen still lower, and it might have become necessary either toreduce the tax upon it, not only to one tenth, as in 1736, but to onetwentieth, in the same manner as that upon gold, or to give upworking the greater part of the American mines which are nowwrought. The gradual increase of the demand for silver, or thegradual enlargement of the market for the produce of the silvermines of America, is probably the cause which has prevented thisfrom happening, and which has not only kept up the value of silverin the European market, but has perhaps even raised it somewhathigher than it was about the middle of the last century.

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

First, the market of Europe has become gradually more andmore extensive. Since the discovery of America, the greater part of

1Solorzano, vol. ii.



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Europe has been much improved. England, Holland, France, andGermany; even Sweden, Denmark, and Russia, have all advancedconsiderably both in agriculture and in manufactures. Italy seemsnot to have gone backwards. The fall of Italy preceded theconquest of Peru. Since that time it seems rather to haverecovered a little. Spain and Portugal, indeed, are supposed tohave gone backwards. Portugal, however, is but a very small partof Europe, and the declension of Spain is not, perhaps, so great asis commonly imagined. In the beginning of the sixteenth century,

Spain was a very poor country, even in comparison withFrance, which has been so much improved since that time. It wasthe well known remark of the Emperor Charles V, who hadtravelled so frequently through both countries, that everythingabounded in France, but that everything was wanting in Spain.The increasing produce of the agriculture and manufactures ofEurope must necessarily have required a gradual increase in thequantity of silver coin to circulate it; and the increasing number ofwealthy individuals must have required the like increase in thequantity of their plate and other ornaments of silver.

Secondly, America is itself a new market for the produce of itsown silver mines; and as its advances in agriculture, industry, andpopulation are much more rapid than those of the most thrivingcountries in Europe, its demand must increase much morerapidly. The English colonies are altogether a new market, which,partly for coin and partly for plate, requires a continuallyaugmenting supply of silver through a great continent where therenever was any demand before. The greater part, too, of theSpanish and Portuguese colonies are altogether new markets.New Granada, the Yucatan, Paraguay, and the Brazils were,



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before discovered by the Europeans, inhabited by savage nationswho had neither arts nor agriculture. A considerable degree ofboth has now been introduced into all of them. Even Mexico andPeru, though they cannot be considered as altogether newmarkets, are certainly much more extensive ones than they everwere before. After all the wonderful tales which have beenpublished concerning the splendid state of those countries inancient times, whoever reads, with any degree of sober judgment,the history of their first discovery and conquest, will evidentlydiscern that, in arts, agriculture, and commerce, their inhabitantswere much more ignorant than the Tartars of the Ukraine are atpresent. Even the Peruvians, the more civilised nation of the two,though they made use of gold and silver as ornaments, had nocoined money of any kind. Their whole commerce was carried onby barter, and there was accordingly scarce any division of labouramong them. Those who cultivated the ground were obliged tobuild their own houses, to make their own household furniture,their own clothes, shoes, and instruments of agriculture. The fewartificers among them are said to have been all maintained by thesovereign, the nobles, and the priests, and were probably theirservants or slaves. All the ancient arts of Mexico and Peru havenever furnished one single manufacture to Europe. The Spanisharmies, though they scarce ever exceeded five hundred men, andfrequently did not amount to half that number, found almosteverywhere great difficulty in procuring subsistence. The famineswhich they are said to have occasioned almost wherever theywent, in countries, too, which at the same time are represented asvery populous and well cultivated, sufficiently demonstrate thatthe story of this populousness and high cultivation is in a great



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measure fabulous. The Spanish colonies are under a governmentin many respects less favourable to agriculture, improvement, andpopulation than that of the English colonies. They seem, however,to be advancing in all these much more rapidly than any countryin Europe. In a fertile soil and happy climate, the great abundanceand cheapness of land, a circumstance common to all newcolonies, is, it seems, so great an advantage as to compensatemany defects in civil government. Frezier, who visited Peru in1713, represents Lima as containing between twenty-five andtwenty-eight thousand inhabitants. Ulloa, who resided in the samecountry between 1740 and 1746, represents it as containing morethan fifty thousand.

The difference in their accounts of the populousness of severalother principal towns in Chili and Peru is nearly the same; and asthere seems to be no reason to doubt of the good information ofeither, it marks an increase which is scarce inferior to that of theEnglish colonies. America, therefore, is a new market for theproduce of its own silver mines, of which the demand mustincrease much more rapidly than that of the most thriving countryin Europe.

Thirdly, the East Indies is another market for the produce ofthe silver mines of America, and a market which, from the time ofthe first discovery of those mines, has been continually taking off agreater and a greater quantity of silver. Since that time, the directtrade between America and the East Indies, which is carried on bymeans of the Acapulco ships, has been continually augmenting,and the indirect intercourse by the way of Europe has beenaugmenting in a still greater proportion. During the sixteenthcentury, the Portuguese were the only European nation who



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carried on any regular trade to the East Indies. In the last years ofthat century the Dutch begun to encroach upon this monopoly,and in a few years expelled them from their principal settlementsin India.

During the greater part of the last century those two nationsdivided the most considerable part of the East India trade betweenthem; the trade of the Dutch continually augmenting in a stillgreater proportion than that of the Portuguese declined. TheEnglish and French carried on some trade with India in the lastcentury, but it has been greatly augmented in the course of thepresent. The East India trade of the Swedes and Danes began inthe course of the present century. Even the Muscovites now traderegularly with China by a sort of caravans which go overlandthrough Siberia and Tartary to Pekin. The East India trade of allthese nations, if we except that of the French, which the last warhad well nigh annihilated, had been almost continuallyaugmenting. The increasing consumption of East India goods inEurope is, it seems, so great as to afford a gradual increase ofemployment to them all. Tea, for example, was a drug very littleused in Europe before the middle of the last century. At presentthe value of the tea annually imported by the English East IndiaCompany, for the use of their own countrymen, amounts to morethan a million and a half a year; and even this is not enough; agreat deal more being constantly smuggled into the country fromthe ports of Holland, from Gottenburg in Sweden, and from thecoast of France too, as long as the French East India Companywas in prosperity. The consumption of the porcelain of China, ofthe spiceries of the Moluccas, of the piece goods of Bengal, and ofinnumerable other articles, has increased very nearly in a like



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proportion. The tonnage accordingly of all the European shippingemployed in the East India trade, at any one time during the lastcentury, was not, perhaps, much greater than that of the EnglishEast India Company before the late reduction of their shipping.

But in the East Indies, particularly in China and Indostan, thevalue of the precious metals, when the Europeans first began totrade to those countries, was much higher than in Europe; and itstill continues to be so. In rice countries, which generally yieldtwo, sometimes three crops in the year, each of them moreplentiful than any common crop of corn, the abundance of foodmust 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 ofbeyond what they themselves can consume, have the means ofpurchasing a much greater quantity of the labour of other people.The retinue of a grandee in China or Indostan accordingly is, byall accounts, much more numerous and splendid than that of therichest subjects in Europe. The same superabundance of food, ofwhich they have the disposal, enables them to give a greaterquantity of it for all those singular and rare productions whichnature furnishes but in very small quantities; such as the preciousmetals and the precious stones, the great objects of thecompetition of the rich. Though the mines, therefore, whichsupplied the Indian market had been as abundant as those whichsupplied the European, such commodities would naturallyexchange for a greater quantity of food in India than in Europe.But the mines which supplied the Indian market with the preciousmetals seem to have been a good deal less abundant, and thosewhich supplied it with the precious stones a good deal more so,



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than the mines which supplied the European. The preciousmetals, therefore, would naturally exchange in India for somewhata greater quantity of the precious stones, and for a much greaterquantity of food than in Europe. The money price of diamonds, thegreatest of all superfluities, would be somewhat lower, and that offood, the first of all necessaries, a great deal lower in the onecountry than in the other. But the real price of labour, the realquantity of the necessaries of life which is given to the labourer, ithas already been observed, is lower both in China and Indostan,the two great markets of India, than it is through the greater partof Europe. The wages of the labourer will there purchase a smallerquantity of food; and as the money price of food is much lower inIndia than in Europe, the money price of labour is there lowerupon a double account; upon account both of the small quantity offood which it will purchase, and of the low price of that food. Butin countries of equal art and industry, the money price of thegreater part of manufactures will be in proportion to the moneyprice of labour; and in manufacturing art and industry, China andIndostan, though inferior, seem not to be much inferior to any partof Europe. The money price of the greater part of manufactures,therefore, will naturally be much lower in those great empiresthan it is anywhere in Europe. Through the greater part ofEurope, too, the expense of land-carriage increases very muchboth the real and nominal price of most manufactures. It costsmore labour, and therefore more money, to bring first thematerials, and afterwards the complete manufacture to market. InChina and Indostan the extent and variety of inland navigationsave the greater part of this labour, and consequently of thismoney, and thereby reduce still lower both the real and the



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nominal price of the greater part of their manufactures. Upon allthose accounts the precious metals axe a commodity which italways has been, and still continues to be, extremely advantageousto carry from Europe to India. There is scarce any commoditywhich brings a better price there; or which, in proportion to thequantity of labour and commodities which it costs in Europe, willpurchase or command a greater quantity of labour andcommodities in India. It is more advantageous, too, to carry silverthither than gold; because in China, and the greater part of theother markets of India, the proportion between fine silver and finegold is but as ten, or at most as twelve, to one; whereas in Europeit is as fourteen or fifteen to one. In China, and the greater part ofthe other markets of India, ten, or at most twelve, ounces of silverwill purchase an ounce of gold; in Europe it requires fromfourteen to fifteen ounces. In the cargoes, therefore, of the greaterpart of European ships which sail to India, silver has generallybeen one of the most valuable articles. It is the most valuablearticle in the Acapulco ships which sail to Manilla. The silver ofthe new continent seems in this manner to be one of the principalcommodities by which the commerce between the two extremitiesof the old one is carried on, and it is by means of it, in a greatmeasure, that those distant parts of the world are connected withone another.

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



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The continual consumption of the precious metals in coin bywearing, and in plate both by wearing and cleaning, is verysensible, and in commodities of which the use is so very widelyextended, would alone require a very great annual supply. Theconsumption of those metals in some particular manufactures,though it may not perhaps be greater upon the whole than thisgradual consumption, is, however, much more sensible, as it ismuch more rapid. In the manufactures of Birmingham alone thequantity of gold and silver annually employed in gilding andplating, and thereby disqualified from ever afterwards appearingin the shape of those metals, is said to amount to more than fiftythousand pounds sterling.

We may from thence form some notion how great must be theannual consumption in all the different parts of the world either inmanufactures of the same kind with those of Birmingham, or inlaces, embroideries, gold and silver stuffs, the gilding of books,furniture, etc. A considerable quantity, too, must be annually lostin transporting those metals from one place to another both by seaand by land. In the greater part of the governments of Asia,besides, the almost universal custom of concealing treasures in thebowels of the earth, of which the knowledge frequently dies withthe person who makes the concealment, must occasion the loss ofa still greater quantity.

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



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According to Mr. Meggens1 the annual importation of theprecious metals into Spain, at an average of six years, viz., from1748 to 1753, both inclusive; and into Portugal, at an average ofseven years, viz., from 1747 to 1753, both inclusive, amounted insilver to 1,101,107 pounds weight; and in gold to 29,940 poundsweight. The silver, at sixty-two shillings the pound Troy, amountsto £3,413,431 10s. sterling. The gold, at forty-four guineas and ahalf the pound Troy, amounts to £2,333,446 14s. sterling. Bothtogether amount to £5,746,878 4s. sterling. The account of whatwas imported under register he assures us is exact. He gives us thedetail of the particular places from which the gold and silver werebrought, and of the particular quantity of each metal, which,according to the register, each of them afforded. He makes anallowance, too, for the quantity of each metal which he supposesmay have been smuggled. The great experience of this judiciousmerchant renders his opinion of considerable weight.

According to the eloquent and, sometimes, well-informedauthor of the Philosophical and Political History of theEstablishment of the Europeans in the two Indies, the annualimportation of registered gold and silver into Spain, at an averageof eleven years, viz., from 1754 to 1764, both inclusive, amounted to13,984,1853/4 piastres of ten reals. On account of what may havebeen smuggled, however, the whole annual importation, hesupposes, may have amounted to seventeen millions of piastres,

1Postscript to the Universal Merchant, pp. 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.



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which, at 4s. 6d. the piastre, is equal to £3,825,000 sterling. Hegives the detail, too, of the particular places from which the goldand silver were brought, and of the particular quantities of eachmetal which, according to the register, each of them afforded. Heinforms us, too, that if we were to judge of the quantity of goldannually imported from the Brazils into Lisbon by the amount ofthe tax paid to the King of Portugal, which it seems is one-fifth ofthe standard metal, we might value it at eighteen millions ofcruzadoes, or forty-five millions of French livres, equal to abouttwo millions sterling. On account of what may have beensmuggled, however, we may safely, he says, add to the sum aneighth more, or £250,000 sterling, so that the whole will amount to£2,250,000 sterling. According to this account, therefore, the wholeannual importation of the precious metals into both Spain andPortugal amounts to about £6,075,000 sterling.

Several other very well authenticated, though manuscript,accounts, I have been assured, agree in making this whole annualimportation 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 andLisbon, indeed, is not equal to the whole annual produce of themines of America. Some part is sent annually by the Acapulcoships to Manilla; some part is employed in the contraband tradewhich the Spanish colonies carry on with those of other Europeannations; and some part, no doubt remains in the country. Themines of America, besides, are by no means the only gold andsilver mines in the world. They are, however, by far the mostabundant. The produce of all the other mines which are known isinsignificant, it is acknowledged, in comparison with theirs; and



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the far greater part of their produce, it is likewise acknowledged,is annually imported into Cadiz and Lisbon. But the consumptionof Birmingham alone, at the rate of fifty thousand pounds a year,is equal to the hundred-and-twentieth part of this annualimportation at the rate of six millions a year. The whole annualconsumption of gold and silver, therefore, in all the differentcountries of the world where those metals are used, may perhapsbe nearly equal to the whole annual produce. The remainder maybe no more than sufficient to supply the increasing demand of allthriving countries. It may even have fallen so far short of timedemand as somewhat to raise the price of those metals in theEuropean market.

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

The price of all metals, though liable to slow and gradualvariations, varies less from year to year than that of almost anyother part of the rude produce of land; and the price of theprecious metals is even less liable to sudden variations than that ofthe coarse ones. The durableness of metals is the foundation ofthis extraordinary steadiness of price. The corn which was



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brought to market last year will be all or almost all consumed longbefore the end of this year. But some part of the iron which wasbrought from the mine two or three hundred years ago may be stillin use, and perhaps some part of the gold which was brought fromit two or three thousand years ago. The different masses of cornwhich in different years must supply the consumption of the worldwill always be nearly in proportion to the respective produce ofthose different years. But the proportion between the differentmasses of iron which may be in use in two different years will bevery little affected by any accidental difference in the produce ofthe iron mines of those two years; and the proportion between themasses of gold will be still less affected by any such difference inthe 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 ofthe greater part of corn fields, those variations have not the sameeffect upon the price of the one species of commodities as uponthat of the other.

VARIATIONS IN THE PROPORTION BETWEEN THERESPECTIVE VALUES OF GOLD AND SILVER

Before the discovery of the mines of America, the value of finegold to fine silver was regulated in the different mints of Europebetween the proportions of one to ten and one to twelve; that is, anounce of fine gold was supposed to be worth from ten to twelveounces of fine silver. About the middle of the last century it cameto be regulated, between the proportions of one to fourteen andone to fifteen; that is, an ounce of fine gold came to be supposed tobe worth between fourteen and fifteen ounces of fine silver. Gold



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rose in its nominal value, or in the quantity of silver which wasgiven for it. Both metals sunk in their real value, or in the quantityof labour which they could purchase; but silver sunk more thangold. Though both the gold and silver mines of America exceededin fertility all those which had ever been known before, the fertilityof the silver mines had, it seems, been proportionably still greaterthan that of the gold ones.

The great quantities of silver carried annually from Europe toIndia have, in some of the English settlements, gradually reducedthe value of that metal in proportion to gold. In the mint ofCalcutta an ounce of fine gold is supposed to be worth fifteenounces of fine silver, in the same manner as in Europe. It is in themint perhaps rated too high for the value which it bears in themarket of Bengal.

In China, the proportion of gold to silver still continues as oneto ten, or one to twelve. In Japan it is said to be as one to eight.

The proportion between the quantities of gold and silverannually imported into Europe, according to Mr. Meggens’saccount, is as one to twenty-two nearly; that is, for one ounce ofgold there are imported a little more than twenty-two ounces ofsilver. The great quantity of silver sent annually to the East Indiesreduces, he supposes, the quantities of those metals which remainin Europe to the proportion of one to fourteen or fifteen, theproportion of their values. The proportion between their values,he seems to think, must necessarily be the same as that betweentheir 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 oftwo commodities is not necessarily the same as that between the



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quantities of them which are commonly in the market. The priceof an ox, reckoned at ten guineas, is about threescore times theprice of a lamb, reckoned at 3s. 6d. It would be absurd, however, toinfer from thence that there are commonly in the marketthreescore lambs for one ox: and it would be just as absurd toinfer, because an ounce of gold will commonly purchase fromfourteen to fifteen ounces of silver, that there are commonly in themarket only fourteen or fifteen ounces of silver for one ounce ofgold.

The quantity of silver commonly in the market, it is probable ismuch greater in proportion to that of gold than the value of acertain quantity of gold is to that of an equal quantity of silver. Thewhole quantity of a cheap commodity brought to market iscommonly not only greater, but of greater value, than the wholequantity of a dear one. The whole quantity of bread annuallybrought to market is not only greater, but of greater value than thewhole quantity of butcher’s meat; the whole quantity of butcher’smeat, than the whole quantity of poultry; and the whole quantityof wild fowl. There are so many more purchasers for the cheapthan for the dear commodity that not only a greater quantity of it,but a greater value, can commonly be disposed of. The wholequantity, therefore, of the cheap commodity must commonly begreater in proportion to the whole quantity of the dear one thanthe value of a certain quantity of the dear one is to the value of anequal quantity of the cheap one. When we compare the preciousmetals with one another, silver is a cheap and gold a dearcommodity. We ought naturally to expect, therefore, that thereshould always be in the market not only a greater quantity, but agreater value of silver than of gold. Let any man who has a little of



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both compare his own silver with his gold plate, and he willprobably find that, not only the quantity, but the value of theformer greatly exceeds that of the latter. Many people, besides,have a good deal of silver who have no gold plate, which, even withthose who have it, is generally confined to watchcases, snuff-boxes, and such like trinkets, of which the whole amount is seldomof great value.

In the British coin, indeed, the value of the gold preponderatesgreatly, but it is not so in that of all countries. In the coin of somecountries the value of the two metals is nearly equal. In the Scotchcoin, before the union with England, the gold preponderated verylittle, though it did somewhat,1 as it appears by the accounts of themint. 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 tocarry about in your pocket. The superior value, however, of thesilver plate above that of the gold, which takes place in allcountries, will much more than compensate the preponderancy ofthe gold coin above the silver, which takes place only in somecountries.

Though, in one sense of the word, silver always has been, andprobably always will be, much cheaper than gold; yet in anothersense gold may, perhaps, in the present state of the Spanishmarket, be said to be somewhat cheaper than silver. A commoditymay be said to be dear or cheap, not only according to the absolutegreatness or smallness of its usual price, but according as thatprice is more or less above the lowest for which it is possible to

1See Ruddiman’s preface to Anderson’s Diplomata, etc., Scotiæ.



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bring it to market for any considerable time together. This lowestprice is that which barely replaces, with a moderate profit, thestock which must be employed in bringing the commodity thither.It is the price which affords nothing to the landlord, of which rentmakes not any component part, but which resolves itselfaltogether into wages and profit. But, in the present state of theSpanish market, gold is certainly somewhat nearer to this lowestprice than silver. The tax of the King of Spain upon gold is onlyone-twentieth part of the standard metal, or five per cent; whereashis tax upon silver amounts to one-tenth part of it, or to ten percent. In these taxes too, it has already been observed, consists thewhole rent of the greater part of the gold and silver mines ofSpanish America; and that upon gold is still worse paid than thatupon silver. The profits of the undertakers of gold mines too, asthey more rarely make a fortune, must, in general, be still moremoderate than those of the undertakers of silver mines. The priceof Spanish gold, therefore, as it affords both less rent and lessprofit, must, in the Spanish market, be somewhat nearer to thelowest price for which it is possible to bring it thither than theprice of Spanish silver. When all expenses are computed, thewhole quantity of the one metal, it would seem, cannot, in theSpanish market, be disposed of so advantageously as the wholequantity of the other. The tax, indeed, of the King of Portugalupon the gold of the Brazils is the same with the ancient tax of theKing of Spain upon the silver of Mexico and Peru; or one-fifth partof the standard metal. It may, therefore, be uncertain whether tothe general market of Europe the whole mass of American goldcomes at a price nearer to the lowest for which it is possible tobring it thither than the whole mass of American silver.



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

Though it is not very probable that any part of a tax, which isnot only imposed upon one of the most proper subjects of taxation,a mere luxury and superfluity, but which affords so very importanta revenue as the tax upon silver, will ever be given up as long as itis possible to pay it; yet the same impossibility of paying it, whichin 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 thesame manner as it made it necessary to reduce the tax upon goldto one-twentieth. That the silver mines of Spanish America, like allother mines, become gradually more expensive in the working, onaccount of the greater depths at which it is necessary to carry onthe works, and of the greater expense of drawing out the waterand of supplying them with fresh air at those depths, isacknowledged by everybody who has inquired into the state ofthose mines.

These causes, which are equivalent to a growing scarcity ofsilver (for a commodity may be said to grow scarcer when itbecomes more difficult and expensive to collect a certain quantityof it) must, in time, produce one or other of the three followingevents. The increase of the expense must either, first, becompensated altogether by a proportionable increase in the priceof the metal; or, secondly, it must be compensated altogether by aproportionable diminution of the tax upon silver; or, thirdly, itmust be compensated partly by the one, and partly by the other ofthose two expedients.

This third event is very possible. As gold rose in its price in



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proportion to silver, notwithstanding a great diminution of the taxupon gold, so silver might rise in its price in proportion to labourand commodities, notwithstanding an equal diminution of the taxupon silver.

Such successive reductions of the tax, however, though theymay not prevent altogether, must certainly retard, more or less,the rise of the value of silver in the European market. Inconsequence of such reductions many mines may be wroughtwhich could not be wrought before, because they could not affordto pay the old tax; and the quantity of silver annually brought tomarket must always be somewhat greater, and, therefore, thevalue of any given quantity somewhat less, than it otherwise wouldhave been. In consequence of the reduction in 1736, the value ofsilver in the European market, though it may not at this day belower than before that reduction, is, probably, at least ten per centlower than it would have been had the Court of Spain continued toexact the old tax.

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



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It must be observed, however, that whatever may be thesupposed annual importation of gold and silver, there must be acertain period at which the annual consumption of those metalswill be equal to that annual importation. Their consumption mustincrease as their mass increases, or rather in a much greaterproportion. As their mass increases, their value diminishes. Theyare more used and less cared for, and their consumptionconsequently increases in a greater proportion than their mass.After a certain period, therefore, the annual consumption of thosemetals must, in this manner, become equal to their annualimportation, provided that importation is not continuallyincreasing; which, in the present times, is not supposed to be thecase.

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

GROUNDS OF THE SUSPICION THAT THE VALUE OFSILVER 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 theincrease of wealth so their value diminishes as their quantityincreases, may, perhaps, dispose many people to believe that theirvalue still continues to fall in the European market; and the still



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gradually increasing price of many parts of the rude produce ofland may confirm them still further in this opinion.

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

If you except corn and such other vegetables as are raisedaltogether by human industry, that all other sorts of rude produce,cattle, poultry, game of all kinds, the useful fossils and minerals ofthe earth, etc., naturally grow dearer as the society advances inwealth and improvement, I have endeavoured to show already.Though such commodities, therefore, come to exchange for agreater quantity of silver than before, it will not from thence followthat silver has become really cheaper, or will purchase less labourthan before, but that such commodities have become really dearer,or will purchase more labour than before. It is not their nominalprice only, but their real price which rises in the progress ofimprovement.

The rise of their nominal price is the effect, not of anydegradation of the value of silver, but of the rise in their real price.



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DIFFERENT EFFECTS OF THE PROGRESS OFIMPROVEMENT UPON THREE DIFFERENT SORTS

OF RUDE PRODUCEThese different sorts of rude produce may be divided into threeclasses. The first comprehends those which it is scarce in thepower of human industry to multiply at all. The second, thosewhich it can multiply in proportion to the demand. The third,those in which the efficacy of industry is either limited oruncertain. In the progress of wealth and improvement, the realprice of the first may rise to any degree of extravagance, andseems not to be limited by any certain boundary. That of thesecond, though it may rise greatly, has, however, a certainboundary beyond which it cannot well pass for any considerabletime together. That of the third, though its natural tendency is torise in the progress of improvement, yet in the same degree ofimprovement it may sometimes happen even to fall, sometimes tocontinue the same, and sometimes to rise more or less, accordingas different accidents render the efforts of human industry, inmultiplying this sort of rude produce, more or less successful.

First SortThe first sort of rude produce of which the price rises in theprogress of improvement is that which it is scarce in the power ofhuman industry to multiply at all. It consists in those things whichnature produces only in certain quantities, and which, being of avery perishable nature, it is impossible to accumulate together theproduce of many different seasons. Such are the greater part ofrare and singular birds and fishes, many different sorts of game,almost all wild-fowl, all birds of passage in particular, as well as



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many other things. When wealth and the luxury whichaccompanies it increase, the demand for these is likely to increasewith them, and no effort of human industry may be able toincrease the supply much beyond what it was before this increaseof the demand. The quantity of such commodities, therefore,remaining the same, or nearly the same, while the competition topurchase them is continually increasing, their price may rise toany degree of extravagance, and seems not to be limited by anycertain boundary. If woodcocks should become so fashionable asto sell for twenty guineas apiece, no effort of human industry couldincrease the number of those brought to market much beyondwhat it is at present. The high price paid by the Romans, in thetime of their greatest grandeur, for rare birds and fishes, may inthis manner easily be accounted for. These prices were not theeffects of the low value of silver in those times, but of the highvalue of such rarities and curiosities as human industry could notmultiply at pleasure. The real value of silver was higher at Rome,for some time before and after the fall of the republic, than it isthrough the greater part of Europe at present. Three sestertii,equal to about sixpence sterling, was the price which the republicpaid for the modius or peck of the tithe wheat of Sicily. This price,however, was probably below the average market price, theobligation to deliver their wheat at this rate being considered as atax upon the Sicilian farmers. When the Romans, therefore, hadoccasion to order more corn than the tithe of wheat amounted to,they were bound by capitulation to pay for the surplus at the rateof four sestertii, or eightpence sterling, the peck; and this hadprobably been reckoned the moderate and reasonable, that is, theordinary or average contract price of those times; it is equal to



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about one-and-twenty shillings the quarter. Eight-and-twentyshillings the quarter was, before the late years of scarcity, theordinary contract price of English wheat, which in quality isinferior to the Sicilian, and generally sells for a lower price in theEuropean market. The value of silver, therefore, in those ancienttimes, must have been to its value in the present as three to fourinversely; that is, three ounces of silver would then havepurchased the same quantity of labour and commodities whichfour ounces will do at present. When we read in Pliny, therefore,that Seius1 bought a white nightingale, as a present for theEmpress Agrippina, at a price of six thousand sestertii, equal toabout fifty pounds of our present money; and that Asinius Celer2

purchased a surmullet at the price of eight thousand sestertii,equal to about sixty-six pounds thirteen shillings and fourpence ofour present money, the extravagance of those prices, how muchsoever it may surprise us, is apt, notwithstanding, to appear to usabout one-third less than it really was. Their real price, thequantity of labour and subsistence which was given away forthem, was about one-third more than their nominal price is apt toexpress to us in the present times. Seius gave for the nightingalethe command of a quantity of labour and subsistence equal towhat £66 13s. 4d. would purchase in the present times; and AsiniusCeler gave for the surmullet the command of a quantity equal towhat £88 17s. 91/2d. would purchase. What occasioned theextravagance of those high prices was, not so much the abundanceof silver as the abundance of labour and subsistence of which

1Pliny, x, 29.2Pliny, ix, 17.



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those Romans had the disposal beyond what was necessary fortheir own use. The quantity of silver of which they had thedisposal was a good deal less than what the command of the samequantity of labour and subsistence would have procured to themin the present times.

Second SortThe second sort of rude procedure of which the price rises in theprogress of improvement is that which human industry canmultiply in proportion to the demand. It consists in those usefulplants and animals which, in uncultivated countries, natureproduces with such profuse abundance that they are of little or novalue, and which, as cultivation advances are therefore forced togive place to some more profitable produce. During a long periodin the progress of improvement, the quantity of these iscontinually diminishing, while at the same time the demand forthem is continually increasing. Their real value, therefore, the realquantity of labour which they will purchase or command,gradually rises, till at last it gets so high as to render them asprofitable a produce as anything else which human industry canraise upon the most fertile and best cultivated land. When it hasgot so high it cannot well go higher. If it did, more land and moreindustry would soon be employed to increase their quantity.

When the price of cattle, for example, rises so high that it is asprofitable to cultivate land in order to raise food for them as inorder to raise food for man, it cannot well go higher. If it did, morecorn land would soon be turned into pasture. The extension oftillage, by diminishing the quantity of wild pasture, diminishes thequantity of butcher’s meat which the country naturally produces



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without labour or cultivation, and by increasing the number ofthose who have either corn, or, what comes to the same thing, theprice of corn, to give in exchange for it, increases the demand. Theprice of butcher’s meat, therefore, and consequently of cattle,must gradually rise till it gets so high that it becomes as profitableto employ the most fertile and best cultivated lands in raising foodfor them as in raising corn. But it must always be late in theprogress of improvement before tillage can be so far extended asto raise the price of cattle to this height; and till it has got to thisheight, if the country is advancing at all, their price must becontinually rising. There are, perhaps, some parts of Europe inwhich the price of cattle has not yet got to this height. It had notgot to this height in any part of Scotland before the union. Had theScotch cattle been always confined to the market of Scotland, in acountry in which the quantity of land which can be applied to noother purpose but the feeding of cattle is so great in proportion towhat can be applied to other purposes, it is scarce possible,perhaps, that their price could ever have risen so high as to renderit profitable to cultivate land for the sake of feeding them. InEngland, the price of cattle, it has already been observed, seems,in the neighbourhood of London, to have got to this height aboutthe beginning of the last century; but it was much later probablybefore it got to it through the greater part of the remoter counties;in some of which, perhaps, it may scarce yet have got to it. Of allthe different substances, however, which compose this second sortof rude produce, cattle is, perhaps, that of which the price, in theprogress of improvement, first rises to this height.

Till the price of cattle, indeed, has got to this height, it seemsscarce possible that the greater part, even of those lands which are



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capable of the highest cultivation, can be completely cultivated. Inall farms too distant from any town to carry manure from it, thatis, in the far greater part of those of every extensive country, thequantity of well-cultivated land must be in proportion to thequantity of manure which the farm itself produces; and this againmust be in proportion to the stock of cattle which are maintainedupon it. The land is manured either by pasturing the cattle uponit, or by feeding them in the stable, and from thence carrying outtheir dung to it. But unless the price of the cattle be sufficient topay both the rent and profit of cultivated land, the farmer cannotafford to pasture them upon it; and he can still less afford to feedthem in the stable. It is with the produce of improved andcultivated land only that cattle can be fed in the stable; because tocollect the scanty and scattered produce of waste and unimprovedlands would require too much labour and be too expensive. If theprice of cattle, therefore, is not sufficient to pay for the produce ofimproved and cultivated land, when they are allowed to pasture it,that price will be still less sufficient to pay for that produce when itmust be collected with a good deal of additional labour, andbrought into the stable to them. In these circumstances, therefore,no more cattle can, with profit, be fed in the stable than what arenecessary for tillage. But these can never afford manure enoughfor keeping constantly in good condition all the lands which theyare capable of cultivating. What they afford being insufficient forthe whole farm will naturally be reserved for the lands to which itcan be most advantageously or conveniently applied; the mostfertile, or those, perhaps, in the neighbourhood of the farmyard.These, therefore, will be kept constantly in good condition and fitfor tillage. The rest will, the greater part of them, be allowed to lie



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waste, producing scarce anything but some miserable pasture, justsufficient to keep alive a few straggling, half-starved cattle; thefarm, though much understocked in proportion to what would benecessary for its complete cultivation, being very frequentlyoverstocked in proportion to its actual produce. A portion of thiswaste land, however, after having been pastured in this wretchedmanner for six or seven years together, may be ploughed up, whenit will yield, perhaps, a poor crop or two of bad oats, or of someother coarse grain, and then, being entirely exhausted, it must berested and pastured again as before and another portion ploughedup to be in the same manner exhausted and rested again in itsturn. Such accordingly was the general system of management allover the low country of Scotland before the union. The landswhich were kept constantly well manured and in good conditionseldom exceeded a third or a fourth part of the whole farm, andsometimes did not amount to a fifth or a sixth part of it. The restwere never manured, but a certain portion of them was in its turn,notwithstanding, regularly cultivated and exhausted. Under thissystem of management, it is evident, even that part of the land ofScotland which is capable of good cultivation could produce butlittle in comparison of what it may be capable of producing. Buthow disadvantageous soever this system may appear, yet beforethe union the low price of cattle seems to have rendered it almostunavoidable. If, notwithstanding a great rise in their price, it stillcontinues to prevail through a considerable part of the country, itis owing, in many places, no doubt, to ignorance and attachmentto old customs, but in most places to the unavoidable obstructionswhich the natural course of things opposes to the immediate orspeedy establishment of a better system: first, to the poverty of the



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tenants, to their not having yet had time to acquire a stock of cattlesufficient to cultivate their lands more completely, the same rise ofprice which would render it advantageous for them to maintain agreater stock rendering it more difficult for them to acquire it;and, secondly, to their not having yet had time to put their lands incondition to maintain this greater stock properly, supposing theywere capable of acquiring it. The increase of stock and theimprovement 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 anyimprovement of land, but there can be no considerable increase ofstock but in consequence of a considerable improvement of land;because otherwise the land could not maintain it. These naturalobstructions to the establishment of a better system cannot beremoved but by a long course of frugality and industry; and half acentury or a century more, perhaps, must pass away before the oldsystem, which is wearing out gradually, can be completelyabolished through all the different parts of the country.

Of all the commercial advantages, however, which Scotland hasderived from the union with England, this rise in the price of cattleis, perhaps, the greatest. It has not only raised the value of allhighland estates, but it has, perhaps, been the principal cause ofthe improvement of the low country.

In all new colonies the great quantity of waste land, which canfor many years be applied to no other purpose but the feeding ofcattle, soon renders them extremely abundant, and in everythinggreat cheapness is the necessary consequence of great abundance.Though all the cattle of the European colonies in America wereoriginally carried from Europe, they soon multiplied so much



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there, and became of so little value that even horses were allowedto run wild in the woods without any owner thinking it worthwhile to claim them. It must be a long time, after the firstestablishment of such colonies, before it can become profitable tofeed cattle upon the produce of cultivated land. The same causes,therefore, the want of manure, and the disproportion between thestock employed in cultivation, and the land which it is destined tocultivate, are likely to introduce there a system of husbandry notunlike that which still continues to take place in so many parts ofScotland. Mr. Kalm, the Swedish traveller, when he gives anaccount of the husbandry of some of the English colonies in NorthAmerica, as he found it in 1749, observes, accordingly, that he canwith difficulty discover there the character of the English nation,so well skilled in all the different branches of agriculture. Theymake scarce any manure for their corn fields, he says; but whenone piece of ground has been exhausted by continual cropping,they clear and cultivate another piece of fresh land; and when thatis exhausted, proceed to the third.

Their cattle are allowed to wander through the woods and otheruncultivated grounds, where they are half-starved; having longago extirpated almost all the annual grasses by cropping them tooearly in the spring, before they had time to form their flowers, orto shed their seeds.1 The annual grasses were, it seems, the bestnatural grasses in that part of North America; and when theEuropeans first settled there, they used to grow very thick, and torise three or four feet high. A piece of ground which, when hewrote, could not maintain one cow, would in former times, he was

1Kalms’ Travels, vol. I, pp. 343, 344.



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assured, have maintained four, each of which would have givenfour times the quantity of milk which that one was capable ofgiving. The poorness of the pasture had, in his opinion, occasionedthe degradation of their cattle, which degenerated sensibly fromone generation to another. They were probably not unlike thatstunted breed which was common all over Scotland thirty or fortyyears ago, and which is now so much mended through the greaterpart of the low country, not so much by a change of the breed,though that expedient has been employed in some places, as by amore plentiful method of feeding them.

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

As cattle are among the first, so perhaps venison is among thelast parts of this sort of rude produce which bring this price. Theprice of venison in Great Britain, how extravagant soever it mayappear, is not near sufficient to compensate the expense of a deerpark, as is well known to all those who have had any experience inthe feeding of deer. If it was otherwise, the feeding of deer wouldsoon become an article of common farming, in the same manneras the feeding of those small birds called Turdi was among theancient Romans. Varro and Columella assure us that it was a mostprofitable article. The fattening of ortolans, birds of passage whicharrive lean in the country, is said to be so in some parts of France.



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If venison continues in fashion, and the wealth and luxury of GreatBritain increase as they have done for some time past, its pricemay very probably rise still higher than it is at present.

Between that period in the progress of improvement whichbrings to its height the price of so necessary an article as cattle,and that which brings to it the price of such a superfluity asvenison, there is a very long interval, in the course of which manyother 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 stables willmaintain a certain number of poultry. These, as they are fed withwhat would otherwise be lost, are a mere save-all; and as they costthe farmer scarce anything, so he can afford to sell them for verylittle. Almost all that he gets is pure gain, and their price canscarce 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 fullysufficient to supply the whole demand. In this state of things,therefore, they are often as cheap as butcher’s meat, or any othersort of animal food. But the whole quantity of poultry, which thefarm in this manner produces without expense, must always bemuch smaller than the whole quantity of butcher’s meat which isreared upon it; and in times of wealth and luxury what is rare,with only nearly equal merit, is always preferred to what iscommon. As wealth and luxury increase, therefore, inconsequence of improvement and cultivation, the price of poultrygradually rises above that of butcher’s meat, till at last it gets sohigh that it becomes profitable to cultivate land for the sake offeeding them. When it has got to this height it cannot well go



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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, andsufficiently profitable to encourage the farmer to raise aconsiderable quantity of Indian corn and buck-wheat for thispurpose. A middling farmer will there sometimes have fourhundred fowls in his yard. The feeding of poultry seems scarce yetto be generally considered as a matter of so much importance inEngland. They are certainly, however, dearer in England than inFrance, as England receives considerable supplies from France. Inthe progress of improvement, the period at which every particularsort of animal food is dearest must naturally be that whichimmediately precedes the general practice of cultivating land forthe sake of raising it. For some time before this practice becomesgeneral, the scarcity must necessarily raise the price. After it hasbecome general, new methods of feeding are commonly fallenupon, which enable the farmer to raise upon the same quantity ofground a much greater quantity of that particular sort of animalfood. The plenty not only obliges him to sell cheaper, but inconsequence of these improvements he can afford to sell cheaper;for if he could not afford it, the plenty would not be of longcontinuance. It has been probably in this manner that theintroduction of clover, turnips, carrots, cabbage, etc., hascontributed to sink the common price of butcher’s meat in theLondon market somewhat below what it was about the beginningof the last century.

The hog, that finds his food among ordure and greedily devoursmany things rejected by every other useful animal, is, like poultry,originally kept as a save-all. As long as the number of such



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animals, which can thus be reared at little or no expense, is fullysufficient to supply the demand, this sort of butcher’s meat comesto market at a much lower price than any other. But when thedemand rises beyond what this quantity can supply, when itbecomes necessary to raise food on purpose for feeding andfattening hogs, in the same manner as for feeding and fatteningother cattle, the price necessarily rises, and becomesproportionably higher or lower than that of other butcher’s meat,according as the nature of the country, and the state of itsagriculture, happen to render the feeding of hogs more or lessexpensive than that of other cattle. In France, according to Mr.Buffon, the price of pork is nearly equal to that of beef. In mostparts of Great Britain it is at present somewhat higher.

The great rise in the price of both hogs and poultry has in GreatBritain been frequently imputed to the diminution of the numberof cottagers and other small occupiers of land; an event which hasin every part of Europe been the immediate forerunner ofimprovement and better cultivation, but which at the same timemay have contributed to raise the price of those articles bothsomewhat sooner and somewhat faster than it would otherwisehave risen. As the poorest family can often maintain a cat or a dogwithout any expense, so the poorest occupiers of land cancommonly maintain a few poultry, or a sow and a few pigs, at verylittle. The little offals of their own table, their whey, skimmed milk,and buttermilk, supply those animals with a part of their food, andthey find the rest in the neighbouring fields without doing anysensible damage to anybody. By diminishing the number of thosesmall occupiers, therefore, the quantity of this sort of provisions,which is thus produced at little or no expense, must certainly have



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been a good deal diminished, and their price must consequentlyhave been raised both sooner and faster than it would otherwisehave risen. Sooner or later, however, in the progress ofimprovement, it must at any rate have risen to the utmost heightto which it is capable of rising; or to the price which pays thelabour and expense of cultivating the land which furnishes themwith food as well as these are paid upon the greater part of othercultivated land.

The business of the dairy, like the feeding of hogs and poultry,is originally carried on as a save-all. The cattle necessarily keptupon the farm produce more milk than either the rearing of theirown young or the consumption of the farmer’s family requires;and they produce most at one particular season. But of all theproductions of land, milk is perhaps the most perishable. In thewarm 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, fora year: and by making it into cheese, he stores a much greater partof it for several years.

Part of all these is reserved for the use of his own family. Therest goes to market, in order to find the best price which is to behad, and which can scarce be so low as to discourage him fromsending thither whatever is over and above the use of his ownfamily. If it is very low, indeed, he will be likely to manage hisdairy in a very slovenly and dirty manner, and will scarce perhapsthink it worth while to have a particular room or building onpurpose for it, but will suffer the business to be carried on amidstthe smoke, filth, and nastiness of his own kitchen; as was the caseof almost all the farmers’ dairies in Scotland thirty or forty years



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ago, and as is the case of many of them still. The same causeswhich gradually raise the price of butcher’s meat, the increase ofthe demand, and, in consequence of the improvement of thecountry, the diminution of the quantity which can be fed at little orno expense, raise, in the same manner, that of the produce of thedairy, of which the price naturally connects with that of butcher’smeat, or with the expense of feeding cattle. The increase of pricepays for more labour, care, and cleanliness. The dairy becomesmore worthy of the farmer’s attention, and the quality of itsproduce gradually improves. The price at last gets so high that itbecomes worth while to employ some of the most fertile and bestcultivated lands in feeding cattle merely for the purpose of thedairy; 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 seemsto have got to this height through the greater part of England,where much good land is commonly employed in this manner. Ifyou except the neighbourhood of a few considerable towns, itseems not yet to have got to this height anywhere in Scotland,where common farmers seldom employ much good land in raisingfood for cattle merely for the purpose of the dairy.

The price of the produce, though it has risen very considerablywithin these few years, is probably still too low to admit of it. Theinferiority of the quality, indeed, compared with that of theproduce of English dairies, is fully equal to that of the price. Butthis inferiority of quality is, perhaps, rather the effect of thislowness of price than the cause of it. Though the quality was muchbetter, the greater part of what is brought to market could not, Iapprehend, in the present circumstances of the country, bedisposed of at a much better price; and the present price, it is



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probable would not pay the expense of the land and labournecessary for producing a much better quality. Though the greaterpart of England, notwithstanding the superiority of price, the dairyis not reckoned a more profitable employment of land than theraising of corn, or the fattening of cattle, the two great objects ofagriculture. Through the greater part of Scotland, therefore, itcannot yet be even so profitable.

The lands of no country, it is evident, can ever be completelycultivated and improved till once the price of every produce,which human industry is obliged to raise upon them, has got sohigh as to pay for the expense of complete improvement andcultivation. In order to do this, the price of each particularproduce 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 othercultivated land; and, secondly, to pay the labour and expense ofthe farmer as well as they are commonly paid upon good cornland; or, in other words, to replace with the ordinary profits thestock which he employs about it. This rise in the price of eachparticular produce must evidently be previous to the improvementand cultivation of the land which is destined for raising it. Gain isthe end of all improvement, and nothing could deserve that nameof which loss was to be the necessary consequence. But loss mustbe the necessary consequence of improving land for the sake of aproduce of which the price could never bring back the expense. Ifthe complete improvement and cultivation of the country be, as itmost certainly is, the greatest of all public advantages, this rise inthe price of all those different sorts of rude produce, instead ofbeing considered as a public calamity, ought to be regarded as thenecessary forerunner and attendant of the greatest of all public



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advantages.This rise, too, in the nominal or money-price of all those

different sorts of rude produce has been the effect, not of anydegradation in the value of silver, but of a rise in their real price.They have become worth, not only a greater quantity of silver, buta greater quantity of labour and subsistence than before. As itcosts a greater quantity of labour and subsistence to bring them tomarket, so when they are brought thither, they represent or areequivalent to a greater quantity.

Third SortThe third and last sort of rude produce, of which the pricenaturally rises in the progress of improvement, is that in which theefficacy of human industry, in augmenting the quantity, is eitherlimited or uncertain. Though the real price of this sort of rudeproduce, therefore, naturally tends to rise in the progress ofimprovement, yet, according as different accidents happen torender the efforts of human industry more or less successful inaugmenting the quantity, it may happen sometimes even to fall,sometimes to continue the same in very different periods ofimprovement, and sometimes to rise more or less in the sameperiod.

There are some sorts of rude produce which nature hasrendered a kind of appendages to other sorts; so that the quantityof the one which any country can afford, is necessarily limited bythat of the other. The quantity of wool or of raw hides, forexample, which any country can afford is necessarily limited bythe number of great and small cattle that are kept in it. The stateof its improvement, and the nature of its agriculture, again



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necessarily determine this number.The same causes which, in the progress of improvement,

gradually raise the price of butcher’s meat, should have the sameeffect, it may be thought, upon the prices of wool and raw hides,and raise them, too, nearly in the same proportion. It probablywould be so if, in the rude beginnings of improvement, the marketfor the latter commodities was confined within as narrow boundsas that for the former. But the extent of their respective markets iscommonly extremely different.

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

The market for wool and raw hides, on the contrary, is in therude beginnings of improvement very seldom confined to thecountry which produces them. They can easily be transported todistant countries, wool without any preparation, and raw hideswith very little: and as they are the materials of manymanufactures, the industry of other countries may occasion ademand for them, though that of the country which producesthem 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 greaterproportion to that of the whole beast than in countries where,improvement and population being further advanced, there ismore demand for butcher’s meat. Mr. Hume observes that in theSaxon times the fleece was estimated at two-fifths of the value of



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the whole sheep, and that this was much above the proportion ofits present estimation. In some provinces of Spain, I have beenassured, the sheep is frequently killed merely for the sake of thefleece and the tallow. The carcase is often left to rot upon theground, or to be devoured by beasts and birds of prey. If thissometimes happens even in Spain, it happens almost constantly inChili, at Buenos Ayres, and in many other parts of SpanishAmerica, where the horned cattle are almost constantly killedmerely for the sake of the hide and the tallow.

This, too, used to happen almost constantly in Hispaniola, whileit was infested by the Buccaneers, and before the settlement,improvement, and populousness of the French plantations (whichnow extend round the coast of almost the whole western half ofthe 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 and mountainous part of the country.

Though in the progress of improvement and population theprice of the whole beast necessarily rises, yet the price of thecarcase is likely to be much more affected by this rise than that ofthe wool and the hide. The market for the carcase, being in therude state of society confined always to the country whichproduces it, must necessarily be extended in proportion to theimprovement and population of that country. But the market forthe wool and the hides even of a barbarous country oftenextending to the whole commercial world, it can very seldom beenlarged in the same proportion. The state of the wholecommercial world can seldom be much affected by theimprovement of any particular country; and the market for suchcommodities may remain the same or very nearly the same after



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such improvements as before. It should, however, in the naturalcourse of things rather upon the whole be somewhat extended inconsequence of them. If the manufactures, especially, of whichthose commodities are the materials should ever come to flourishin the country, the market, though it might not be much enlarged,would at least be brought much nearer to the place of growth thanbefore; and the price of those materials might at least be increasedby what had usually been the expense of transporting them todistant countries. Though it might not rise therefore in the sameproportion as that of butcher’s meat, it ought naturally to risesomewhat, and it ought certainly not to fall.

In England, however, notwithstanding the flourishing state ofits woollen manufacture, the price of English wool has fallen veryconsiderably since the time of Edward III. There are manyauthentic records which demonstrate that during the reign of thatprince (towards the middle of the fourteenth century, or about1339) what was reckoned the moderate and reasonable price of thetod, or twenty-eight pounds of English wool, was not less than tenshillings of the money of those times,1 containing at the rate oftwentypence the ounce, six ounces of silver Tower weight, equal toabout thirty shillings of our present money. In the present times,one-and-twenty shillings the tod may be reckoned a good price forvery good English wool. The money-price of wool, therefore, in thetime of Edward III, was to its money-price in the present times asten to seven. The superiority of its real price was still greater. Atthe rate of six shillings and eightpence the quarter, ten shillingswas in those ancient times the price of twelve bushels of wheat. At

11See Smith’s Memoirs of Wool, vol. i, c. 5, 6 and 7; also vol. ii, c. 176.



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the rate of twenty-eight shillings the quarter, one-and-twentyshillings is in the present times the price of six bushels only. Theproportion between the real prices of ancient and modern times,therefore, is as twelve to six, or as two to one. In those ancienttimes a tod of wool would have purchased twice the quantity ofsubsistence which it will purchase at present; and consequentlytwice the quantity of labour, if the real recompense of labour hadbeen the same in both periods.

This degradation both in the real and nominal value of woolcould never have happened in consequence of the natural courseof 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 any othercountry but England. In consequence of these regulations themarket for English wool, instead of being somewhat extended inconsequence of the improvement of England, has been confined tothe home market, where the wool of several other countries isallowed to come into competition with it, and where that of Irelandis forced into competition with it. As the woollen manufactures,too, of Ireland are fully as much discouraged as is consistent withjustice and fair dealing, the Irish can work up but a small part oftheir own wool at home, and are, therefore, obliged to send agreater proportion of it to Great Britain, the only market they areallowed.

I have not been able to find any such authentic recordsconcerning the price of raw hides in ancient times. Wool wascommonly paid as a subsidy to the king, and its valuation in thatsubsidy ascertains, at least in some degree, what was its ordinary



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price. But this seems not to have been the case with raw hides.Fleetwood, however, from an account in 1425, between the prior ofBurcester Oxford and one of his canons, gives us their price, atleast as it was stated upon that particular occasion, viz., five oxhides at twelve shillings; five cow hides at seven shillings andthreepence; thirty-six sheep skins of two years old at nineshillings; sixteen calves skins at two shillings. In 1425, twelveshillings contained about the same quantity of silver as four-and-twenty shillings of our present money. An ox hide, therefore, wasin this account valued at the same quantity of silver as 4s. four-fifths of our present money. Its nominal price was a good deallower than at present. But at the rate of six shillings andeightpence the quarter, twelve shillings would in those times havepurchased fourteen bushels and four-fifths of a bushel of wheat,which, at three and sixpence the bushel, would in the presenttimes cost 51s. 4d. An ox hide, therefore, would in those times havepurchased as much corn as ten shillings and threepence wouldpurchase at present. Its real value was equal to ten shillings andthreepence of our present money. In those ancient times, whenthe cattle were half starved during the greater part of the winter,we cannot suppose that they were of a very large size. An ox hidewhich weighs four stone of sixteen pounds avoirdupois is not inthe present times reckoned a bad one; and in those ancient timeswould probably have been reckoned a very good one. But at half-a-crown the stone, which at this moment (February 1773) Iunderstand to be the common price, such a hide would at presentcost only ten shillings.

Though its nominal price, therefore, is higher in the presentthan it was in those ancient times, its real price, the real quantity



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of subsistence which it will purchase or command, is rathersomewhat lower. The price of cow hides, as stated in the aboveaccount, is nearly in the common proportion to that of ox hides.That of sheep skins is a good deal above it. They had probablybeen sold with the wool. That of calves skins, on the contrary, isgreatly 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 upthe stock, are generally killed very young; as was the case inScotland twenty or thirty years ago. It saves the milk, which theirprice would not pay for. Their skins, therefore, are commonlygood for little.

The price of raw hides is a good deal lower at present than itwas a few years ago, owing probably to the taking off the dutyupon sealskins, and to the allowing, for a limited time, theimportation of raw hides from Ireland and from the plantationsduty free, which was done in 1769. Take the whole of the presentcentury at an average, their real price has probably beensomewhat higher than it was in those ancient times. The nature ofthe commodity renders it not quite so proper for beingtransported to distant markets as wool. It suffers more by keeping.A salted hide is reckoned inferior to a fresh one, and sells for alower price. This circumstance must necessarily have sometendency to sink the price of raw hides produced in a countrywhich does not manufacture them, but is obliged to export them;and comparatively to raise that of those produced in a countrywhich does manufacture them. It must have some tendency tosink their price in a barbarous, and to raise it in an improved andmanufacturing country. It must have had some tendency,therefore, to sink it in ancient and to raise it in modern times. Our



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tanners, besides, have not been quite so successful as our clothiersin convincing the wisdom of the nation that the safety of thecommonwealth depends upon the prosperity of their particularmanufacture. They have accordingly been much less favoured.The exportation of raw hides has, indeed, been prohibited, anddeclared a nuisance; but their importation from foreign countrieshas been subjected to a duty; and though this duty has been takenoff from those of Ireland and the plantations (for the limited timeof five years only), yet Ireland has not been confined to the marketof Great Britain for the sale of its surplus hides, or of those whichare not manufactured at home. The hides of common cattle havebut within these few years been put among the enumeratedcommodities which the plantations can send nowhere but to themother country; neither has the commerce of Ireland been in thiscase oppressed hitherto in order to support the manufactures ofGreat Britain.

Whatever regulations tend to sink the price either of wool or ofraw hides below what it naturally would be must, in an improvedand cultivated country, have some tendency to raise the price ofbutcher’s meat. The price both of the great and small cattle, whichare fed on improved and cultivated land, must be sufficient to paythe rent which the landlord and the profit which the farmer hasreason 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 thecarcase. The less there is paid for the one, the more must be paidfor the other. In what manner this price is to be divided upon thedifferent parts of the beast is indifferent to the landlords andfarmers, provided it is all paid to them. In an improved and



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cultivated country, therefore, their interest as landlords andfarmers cannot be much affected by such regulations, though theirinterest as consumers may, by the rise in the price of provisions. Itwould be quite otherwise, however, in an unimproved anduncultivated country, where the greater part of the lands could beapplied to no other purpose but the feeding of cattle, and wherethe wool and the hide made the principal part of the value of thosecattle. Their interest as landlords and farmers would in this casebe very deeply affected by such regulations, and their interest asconsumers very little. The fall in the price of wool and the hidewould not in this case raise the price of the carcase, because thegreater part of the lands of the country being applicable to noother purpose but the feeding of cattle, the same number wouldstill continue to be fed. The same quantity of butcher’s meat wouldstill come to market. The demand for it would be no greater thanbefore. Its price, therefore, would be the same as before. Thewhole price of cattle would fall, and along with it both the rent andthe profit of all those lands of which cattle was the principalproduce, that is, of the greater part of the lands of the country. Theperpetual prohibition of the exportation of wool, which iscommonly, but very falsely, ascribed to Edward III, would, in thethen circumstances of the country, have been the most destructiveregulation which could well have been thought of. It would notonly have reduced the actual value of the greater part of the landsof the kingdom, but by reducing the price of the most importantspecies of small cattle it would have retarded very much itssubsequent improvement.

The wool of Scotland fell very considerably in its price inconsequence of the union with England, by which it was excluded



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from the great market of Europe, and confined to the narrow oneof Great Britain. The value of the greater part of the lands in thesouthern counties of Scotland, which are chiefly a sheep country,would have been very deeply affected by this event, had not therise in the price of butcher’s meat fully compensated the fall in theprice of wool.

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

In multiplying another very important sort of rude produce, thequantity of fish that is brought to market, it is likewise bothlimited and uncertain. It is limited by the local situation of thecountry, by the proximity or distance of its different provincesfrom the sea, by the number of its lakes and rivers, and by whatmay be called the fertility or barrenness of those seas, lakes, andrivers, as to this sort of rude produce. As population increases, asthe annual produce of the land and labour of the country growsgreater and greater, there come to be more buyers of fish, andthose buyers, too, have a greater quantity and variety of othergoods, or, what is the same thing, the price of a greater quantity



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and variety of other goods to buy with. But it will generally beimpossible to supply the great and extended market withoutemploying a quantity of labour greater than in proportion to whathad been requisite for supplying the narrow and confined one. Amarket which, from requiring only one thousand, comes to requireannually ten thousand tons of fish, can seldom be supplied withoutemploying more than ten times the quantity of labour which hadbefore been sufficient to supply it. The fish must generally befought for at a greater distance, larger vessels must be employed,and more expensive machinery of every kind made use of. Thereal price of this commodity, therefore, naturally rises in theprogress 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 veryuncertain matter, yet, the local situation of the country beingsupposed, the general efficacy of industry in bringing a certainquantity of fish to market, taking the course of a year, or of severalyears together, it may perhaps be thought is certain enough; and itno doubt is so. As it depends more, however, upon the localsituation of the country than upon the state of its wealth andindustry; as upon this account it may in different countries be thesame in very different periods of improvement, and very differentin the same period; its connection with the state of improvement isuncertain, and it is of this sort of uncertainty that I am herespeaking.

In increasing the quantity of the different minerals and metalswhich are drawn from the bowels of the earth, that of the moreprecious ones particularly, the efficacy of human industry seemsnot to be limited, but to be altogether uncertain.



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The quantity of the precious metals which is to be found in anycountry is not limited by anything in its local situation, such as thefertility or barrenness of its own mines. Those metals frequentlyabound in countries which possess no mines. Their quantity inevery particular country seems to depend upon two differentcircumstances; first, upon its power of purchasing, upon the stateof its industry, upon the annual produce of its land and labour, inconsequence of which it can afford to employ a greater or asmaller quantity of labour and subsistence in bringing orpurchasing such superfluities as gold and silver, either from itsown mines or from those of other countries; and, secondly, uponthe fertility or barrenness of the mines which may happen at anyparticular time to supply the commercial world with those metals.The quantity of those metals in the countries most remote fromthe mines must be more or less affected by this fertility orbarrenness, on account of the easy and cheap transportation ofthose metals, of their small bulk and great value. Their quantity inChina and Indostan must have been more or less affected by theabundance of the mines of America.

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

So far as their quantity in any particular country depends upon



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the latter of those two circumstances (the fertility or barrenness ofthe mines which happen to supply the commercial world), theirreal price, the real quantity of labour and subsistence which theywill purchase or exchange for, will, no doubt, sink more or less inproportion to the fertility, and rise in proportion to the barrennessof those mines.

The fertility or barrenness of the mines, however, which mayhappen at any particular time to supply the commercial world, is acircumstance which, it is evident, may have no sort of connectionwith the state of industry in a particular country. It seems even tohave no very necessary connection with that of the world ingeneral. As arts and commerce, indeed, gradually spreadthemselves over a greater and a greater part of the earth, thesearch for new mines, being extended over a wider surface, mayhave somewhat a better chance for being successful than whenconfined within narrower bounds. The discovery of new mines,however, as the old ones come to be gradually exhausted, is amatter of the greatest uncertainty, and such as no human skill orindustry can ensure. All indications, it is acknowledged, aredoubtful, and the actual discovery and successful working of a newmine can alone ascertain the reality of its value, or even of itsexistence. In this search there seem to be no certain limits eitherto the possible success or to the possible disappointment of humanindustry. In the course of a century or two, it is possible that newmines may be discovered more fertile than any that have ever yetbeen known; and it is just equally possible the most fertile minethen known may be more barren than any that was wroughtbefore the discovery of the mines of America. Whether the one orthe other of those two events may happen to take place is of very



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little importance to the real wealth and prosperity of the world, tothe real value of the annual produce of the land and labour ofmankind. Its nominal value, the quantity of gold and silver bywhich this annual produce could be expressed or represented,would, no doubt, be very different; but its real value, the realquantity of labour which it could purchase or command, would beprecisely the same. A shilling might in the one case represent nomore labour than a penny does at present; and a penny in theother might represent as much as a shilling does now. But in theone case he who had a shilling in his pocket would be no richerthan he who has a penny at present; and in the other he who had apenny would be just as rich as he who has a shilling now. Thecheapness and abundance of gold and silver plate would be thesole advantage which the world could derive from the one event,and the dearness and scarcity of those trifling superfluities theonly inconveniency it could suffer from the other.

CONCLUSION OF THE DIGRESSION CONCERNING THEVARIATIONS IN THE VALUE OF SILVER

The greater part of the writers who have collected the moneyprices of things in ancient times seem to have considered the lowmoney-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 scarcityof those metals, but of the poverty and barbarism of the country atthe time when it took place. This notion is connected with thesystem of political economy which represents national wealth asconsisting in the abundance, and national poverty in the scarcityof gold and silver; a system which I shall endeavour to explain andexamine at great length in the fourth book of this inquiry. I shall



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only observe at present that the high value of the precious metalscan be no proof of the poverty or barbarism of any particularcountry at the time when it took place. It is a proof only of thebarrenness of the mines which happened at that time to supplythe commercial world. A poor country, as it cannot afford to buymore, so it can as little afford to pay dearer for gold and silver thana rich one; and the value of those metals, therefore, is not likely tobe higher in the former than in the latter. In China, a countrymuch richer than any part of Europe, the value of the preciousmetals is much higher than in any part of Europe. As the wealth ofEurope, indeed, has increased greatly since the discovery of themines of America, so the value of gold and silver has graduallydiminished. This diminution of their value, however, has not beenowing to the increase of the real wealth of Europe, of the annualproduce of its land and labour, but to the accidental discovery ofmore abundant mines than any that were known before. Theincrease of the quantity of gold and silver in Europe, and theincrease of its manufactures and agriculture, are two eventswhich, though they have happened nearly about the same time,yet have arisen from very different causes, and have scarce anynatural connection with one another. The one has arisen from amere accident, in which neither prudence nor policy either had orcould have any share. The other from the fall of the feudal system,and from the establishment of a government which afforded toindustry the only encouragement which it requires, some tolerablesecurity that it shall enjoy the fruits of its own labour. Poland,where the feudal system still continues to take place, is at this dayas beggarly a country as it was before the discovery of America.The money price of corn, however, has risen; the real value of the



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precious metals has fallen in Poland, in the same manner as inother parts of Europe. Their quantity, therefore, must haveincreased there as in other places, and nearly in the sameproportion to the annual produce of its land and labour. Thisincrease of the quantity of those metals, however, has not, itseems, increased that annual produce, has neither improved themanufactures and agriculture of the country, nor mended thecircumstances of its inhabitants. Spain and Portugal, the countrieswhich possess the mines, are, after Poland, perhaps, the two mostbeggarly countries in Europe. The value of the precious metals,however, must be lower in Spain and Portugal than in any otherpart of Europe; as they come from those countries to all otherparts of Europe, loaded, not only with a freight and an insurance,but with the expense of smuggling, their exportation being eitherprohibited, or subjected to a duty. In proportion to the annualproduce of the land and labour, therefore, their quantity must begreater in those countries than in any other part of Europe. Thosecountries, however, are poorer than the greater part of Europe.Though the feudal system has been abolished in Spain andPortugal, it has not been succeeded by a much better.

As the low value of gold and silver, therefore, is no proof of thewealth and flourishing state of the country where it takes place; soneither is their high value, or the low money price either of goodsin general, or of corn in particular, any proof of its poverty andbarbarism.

But though the low money price either of goods in general, or ofcorn in particular, be no proof of the poverty or barbarism of thetimes, the low money price of some particular sorts of goods, suchas cattle, poultry, game of all kinds, etc., in proportion to that of



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corn, is a most decisive one. It clearly demonstrates, first, theirgreat abundance in proportion to that of corn, and consequentlythe great extent of the land which they occupied in proportion towhat was occupied by corn; and, secondly, the low value of thisland in proportion to that of corn land, and consequently theuncultivated and unimproved state of the far greater part of thelands of the country. It clearly demonstrates that the stock andpopulation of the country did not bear the same proportion to theextent of its territory which they commonly do in civilisedcountries, 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, orof corn in particular, we can infer only that the mines which atthat time happened to supply the commercial world with gold andsilver 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 inproportion to that of others, we can infer, with a degree ofprobability that approaches almost to certainty, that it was rich orpoor, that the greater part of its lands were improved orunimproved, and that it was either in a more or less barbarousstate, or in a more or less civilised one.

Any rise in the money price of goods which proceededaltogether from the degradation of the value of silver would affectall sorts of goods equally, and raise their price universally a third,or a fourth, or a fifth part higher, according as silver happened tolose a third, or a fourth, or a fifth part of its former value. But therise in the price of provisions, which has been the subject of somuch reasoning and conversation, does not affect all sorts ofprovisions equally. Taking the course of the present century at an



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average, the price of corn, it is acknowledged, even by those whoaccount for this rise by the degradation of the value of silver, hasrisen much less than that of some other sorts of provisions. Therise in the price of those other sorts of provisions, therefore,cannot be owing altogether to the degradation of the value ofsilver. Some other causes must be taken into the account, andthose which have been above assigned will, perhaps, withouthaving recourse to the supposed degradation of the value of silver,sufficiently explain this rise in those particular sorts of provisionsof 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 firstyears of the present century, and before the late extraordinarycourse of bad seasons, been somewhat lower than it was duringthe sixty-four last years of the preceding century. This fact isattested, not only by the accounts of Windsor market, but by thepublic fiars of all the different counties of Scotland, and by theaccounts of several different markets in France, which have beencollected with great diligence and fidelity by Mr. Messance and byMr. Dupré de St. Maur. The evidence is more complete than couldwell have been expected in a matter which is naturally so verydifficult to be ascertained.

As to the high price of corn during these last ten or twelveyears, it can be sufficiently accounted for from the badness of theseasons, without supposing any degradation in the value of silver.The opinion, therefore, that silver is continually sinking in itsvalue, seems not to be founded upon any good observations, eitherupon the prices of corn, or upon those of other provisions.

The same quantity of silver, it may, perhaps, be said, will in thepresent times, even according to the account which has been here



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given, purchase a much smaller quantity of several sorts ofprovisions than it would have done during some part of the lastcentury; and to ascertain whether this change be owing to a rise inthe value of those goods, or to a fall in the value of silver, is only toestablish a vain and useless distinction, which can be of no sort ofservice to the man who has only a certain quantity of silver to go tomarket with, or a certain fixed revenue in money. I certainly donot pretend that the knowledge of this distinction will enable himto buy cheaper. It may not, however, upon that account bealtogether useless.

It may be of some use to the public by affording an easy proof ofthe prosperous condition of the country. If the rise in the price ofsome sorts of provisions be owing altogether to a fall in the valueof silver, it is owing to a circumstance from which nothing can beinferred but the fertility of the American mines. The real wealth ofthe 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 mostother parts of Europe. But if this rise in the price of some sorts ofprovisions be owing to a rise in the real value of the land whichproduces them, to its increased fertility, or, in consequence ofmore extended improvement and good cultivation, to its havingbeen rendered fit for producing corn; it is owing to a circumstancewhich indicates in the clearest manner the prosperous andadvancing state of the country. The land constitutes by far thegreatest, the most important, and the most durable part of thewealth of every extensive country. It may surely be of some use,or, at least, it may give some satisfaction to the public, to have sodecisive a proof of the increasing value of by far the greatest, the



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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 theprice of some sorts of provisions be owing to a fall in the value ofsilver, their pecuniary reward, provided it was not too largebefore, ought certainly to be augmented in proportion to theextent of this fall. If it is not augmented, their real recompense willevidently be so much diminished. But if this rise of price is owingto the increased value, in consequence of the improved fertility ofthe land which produces such provisions, it becomes a much nicermatter to judge either in what proportion any pecuniary rewardought to be augmented, or whether it ought to be augmented atall. The extension of improvement and cultivation, as it necessarilyraises more or less, in proportion to the price of corn, that of everysort 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 renderedfit for producing corn, must afford to the landlord and farmer therent and profit of corn-land. It lowers the price of vegetable food;because, by increasing the fertility of the land, it increases itsabundance.

The improvements of agriculture, too, introduce many sorts ofvegetable food, which, requiring less land and not more labourthan corn, come much cheaper to market. Such are potatoes andmaize, or what is called Indian corn, the two most importantimprovements which the agriculture of Europe, perhaps, whichEurope itself has received from the great extension of itscommerce and navigation. Many sorts of vegetable food, besides,which in the rude state of agriculture are confined to the kitchen-



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garden, and raised only by the spade, come in its improved state tobe introduced into common fields, and to be raised by the plough:such as turnips, carrots, cabbages, etc. If in the progress ofimprovement, therefore, the real price of one species of foodnecessarily rises, that of another as necessarily falls, and itbecomes a matter of more nicety to judge how far the rise in theone 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 morethan a century ago), any rise which can afterwards happen in thatof any other sort of animal food cannot much affect thecircumstances of the inferior ranks of people. The circumstancesof the poor through a great part of England cannot surely be somuch 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 doubtdistresses the poor. But in times of moderate plenty, when corn isat its ordinary or average price, the natural rise in the price of anyother sort of rude produce cannot much affect them. They suffermore, perhaps, by the artificial rise which has been occasioned bytaxes in the price of some manufactured commodities; as of salt,soap, leather, candles, malt, beer, and ale, etc.

EFFECTS OF THE PROGRESS OF IMPROVEMENT UPONTHE REAL PRICE OF MANUFACTURES

It is the natural effect of improvement, however, to diminishgradually the real price of almost all manufactures. That of themanufacturing workmanship diminishes, perhaps, in all of them



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without exception. In consequence of better machinery, of greaterdexterity, and of a more proper division and distribution of work,all of which are the natural effects of improvement, a muchsmaller quantity of labour becomes requisite for executing anyparticular piece of work, and though, in consequence of theflourishing circumstances of the society, the real price of labourshould rise very considerably, yet the great diminution of thequantity will generally much more than compensate the greatestrise which can happen in the price.

There are, indeed, a few manufactures in which the necessaryrise in the real price of the rude materials will more thancompensate all the advantages which improvement can introduceinto the execution of the work. In carpenters’ and joiners’ work,and in the coarser sort of cabinet work, the necessary rise in thereal price of barren timber, in consequence of the improvement ofland, will more than compensate all the advantages which can bederived from the best machinery, the greatest dexterity, and themost proper division and distribution of work.

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

This diminution of price has, in the course of the present andpreceding century, been most remarkable in those manufacturesof which the materials are the coarser metals. A better movementof a watch, that about the middle of the last century could havebeen bought for twenty pounds, may now perhaps be had fortwenty shillings. In the work of cutlers and locksmiths, in all thetoys which are made of the coarser metals, and in all those goodswhich are commonly known by the name of Birmingham and



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Sheffield ware, there has been, during the same period, a verygreat reduction of price, though not altogether so great as inwatch-work. It has, however, been sufficient to astonish theworkmen of every other part of Europe, who in many casesacknowledge that they can produce no work of equal goodness fordouble, or even for triple the price. There are perhaps nomanufactures in which the division of labour can be carriedfurther, or in which the machinery employed admits of a greatervariety of improvements, than those of which the materials are thecoarser metals.

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

But the reduction will appear much more sensible andundeniable if we compare the price of this manufacture in thepresent times with what it was in a much remoter period, towardsthe end of the fifteenth century, when the labour was probably



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much less subdivided, and the machinery employed much moreimperfect, 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 scarletgrained, or of other grained cloth of the finest making, abovesixteen shillings, shall forfeit forty shillings for every yard so sold.”Sixteen shillings, therefore, containing about the same quantity ofsilver as four-and-twenty shillings of our present money, was, atthat time, reckoned not an unreasonable price for a yard of thefinest cloth; and as this is a sumptuary law, such cloth, it isprobable, had usually been sold somewhat dearer. A guinea maybe reckoned the highest price in the present times. Even thoughthe quality of the cloths, therefore, should be supposed equal, andthat of the present times is most probably much superior, yet, evenupon this supposition, the money price of the finest cloth appearsto have been considerably reduced since the end of the fifteenthcentury. But its real price has been much more reduced. Sixshillings and eightpence was then, and long afterwards, reckonedthe average price of a quarter of wheat. Sixteen shillings,therefore, was the price of two quarters and more than threebushels of wheat. Valuing a quarter of wheat in the present timesat eight-and-twenty shillings, the real price of a yard of fine clothmust, in those times, have been equal to at least three pounds sixshillings and sixpence of our present money. The man who boughtit must have parted with the command of a quantity of labour andsubsistence equal to what that sum would purchase in the presenttimes.

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



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In 1643, being the 3rd of Edward IV, it was enacted that “noservant in husbandry, nor common labourer, nor servant to anyartificer inhabiting out of a city or burgh shall use or wear in theirclothing any cloth above two shillings the broad yard.” In the 3rdof Edward IV, two shillings contained very nearly the samequantity of silver as four of our present money. But the Yorkshirecloth which is now sold at four shillings the yard is probably muchsuperior to any that was then made for the wearing of the verypoorest order of common servants. Even the money price of theirclothing, therefore, may, in proportion to the quality, be somewhatcheaper in the present than it was in those ancient times. The realprice is certainly a good deal cheaper. Tenpence was thenreckoned what is called the moderate and reasonable price of abushel of wheat. Two shillings, therefore, was the price of twobushels and near two pecks of wheat, which in the present times,at three shillings and sixpence the bushel, would be worth eightshillings and ninepence. For a yard of this cloth the poor servantmust have parted with the power of purchasing a quantity ofsubsistence equal to what eight shillings and ninepence wouldpurchase in the present times. This is a sumptuary law too,restraining the luxury and extravagance of the poor. Theirclothing, therefore, had commonly been much more expensive.

The same order of people are, by the same law, prohibited fromwearing hose, of which the price should exceed fourteenpence thepair, equal to about eight-and-twentypence of our present money.But fourteenpence was in those times the price of a bushel andnear two pecks of wheat, which, in the present times, at three andsixpence the bushel, would cost five shillings and threepence. Weshould in the present times consider this as a very high price for a



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pair of stockings, to a servant of the poorest and lowest order. Hemust, however, in those times have paid what was reallyequivalent to this price for them.

In the time of Edward IV the art of knitting stockings wasprobably not known in any part of Europe. Their hose were madeof common cloth, which may have been one of the causes of theirdearness. The first person that wore stockings in England is saidto have been Queen Elizabeth. She received them as a presentfrom the Spanish ambassador.

Both in the coarse and in the fine woollen manufacture, themachinery employed was much more imperfect in those ancientthan it is in the present times. It has since received three verycapital improvements, besides, probably, many smaller ones ofwhich it may be difficult to ascertain either the number or theimportance.

The three capital improvements are: first, the exchange of therock and spindle for the spinning-wheel, which, with the samequantity of labour, will perform more than double the quantity ofwork. Secondly, the use of several very ingenious machines whichfacilitate and abridge in a still greater proportion the winding ofthe worsted and woollen yarn, or the proper arrangement of thewarp and woof before they are put into the loom; an operationwhich, previous to the invention of those machines, must havebeen extremely tedious and troublesome. Thirdly, theemployment of the fulling mill for thickening the cloth, instead oftreading it in water. Neither wind nor water mills of any kind wereknown in England so early as the beginning of the sixteenthcentury, nor, so far as I know, in any other part of Europe north ofthe Alps. They had been introduced into Italy some time before.



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

The coarse manufacture probably was, in those ancient times,carried on in England, in the same manner as it always has beenin countries where arts and manufactures are in their infancy. Itwas probably a household manufacture, in which every differentpart of the work was occasionally performed by all the differentmembers of almost every private family; but so as to be their workonly when they had nothing else to do, and not to be the principalbusiness from which any of them derived the greater part of theirsubsistence. The work which is performed in this manner, it hasalready been observed, comes always much cheaper to marketthan that which is the principal or sole fund of the workman’ssubsistence. The fine manufacture, on the other hand, was not inthose times carried on in England, but in the rich and commercialcountry of Flanders; and it was probably conducted then, in thesame manner as now, by people who derived the whole, or theprincipal part of their subsistence from it. It was, besides, a foreignmanufacture, and must have paid some duty, the ancient customof tonnage and poundage at least, to the king. This duty, indeed,would not probably be very great. It was not then the policy ofEurope to restrain, by high duties, the importation of foreignmanufactures, but rather to encourage it, in order that merchantsmight be enabled to supply, at as easy a rate as possible, the great



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men with the conveniences and luxuries which they wanted, andwhich the industry of their own country could not afford them.

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

CONCLUSION OF THE CHAPTERI shall conclude this very long chapter with observing that everyimprovement in the circumstances of the society tends eitherdirectly or indirectly to raise the real rent of land, to increase thereal wealth of the landlord, his power of purchasing the labour, orthe produce of the labour of other people.

The extension of improvement and cultivation tends to raise itdirectly. The landlord’s share of the produce necessarily increaseswith the increase of the produce.

That rise in the real price of those parts of the rude produce ofland, which is first the effect of extended improvement andcultivation, and afterwards the cause of their being still furtherextended, the rise in the price of cattle, for example, tends too toraise the rent of land directly, and in a still greater proportion. Thereal value of the landlord’s share, his real command of the labourof 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 morelabour to collect it than before. A smaller proportion of it will,therefore, be sufficient to replace, with the ordinary profit, thestock which employs that labour. A greater proportion of it must,consequently, belong to the landlord.



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All those improvements in the productive powers of labour,which tend directly to reduce the real price of manufactures, tendindirectly to raise the real rent of land. The landlord exchangesthat part of his rude produce, which is over and above his ownconsumption, or what comes to the same thing, the price of thatpart of it, for manufactured produce. Whatever reduces the realprice of the latter, raises that of the former. An equal quantity ofthe former becomes thereby equivalent to a greater quantity of thelatter; and the landlord is enabled to purchase a greater quantityof the conveniences, ornaments, or luxuries, which he hasoccasion for.

Every increase in the real wealth of the society, every increasein the quantity of useful labour employed within it, tendsindirectly to raise the real rent of land. A certain proportion of thislabour naturally goes to the land. A greater number of men andcattle are employed in its cultivation, the produce increases withthe increase of the stock which is thus employed in raising it, andthe rent increases with the produce.

The contrary circumstances, the neglect of cultivation andimprovement, the fall in the real price of any part of the rudeproduce of land, the rise in the real price of manufactures from thedecay of manufacturing art and industry, the declension of the realwealth of the society, all tend, on the other hand, to lower the realrent of land, to reduce the real wealth of the landlord, to diminishhis power of purchasing either the labour, or the produce of thelabour of other people.

The whole annual produce of the land and labour of everycountry, or what comes to the same thing, the whole price of thatannual produce, naturally divides itself, it has already been



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observed, into three parts; the rent of land, the wages of labour,and the profits of stock; and constitutes a revenue to threedifferent orders of people; to those who live by rent, to those wholive by wages, and to those who live by profit. These are the threegreat, original, and constituent orders of every civilised society,from whose revenue that of every other order is ultimatelyderived.

The interest of the first of those three great orders, it appearsfrom what has been just now said, is strictly and inseparablyconnected with the general interest of the society. Whatever eitherpromotes or obstructs the one, necessarily promotes or obstructsthe other. When the public deliberates concerning any regulationof commerce or police, the proprietors of land never can misleadit, with a view to promote the interest of their own particularorder; at least, if they have any tolerable knowledge of thatinterest. They are, indeed, too often defective in this tolerableknowledge. They are the only one of the three orders whoserevenue costs them neither labour nor care, but comes to them, asit were, of its own accord, and independent of any plan or projectof their own. That indolence, which is the natural effect of the easeand security of their situation, renders them too often, not onlyignorant, but incapable of that application of mind which isnecessary in order to foresee and understand the consequences ofany public regulation.

The interest of the second order, that of those who live bywages, is as strictly connected with the interest of the society asthat of the first. The wages of the labourer, it has already beenshown, are never so high as when the demand for labour iscontinually rising, or when the quantity employed is every year



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increasing considerably. When this real wealth of the societybecomes stationary, his wages are soon reduced to what is barelyenough to enable him to bring up a family, or to continue the raceof labourers. When the society declines, they fall even below this.The order of proprietors may, perhaps, gain more by theprosperity of the society than that of labourers: but there is noorder that suffers so cruelly from its decline. But though theinterest of the labourer is strictly connected with that of thesociety, he is incapable either of comprehending that interest or ofunderstanding its connection with his own. His condition leaveshim no time to receive the necessary information, and hiseducation and habits are commonly such as to render him unfit tojudge even though he was fully informed. In the publicdeliberations, therefore, his voice is little heard and less regarded,except upon some particular occasions, when his clamour isanimated, set on and supported by his employers, not for his, buttheir own particular purposes.

His employers constitute the third order, that of those who liveby profit. It is the stock that is employed for the sake of profitwhich puts into motion the greater part of the useful labour ofevery society. The plans and projects of the employers of stockregulate and direct all the most important operations of labour,and profit is the end proposed by all those plans and projects. Butthe rate of profit does not, like rent and wages, rise with theprosperity and fall with the declension of the society. On thecontrary, it is naturally low in rich and high in poor countries, andit is always highest in the countries which are going fastest to ruin.The interest of this third order, therefore, has not the sameconnection with the general interest of the society as that of the



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other two. Merchants and master manufacturers are, in this order,the two classes of people who commonly employ the largestcapitals, and who by their wealth draw to themselves the greatestshare of the public consideration. As during their whole lives theyare engaged in plans and projects, they have frequently moreacuteness of understanding than the greater part of countrygentlemen. As their thoughts, however, are commonly exercisedrather about the interest of their own particular branch ofbusiness, than about that of the society, their judgment, evenwhen given with the greatest candour (which it has not been uponevery occasion) is much more to be depended upon with regard tothe former of those two objects than with regard to the latter.

Their superiority over the country gentleman is not so much intheir knowledge of the public interest, as in their having a betterknowledge of their own interest than he has of his. It is by thissuperior knowledge of their own interest that they have frequentlyimposed upon his generosity, and persuaded him to give up bothhis own interest and that of the public, from a very simple buthonest conviction that their interest, and not his, was the interestof the public. The interest of the dealers, however, in anyparticular branch of trade or manufactures, is always in somerespects different from, and even opposite to, that of the public. Towiden the market and to narrow the competition, is always theinterest of the dealers. To widen the market may frequently beagreeable enough to the interest of the public; but to narrow thecompetition must always be against it, and can serve only toenable the dealers, by raising their profits above what theynaturally would be, to levy, for their own benefit, an absurd taxupon the rest of their fellow-citizens. The proposal of any new law



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or regulation of commerce which comes from this order oughtalways to be listened to with great precaution, and ought never tobe adopted till after having been long and carefully examined, notonly with the most scrupulous, but with the most suspiciousattention.

It comes from an order of men whose interest is never exactlythe same with that of the public, who have generally an interest todeceive and even to oppress the public, and who accordingly have,upon many occasions, both deceived and oppressed it.



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Tables Referred to in Chapter 11, Part 3

Years XII Price of theQuarter of Wheat

each Year

Average of thedifferent Prices of

the same Year

The average Priceof each Year inMoney of the

present Times£ s. d. £. s. d. £. s. d.

1202 – 12 – – – – 1 16 –1205 – 12 –

“ – 13 4 – 13 5 2 – 3“ – 15 –

1223 – 12 – – – – 1 16 –1237 – 3 4 – – – – 10 –1243 – 2 – – – – – 6 –1244 – 2 – – – – – 6 –1246 – 16 – – – – 2 8 –1247 – 13 4 – – – 2 – –1257 1 4 – – – – 3 12 –1258 1 – –

“ – 15 – – 17 – 2 11 – “ – 16 –

1270 4 16 – 5 12 – 16 16 –“ 6 8 –

1286“ – 16 – – 9 4 1 8 –

Total £35 9 3 Average Price £2 19 11/4



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each Year


the same Year



1287 – 3 4 – – – – 10 – 1288 – – 8

“ – 1 – “ – 1 4“ – 1 6 “ – 1 8 “ – 2 – “ – 3 4 “ – 9 4 – 3 –1/4 – 9 –3/4

1289 – 12 – “ – 6 –“ – 2 – “ – 10 8 “ 1 – – – 10 13/4 1 10 41/2

1290 – 16 – – – – 2 8 –1294 – 16 – – – – 2 8 –1302 – 4 – – – – – 12 –1309 – 7 2 – – – 1 1 61315 1 – – – – – 3 – –1316 1 – –

1 – –1 10 –1 12 –2 – – 1 10 6 4 11 6

1317 2 4 –– 14 –2 13 –4 – –– 6 8 1 19 6 5 18 6

1336 – 2 – – – – – 6 –1338 – 3 4 – – – – 10 –

Total £23 4 111/4Average Price £1 18 8



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each Year


the same Year



1339 – 9 – – – – 1 7 –1349 – 2 – – – – – 5 21359 1 6 8 – – – 3 2 21361 – 2 – – – – – 4 81363 – 15 – – – – 1 15 –1369 1 – –

1 4 – 1 2 – 2 9 41379 – 4 – – – – – 9 41387 – 2 – – – – – 4 81390 – 13 4

– 14 –– 16 – – 14 5 1 13 7

1401 – 16 – – – – 1 17 41407 – 4 43/4 – 3 10 – 8 11

– 3 4 – 3 10 – 8 111416 – 16 – – – – 1 12 –

Total £15 9 4Average Price £1 5 91/3



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each Year


the same Year



1423 – 8 – – – – – 16 –1425 – 4 – – – – – 8 –1434 1 6 8 – – – 2 13 41435 – 5 4 – – – – 10 81439 1 – –

1 6 8 1 3 4 2 6 81440 1 4 – – – – 2 8 –1444 – 4 4

– 4 – – 4 2 – 8 41445 – 4 6 – – – – 9 –1447 – 8 – – – – – 16 –1448 – 6 8 – – – – 13 41449 – 5 – – – – – 10 –1452 – 8 – – – – – 16 –


1453 – 5 4 – – – – 10 81455 – 1 2 – – – – 2 41457 – 7 8 – – – – 15 41459 – 5 – – – – – 10 –1460 – 8 – – – – – 16 –1463 – 2 –– 1 8 – 1 10 – 3 81464 – 6 8 – – – – 10 –1486 1 4 – – – – 1 17 –1491 – 14 8 – – – 1 2 –1494 – 4 – – – – – 6 –1495 – 3 4 – – – – 5 –

1497 1 – – – – – 1 11 –

Total £8 9 –Average Price – 14 1



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each Year


the same Year



1499 – 4 – – – – – 6 –1504 – 5 8 – – – – 8 61521 1 – – – – – 1 10 –1551 – 8 – – – – – 2 –1553 – 8 – – – – – 8 –1554 – 8 – – – – – 8 –1555 – 8 – – – – – 8 –1556 – 8 – – – – – 8 –1557 – 4 –

– 5 –– 8 –

2 13 4 – 17 81/2 – 17 81/21558 – 8 – – – – – 8 –1559 – 8 – – – – – 8 –1560 – 8 – – – – – 8 –

Total £6 0 21/2Average Price – 10 –5/12

1561 – 8 – – – – – 8 –1562 – 8 – – – – – 8 –1574 2 16 –

1 4 – 2 – – 2 – –1587 3 4 – – – – 3 4 –1594 2 16 – – – – 2 16 –1595 2 13 – – – – 2 13 –1596 4 – – – – – 4 – –1597 5 4 –

4 – – 4 12 – 4 12 –1598 2 16 8 – – – 2 16 81599 1 19 2 – – – 1 19 21600 1 17 8 – – – 1 17 81601 1 14 10 – – – 1 14 10




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Prices of the Quarter of nine Bushels of the best or highest pricedWheat at Windsor Market, on Lady–day and Michaelmas, from

1595 to 1764, both inclusive; the Price of each Year being themedium between the highest Prices of those Two Market Days.

Years £. s. d. Years £. s. d.1595 – 2 0 0 1621 – 1 10 41596 – 2 8 0 1622 – 2 18 81597 – 3 9 6 1623 – 2 12 01598 – 2 16 8 1624 – 2 8 01599 – 1 19 2 1625 – 2 12 01600 – 1 17 8 1626 – 2 9 41601 – 1 14 10 1627 – 1 16 01602 – 1 9 4 1628 – 1 8 01603 – 1 15 4 1629 – 2 2 01604 – 1 10 8 1630 – 2 15 81605 – 1 15 10 1631 – 3 8 01606 – 1 13 0 1632 – 2 13 41607 – 1 16 8 1633 – 2 18 01608 – 2 16 8 1634 – 2 16 01609 – 2 10 0 1635 – 2 16 01610 – 1 15 10 1636 – 2 16 81611 – 1 18 8 16) 40 0 01612 – 2 2 4 £2 10 01613 – 2 8 81614 – 2 1 81/21615 – 1 18 81616 – 2 0 41617 – 2 8 81618 – 2 6 81619 – 1 15 41620 – 1 10 4

26) 54 0 61/2£2 1 69/12



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Years Wheat per quarter Years Wheat per quarter£. s. d. £. s. d.

1637 – 2 13 0 Broughtover

79 14 10

1638 – 2 17 4 1671 – 2 2 01639 – 2 4 10 1672 – 2 1 01640 – 2 4 8 1673 – 2 6 81641 – 2 8 0 1674 – 3 8 81642 – 0 0 0* 1675 – 3 4 81643 – 0 0 0 1676 – 1 18 01644 – 0 0 0 1677 – 2 2 01645 – 0 0 0 1678 – 2 19 01646 – 2 8 0 1679 – 3 0 01647 – 3 13 8 1680 – 2 5 01648 – 4 5 0 1681 – 2 6 81649 – 4 0 0 1682 – 2 4 01650 – 3 16 8 1683 – 2 0 01651 – 3 13 4 1684 – 2 4 01652 – 2 9 6 1685 – 2 6 81653 – 1 15 6 1686 – 1 14 01654 – 1 6 0 1687 – 1 5 21655 – 1 13 4 1688 – 2 6 01656 – 2 3 0 1689 – 1 10 01657 – 2 6 8 1690 – 1 14 81658 – 3 5 0 1691 – 1 14 01659 – 3 6 0 1692 – 2 6 81660 – 2 16 6 1693 – 3 7 81661 – 3 10 0 1694 – 3 4 01662 – 3 14 0 1695 – 2 13 01663 – 2 17 0 1696 – 3 11 01664 – 2 0 6 1697 – 3 0 01665 – 2 9 4 1698 – 3 8 41666 – 1 16 0 1699 – 3 4 01667 – 1 16 0 1700 – 2 0 01668 – 2 0 0 60) 153 1 81669 – 2 4 4 £2 11 01/31670 – 2 1 8

Carry over £79 14 10

* Wanting in the account. The year 1646 supplied by Bishop Fleetwood.



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1701 – 1 17 8 Broughtover

69 8 8

1702 – 1 9 6 1734 – 1 18 101703 – 1 16 0 1735 – 2 3 01704 – 2 6 6 1736 – 2 0 41705 – 1 10 0 1737 – 1 18 01706 – 1 6 0 1738 – 1 15 61707 – 1 8 6 1739 – 1 18 61708 – 2 1 6 1740 – 2 10 81709 – 3 18 6 1741 – 2 6 81710 – 3 18 0 1742 – 1 14 01711 – 2 14 0 1743 – 1 4 101712 – 2 6 4 1744 – 1 4 101713 – 2 11 0 1745 – 1 7 61714 – 2 10 4 1746 – 1 19 01715 – 2 3 0 1747 – 1 14 101716 – 2 8 0 1748 – 1 17 01717 – 2 5 8 1749 – 1 17 01718 – 1 18 10 1750 – 1 12 61719 – 1 15 0 1751 – 1 18 61720 – 1 17 0 1752 – 2 1 101721 – 1 17 6 1753 – 2 4 81722 – 1 16 0 1754 – 1 14 81723 – 1 14 8 1755 – 1 13 101724 – 1 17 0 1756 – 2 5 31725 – 2 8 6 1757 – 3 0 01726 – 2 6 0 1758 – 2 10 01727 – 2 2 0 1759 – 1 19 101728 – 2 14 6 1760 – 1 16 61729 – 2 6 10 1761 – 1 10 31730 – 1 16 6 1762 – 1 19 01731 – 1 12 10 1763 – 2 0 91732 – 1 6 8 1764 – 2 6 91733 – 1 8 4 64) 129 13 6

Carry over £69 8 8 £2 0 69/32



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1731 – 1 12 10 1741 – 2 6 81732 – 1 6 8 1742 – 1 14 01733 – 1 8 4 1743 – 1 4 101734 – 1 18 10 1744 – 1 4 101735 – 2 3 0 1745 – 1 7 61736 – 2 0 4 1746 – 1 19 01737 – 1 18 0 1747 – 1 14 101738 – 1 15 6 1748 – 1 17 01739 – 1 18 6 1749 – 1 17 01740 – 2 10 8 1750 – 1 12 6

10) 18 12 8 10) 16 18 2£1 17 31/5 £1 13 94/5

Book Two

Of the Nature,Accumulation, and

Employment ofStock



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Introduction

n that rude state of society in which there is no division oflabour, in which exchanges are seldom made, and in whichevery man provides everything for himself, it is not necessary

that any stock should be accumulated or stored up beforehand inorder to carry on the business of the society. Every manendeavours to supply by his own industry his own occasionalwants as they occur. When he is hungry, he goes to the forest tohunt; when his coat is worn out, he clothes himself with the skin ofthe first large animal he kills: and when his hut begins to go toruin, he repairs it, as well as he can, with the trees and the turfthat are nearest it.

But when the division of labour has once been thoroughlyintroduced, the produce of a man’s own labour can supply but avery small part of his occasional wants. The far greater part ofthem are supplied by the produce of other men’s labour, which hepurchases with the produce, or, what is the same thing, with theprice of the produce of his own. But this purchase cannot be madetill such time as the produce of his own labour has not only beencompleted, but sold. A stock of goods of different kinds, therefore,must be stored up somewhere sufficient to maintain him, and tosupply him with the materials and tools of his work till such time,at least, as both these events can be brought about. A weavercannot apply himself entirely to his peculiar business, unless thereis beforehand stored up somewhere, either in his own possessionor 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

I



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has not only completed, but sold his web. This accumulation must,evidently, be previous to his applying his industry for so long atime to such a peculiar business.

As the accumulation of stock must, in the nature of things, beprevious to the division of labour, so labour can be more and moresubdivided in proportion only as stock is previously more andmore accumulated. The quantity of materials which the samenumber of people can work up, increases in a great proportion aslabour comes to be more and more subdivided; and as theoperations of each workman are gradually reduced to a greaterdegree of simplicity, a variety of new machines come to beinvented for facilitating and abridging those operations. As thedivision of labour advances, therefore, in order to give constantemployment to an equal number of workmen, an equal stock ofprovisions, and a greater stock of materials and tools than whatwould have been necessary in a ruder state of things, must beaccumulated beforehand. But the number of workmen in everybranch of business generally increases with the division of labourin that branch, or rather it is the increase of their number whichenables them to class and subdivide themselves in this manner.

As the accumulation of stock is previously necessary forcarrying on this great improvement in the productive powers oflabour, 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 asgreat a quantity of work as possible. He endeavours, therefore,both to make among his workmen the most proper distribution ofemployment, and to furnish them with the best machines which hecan either invent or afford to purchase. His abilities in both these



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respects are generally in proportion to the extent of his stock, or tothe number of people whom it can employ. The quantity ofindustry, therefore, not only increases in every country with theincrease of the stock which employs it, but, in consequence of thatincrease, the same quantity of industry produces a much greaterquantity of work.

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

In the following book I have endeavoured to explain the natureof stock, the effects of its accumulation into capitals of differentkinds, and the effects of the different employments of thosecapitals. This book is divided into five chapters. In the firstchapter, I have endeavoured to show what are the different partsor branches into which the stock, either of an individual, or of agreat society, naturally divides itself. In the second, I haveendeavoured to explain the nature and operation of moneyconsidered as a particular branch of the general stock of thesociety. The stock which is accumulated into a capital, may eitherbe employed by the person to whom it belongs, or it may be lent tosome other person. In the third and fourth chapters, I haveendeavoured to examine the manner in which it operates in boththese situations. The fifth and last chapter treats of the differenteffects which the different employments of capital immediatelyproduce upon the quantity both of national industry, and of theannual produce of land and labour.



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Chapter I

Of the Division of Stock

hen the stock which a man possesses is no more thansufficient 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 labourto acquire something which may supply its place before it beconsumed altogether. His revenue is, in this case, derived from hislabour only. This is the state of the greater part of the labouringpoor in all countries.

But when he possesses stock sufficient to maintain him formonths or years, he naturally endeavours to derive a revenue fromthe greater part of it; reserving only so much for his immediateconsumption as may maintain him till this revenue begins to comein.

His whole stock, therefore, is distinguished into two parts. Thatpart which, he expects, is to afford him this revenue, is called hiscapital. The other is that which supplies his immediateconsumption; and which consists either, first, in that portion of hiswhole stock which was originally reserved for this purpose; or,secondly, in his revenue, from whatever source derived, as itgradually comes in; or, thirdly, in such things as had beenpurchased by either of these in former years, and which are notyet entirely consumed; such as a stock of clothes, householdfurniture, and the like. In one, or other, or all of these threearticles, consists the stock which men commonly reserve for their

W



364

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 capitalemployed in this manner yields no revenue or profit to itsemployer, while it either remains in his possession, or continues inthe same shape. The goods of the merchant yield him no revenueor profit till he sells them for money, and the money yields him aslittle till it is again exchanged for goods. His capital is continuallygoing from him in one shape, and returning to him in another, andit is only by means of such circulation, or successive exchanges,that it can yield him any profit. Such capitals, therefore, may veryproperly be called circulating capitals.

Secondly, it may be employed in the improvement of land, inthe purchase of useful machines and instruments of trade, or insuchlike things as yield a revenue or profit without changingmasters, or circulating any further. Such capitals, therefore, mayvery properly be called fixed capitals.

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

The capital of a merchant, for example, is altogether acirculating capital. He has occasion for no machines orinstruments of trade, unless his shop, or warehouse, be consideredas such.

Some part of the capital of every master artificer ormanufacturer must be fixed in the instruments of his trade. Thispart, however, is very small in some, and very great in others. Amaster tailor requires no other instruments of trade but a parcel of



365

needles. Those of the master shoemaker are a little, though but avery little, more expensive. Those of the weaver rise a good dealabove those of the shoemaker. The far greater part of the capital ofall such master artificers, however, is circulated, either in thewages of their workmen, or in the price of their materials, andrepaid with a profit by the price of the work.

In other works a much greater fixed capital is required. In agreat iron-work, for example, the furnace for melting the ore, theforge, the slitt-mill, are instruments of trade which cannot beerected without a very great expense. In coal-works and mines ofevery kind, the machinery necessary both for drawing out thewater and for other purposes is frequently still more expensive.

That part of the capital of the farmer which is employed in theinstruments of agriculture is a fixed, that which is employed in thewages and maintenance of his labouring servants, is a circulatingcapital. He makes a profit of the one by keeping it in his ownpossession, and of the other by parting with it. The price or valueof his labouring cattle is a fixed capital in the same manner as thatof the instruments of husbandry. Their maintenance is acirculating capital in the same manner as that of the labouringservants. The farmer makes his profit by keeping the labouringcattle, and by parting with their maintenance. Both the price andthe maintenance of the cattle which are brought in and fattened,not for labour, but for sale, are a circulating capital. The farmermakes his profit by parting with them. A flock of sheep or a herd ofcattle that, in a breeding country, is bought in, neither for labour,nor for sale, but in order to make a profit by their wool, by theirmilk, and by their increase, is a fixed capital. The profit is made bykeeping them. Their maintenance is a circulating capital. The



366

profit is made by parting with it; and it comes back with both itsown profit and the profit upon the whole price of the cattle, in theprice of the wool, the milk, and the increase. The whole value ofthe seed, too, is properly a fixed capital. Though it goes backwardsand forwards between the ground and the granary, it neverchanges masters, and therefore does not properly circulate. Thefarmer makes his profit, not by its sale, but by its increase.

The general stock of any country or society is the same withthat of all its inhabitants or members, and therefore naturallydivides itself into the same three portions, each of which has adistinct function or office.

The first is that portion which is reserved for immediateconsumption, and of which the characteristic is, that it affords norevenue or profit. It consists in the stock of food, clothes,household furniture, etc., which have been purchased by theirproper consumers, but which are not yet entirely consumed. Thewhole stock of mere dwelling-houses too, subsisting at any onetime in the country, make a part of this first portion. The stockthat is laid out in a house, if it is to be the dwelling-house of theproprietor, ceases from that moment to serve in the function of acapital, or to afford any revenue to its owner. A dwelling-house, assuch, contributes nothing to the revenue of its inhabitant; andthough it is, no doubt, extremely useful to him, it is as his clothesand household furniture are useful to him, which, however, makesa part of his expense, and not of his revenue. If it is to be let to atenant for rent, as the house itself can produce nothing, the tenantmust always pay the rent out of some other revenue which hederives either from labour, or stock, or land. Though a house,therefore, may yield a revenue to its proprietor, and thereby serve



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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 thewhole body of the people can never be in the smallest degreeincreased by it. Clothes, and household furniture, in the samemanner, sometimes yield a revenue, and thereby serve in thefunction of a capital to particular persons. In countries wheremasquerades are common, it is a trade to let out masqueradedresses for a night. Upholsterers frequently let furniture by themonth or by the year. Undertakers let the furniture of funerals bythe day and by the week. Many people let furnished houses, andget a rent, not only for the use of the house, but for that of thefurniture. The revenue, however, which is derived from suchthings must always be ultimately drawn from some other source ofrevenue. Of all parts of the stock, either of an individual, or of asociety, reserved for immediate consumption, what is laid out inhouses is most slowly consumed. A stock of clothes may lastseveral years: a stock of furniture half a century or a century: but astock of houses, well built and properly taken care of, may lastmany centuries. Though the period of their total consumption,however, is more distant, they are still as really a stock reservedfor immediate consumption as either clothes or householdfurniture.

The second of the three portions into which the general stock ofthe society divides itself, is the fixed capital, of which thecharacteristic is, that it affords a revenue or profit withoutcirculating or changing masters. It consists chiefly of the fourfollowing articles:

First, of all useful machines and instruments of trade whichfacilitate and abridge labour:



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Secondly, of all those profitable buildings which are the meansof procuring a revenue, not only to their proprietor who lets themfor a rent, but to the person who possesses them and pays thatrent for them; such as shops, warehouses, workhouses,farmhouses, with all their necessary buildings; stables, granaries,etc. These are very different from mere dwelling houses. They area sort of instruments of trade, and may be considered in the samelight:

Thirdly, of the improvements of land, of what has beenprofitably laid out in clearing, draining, enclosing, manuring, andreducing it into the condition most proper for tillage and culture.An improved farm may very justly be regarded in the same light asthose useful machines which facilitate and abridge labour, and bymeans of which an equal circulating capital can afford a muchgreater revenue to its employer. An improved farm is equallyadvantageous and more durable than any of those machines,frequently requiring no other repairs than the most profitableapplication of the farmer’s capital employed in cultivating it:

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

The third and last of the three portions into which the general



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stock of the society naturally divides itself, is the circulatingcapital; of which the characteristic is, that it affords a revenue onlyby circulating or changing masters. It is composed likewise of fourparts: First, of the money by means of which all the other three arecirculated and distributed to their proper consumers: Secondly, ofthe stock of provisions which are in the possession of the butcher,the grazier, the farmer, the corn-merchant, the brewer, etc., andfrom the sale of which they expect to derive a profit: Thirdly, ofthe materials, whether altogether rude, or more or lessmanufactured, of clothes, furniture, and building, which are notyet made up into any of those three shapes, but which remain inthe hands of the growers, the manufacturers, the mercers anddrapers, the timber merchants, the carpenters and joiners, thebrickmakers, etc.

Fourthly, and lastly, of the work which is made up andcompleted, but which is still in the hands of the merchant ormanufacturer, and not yet disposed of or distributed to the properconsumers; such as the finished work which we frequently findready-made in the shops of the smith, the cabinet-maker, thegoldsmith, the jeweller, the china-merchant, etc. The circulatingcapital consists in this manner, of the provisions, materials, andfinished work of all kinds that are in the hands of their respectivedealers, and of the money that is necessary for circulating anddistributing them to those who are finally to use or to consumethem.

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



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Every fixed capital is both originally derived from, and requiresto be continually supported by a circulating capital. All usefulmachines and instruments of trade are originally derived from acirculating capital, which furnishes the materials of which they aremade, and the maintenance of the workmen who make them.They require, too, a capital of the same kind to keep them inconstant repair.

No fixed capital can yield any revenue but by means of acirculating capital. The most useful machines and instruments oftrade will produce nothing without the circulating capital whichaffords the materials they are employed upon, and themaintenance of the workmen who employ them. Land, howeverimproved, will yield no revenue without a circulating capital,which maintains the labourers who cultivate and collect itsproduce.

To maintain and augment the stock which may be reserved forimmediate consumption is the sole end and purpose both of thefixed and circulating capitals. It is this stock which feeds, clothes,and lodges the people. Their riches or poverty depends upon theabundant or sparing supplies which those two capitals can affordto the stock reserved for immediate consumption.

So great a part of the circulating capital being continuallywithdrawn from it, in order to be placed in the other two branchesof the general stock of the society; it must in its turn requirecontinual supplies, without which it would soon cease to exist.These supplies are principally drawn from three sources, theproduce of land, of mines, and of fisheries. These afford continualsupplies of provisions and materials, of which part is afterwardswrought up into finished work, and by which are replaced the



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provisions, materials, and finished work continually withdrawnfrom the circulating capital. From mines, too, is drawn what isnecessary for maintaining and augmenting that part of it whichconsists 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 generalstock of the society, it must, however, like all other things, bewasted and worn out at last, and sometimes, too, be either lost orsent abroad, and must, therefore, require continual, though, nodoubt, much smaller supplies.

Land, mines, and fisheries, require all both a fixed and acirculating capital to cultivate them; and their produce replaceswith a profit, not only those capitals, but all the others in thesociety. Thus the farmer annually replaces to the manufacturerthe provisions which he had consumed and the materials which behad wrought up the year before; and the manufacturer replaces tothe farmer the finished work which he had wasted and worn out inthe same time. This is the real exchange that is annually madebetween those two orders of people, though it seldom happensthat the rude produce of the one and the manufactured produce ofthe other, are directly bartered for one another; because it seldomhappens that the farmer sells his corn and his cattle, his flax andhis wool, to the very same person of whom he chooses to purchasethe clothes, furniture, and instruments of trade which he wants.He sells, therefore, his rude produce for money, with which he canpurchase, wherever it is to be had, the manufactured produce hehas occasion for. Land even replaces, in part at least, the capitalswith which fisheries and mines are cultivated. It is the produce ofland which draws the fish from the waters; and it is the produce of



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the surface of the earth which extracts the minerals from itsbowels.

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

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

In those unfortunate countries, indeed, where men arecontinually afraid of the violence of their superiors, theyfrequently bury and conceal a great part of their stock, in order tohave it always at hand to carry with them to some place of safety,in case of their being threatened with any of those disasters towhich they consider themselves as at all times exposed. This issaid to be a common practice in Turkey, in Indostan, and, Ibelieve, in most other governments of Asia. It seems to have beena common practice among our ancestors during the violence of thefeudal government.

Treasure-trove was in those times considered as no



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contemptible part of the revenue of the greatest sovereigns inEurope. It consisted in such treasure as was found concealed inthe earth, and to which no particular person could prove any right.This was regarded in those times as so important an object, that itwas always considered as belonging to the sovereign, and neitherto the finder nor to the proprietor of the land, unless the right to ithad been conveyed to the latter by an express clause in hischarter. It was put upon the same footing with gold and silvermines, which, without a special clause in the charter, were neversupposed to be comprehended in the general grant of the lands,though mines of lead, copper, tin, and coal were as things ofsmaller consequence.



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Chapter II

Of Money Considered as a Particular Branch of theGeneral Stock of the Society, or of the Expense of

Maintaining the National Capital

t has been shown in the first book, that the price of the greaterpart of commodities resolves itself into three parts, of whichone pays the wages of the labour, another the profits of the

stock, and a third the rent of the land which had been employed inproducing and bringing them to market: that there are, indeed,some commodities of which the price is made up of two of thoseparts only, the wages of labour, and the profits of stock: and a veryfew in which it consists altogether in one, the wages of labour: butthat the price of every commodity necessarily resolves itself intosome one, or other, or all of these three parts; every part of itwhich goes neither to rent nor to wages, being necessarily profit tosomebody.

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

But though the whole value of the annual produce of the landand labour of every country is thus divided among and constitutes

I



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a revenue to its different inhabitants, yet as in the rent of a privateestate we distinguish between the gross rent and the net rent, somay we likewise in the revenue of all the inhabitants of a greatcountry.

The gross rent of a private estate comprehends whatever ispaid by the farmer; the net rent, what remains free to the landlord,after deducting the expense of management, of repairs, and allother necessary charges; or what, without hurting his estate, hecan afford to place in his stock reserved for immediateconsumption, or to spend upon his table, equipage, the ornamentsof his house and furniture, his private enjoyments andamusements. His real wealth is in proportion, not to his gross, butto his net rent.

The gross revenue of all the inhabitants of a great countrycomprehends the whole annual produce of their land and labour;the net revenue, what remains free to them after deducting theexpense of maintaining—first, their fixed, and, secondly, theircirculating capital; or what, without encroaching upon theircapital, they can place in their stock reserved for immediateconsumption, or spend upon their subsistence, conveniencies, andamusements. Their real wealth, too, is in proportion, not to theirgross, but to their net revenue.

The whole expense of maintaining the fixed capital mustevidently be excluded from the net revenue of the society. Neitherthe materials necessary for supporting their useful machines andinstruments of trade, their profitable buildings, etc., nor theproduce of the labour necessary for fashioning those materials intothe proper form, can ever make any part of it. The price of thatlabour may indeed make a part of it; as the workmen so employed



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may place the whole value of their wages in their stock reservedfor immediate consumption. But in other sorts of labour, both theprice and the produce go to this stock, the price to that of theworkmen, the produce to that of other people, whose subsistence,conveniences, and amusements, are augmented by the labour ofthose workmen.

The intention of the fixed capital is to increase the productivepowers of labour, or to enable the same number of labourers toperform a much greater quantity of work. In a farm where all thenecessary buildings, fences, drains, communications, etc., are inthe most perfect good order, the same number of labourers andlabouring cattle will raise a much greater produce than in one ofequal extent and equally good ground, but not furnished withequal conveniencies.

In manufactures the same number of hands, assisted with thebest machinery, will work up a much greater quantity of goodsthan with more imperfect instruments of trade. The expensewhich is properly laid out upon a fixed capital of any kind, isalways repaid with great profit, and increases the annual produceby a much greater value than that of the support which suchimprovements require. This support, however, still requires acertain portion of that produce.

A certain quantity of materials, and the labour of a certainnumber of workmen, both of which might have been immediatelyemployed to augment the food, clothing and lodging, thesubsistence and conveniencies of the society, are thus diverted toanother employment, highly advantageous indeed, but stilldifferent from this one. It is upon this account that all suchimprovements in mechanics, as enable the same number of



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workmen to perform an equal quantity of work, with cheaper andsimpler machinery than had been usual before, are alwaysregarded as advantageous to every society. A certain quantity ofmaterials, and the labour of a certain number of workmen, whichhad before been employed in supporting a more complex andexpensive machinery, can afterwards be applied to augment thequantity of work which that or any other machinery is useful onlyfor performing. The undertaker of some great manufactory whoemploys a thousand a year in the maintenance of his machinery, ifhe can reduce this expense to five hundred will naturally employthe other five hundred in purchasing an additional quantity ofmaterials to be wrought up by an additional number of workmen.The quantity of that work, therefore, which his machinery wasuseful only for performing, will naturally be augmented, and withit all the advantage and conveniency which the society can derivefrom that work.

The expense of maintaining the fixed capital in a great countrymay very properly be compared to that of repairs in a privateestate. The expense of repairs may frequently be necessary forsupporting the produce of the estate, and consequently both thegross and the net rent of the landlord. When by a more properdirection, however, it can be diminished without occasioning anydiminution of produce, the gross rent remains at least the same asbefore, and the net rent is necessarily augmented.

But though the whole expense of maintaining the fixed capitalis thus necessarily excluded from the net revenue of the society, itis not the same case with that of maintaining the circulatingcapital. Of the four parts of which this latter capital is composed—money, provisions, materials, and finished work—the three last, it



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has already been observed, are regularly withdrawn from it, andplaced either in the fixed capital of the society, or in their stockreserved for immediate consumption. Whatever portion of thoseconsumable goods is employed in maintaining the former, goes allto the latter, and makes a part of the net revenue of the society.The maintenance of those three parts of the circulating capital,therefore, withdraws no portion of the annual produce from thenet revenue of the society, besides what is necessary formaintaining the fixed capital.

The circulating capital of a society is in this respect differentfrom that of an individual. That of an individual is totally excludedfrom making any part of his net revenue, which must consistaltogether in his profits. But though the circulating capital of everyindividual makes a part of that of the society to which he belongs,it is not upon that account totally excluded from making a partlikewise of their net revenue. Though the whole goods in amerchant’s shop must by no means be placed in his own stockreserved for immediate consumption, they may in that of otherpeople, who, from a revenue derived from other funds, mayregularly replace their value to him, together with its profits,without occasioning any diminution either of his capital or oftheirs.

Money, therefore, is the only part of the circulating capital of asociety, of which the maintenance can occasion any diminution intheir net revenue.

The fixed capital, and that part of the circulating capital whichconsists 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



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a certain expense, first to erect them, and afterwards to supportthem, both which expenses, though they make a part of the gross,are deductions from the net revenue of the society; so the stock ofmoney which circulates in any country must require a certainexpense, first to collect it, and afterwards to support it, both whichexpenses, though they make a part of the gross, are, in the samemanner, deductions from the net revenue of the society. A certainquantity of very valuable materials, gold and silver, and of verycurious labour, instead of augmenting the stock reserved forimmediate consumption, the subsistence, conveniencies, andamusements of individuals, is employed in supporting that greatbut expensive instrument of commerce, by means of which everyindividual in the society has his subsistence, conveniencies, andamusements regularly distributed to him in their properproportions.

Secondly, as the machines and instruments of a trade, etc.,which compose the fixed capital either of an individual or of asociety, make no part either of the gross or of the net revenue ofeither; so money, by means of which the whole revenue of thesociety is regularly distributed among all its different members,makes itself no part of that revenue. The great wheel of circulationis altogether different from the goods which are circulated bymeans of it. The revenue of the society consists altogether in thosegoods, and not in the wheel which circulates them. In computingeither the gross or the net revenue of any society, we must always,from their whole annual circulation of money and goods, deductthe whole value of the money, of which not a single farthing canever make any part of either.

It is the ambiguity of language only which can make this



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proposition appear either doubtful or paradoxical. When properlyexplained and understood, it is almost self-evident.

When we talk of any particular sum of money, we sometimesmean nothing but the metal pieces of which it is composed; andsometimes we include in our meaning some obscure reference tothe goods which can be had in exchange for it, or to the power ofpurchasing which the possession of it conveys. Thus when we saythat the circulating money of England has been computed ateighteen millions, we mean only to express the amount of themetal pieces, which some writers have computed, or rather havesupposed to circulate in that country.

But when we say that a man is worth fifty or a hundred poundsa year, we mean commonly to express not only the amount of themetal pieces which are annually paid to him, but the value of thegoods which he can annually purchase or consume. We meancommonly to ascertain what is or ought to be his way of living, orthe quantity and quality of the necessaries and conveniencies oflife in which he can with propriety indulge himself.

When, by any particular sum of money, we mean not only toexpress the amount of the metal pieces of which it is composed,but to include in its signification some obscure reference to thegoods which can be had in exchange for them, the wealth orrevenue which it in this case denotes, is equal only to one of thetwo values which are thus intimated somewhat ambiguously bythe 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 certainquantity of subsistence, conveniencies, and amusements. In



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proportion as this quantity is great or small, so are his real riches,his real weekly revenue. His weekly revenue is certainly not equalboth to the guinea, and to what can be purchased with it, but onlyto one or other of those two equal values; and to the latter moreproperly than to the former, to the guinea’s worth rather than tothe guinea.

If the pension of such a person was paid to him, not in gold, butin a weekly bill for a guinea, his revenue surely would not soproperly consist in the piece of paper, as in what he could get forit. A guinea may be considered as a bill for a certain quantity ofnecessaries and conveniencies upon all the tradesmen in theneighbourhood. The revenue of the person to whom it is paid,does not so properly consist in the piece of gold, as in what he canget for it, or in what he can exchange it for. If it could beexchanged for nothing, it would, like a bill upon a bankrupt, be ofno more value than the most useless piece of paper.

Though the weekly or yearly revenue of all the differentinhabitants of any country, in the same manner, may be, and inreality frequently is paid to them in money, their real riches,however, the real weekly or yearly revenue of all of them takentogether, must always be great or small in proportion to thequantity of consumable goods which they can all of them purchasewith this money. The whole revenue of all of them taken togetheris evidently not equal to both the money and the consumablegoods; but only to one or other of those two values, and to thelatter more properly than to the former.

Though we frequently, therefore, express a person’s revenue bythe metal pieces which are annually paid to him, it is because theamount of those pieces regulates the extent of his power of



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purchasing, or the value of the goods which he can annually affordto consume. We still consider his revenue as consisting in thispower of purchasing or consuming, and not in the pieces whichconvey it.

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

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



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of their annual circulation, distribute to every man the revenuewhich properly belongs to him, they make themselves no part ofthat revenue.

Thirdly, and lastly, the machines and instruments of trade, etc.,which compose the fixed capital, bear this further resemblance tothat part of the circulating capital which consists in money; that asevery saving in the expense of erecting and supporting thosemachines, which does not diminish the productive powers oflabour, is an improvement of the net revenue of the society, soevery saving in the expense of collecting and supporting that partof the circulating capital which consists in money, is animprovement of exactly the same kind.

It is sufficiently obvious, and it has partly, too, been explainedalready, in what manner every saving in the expense of supportingthe fixed capital is an improvement of the net revenue of thesociety.

The whole capital of the undertaker of every work is necessarilydivided between his fixed and his circulating capital. While hiswhole capital remains the same, the smaller the one part, thegreater must necessarily be the other. It is the circulating capitalwhich furnishes the materials and wages of labour, and putsindustry into motion. Every saving, therefore, in the expense ofmaintaining the fixed capital, which does not diminish theproductive powers of labour, must increase the fund which putsindustry into motion, and consequently the annual produce ofland 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 muchless costly, and sometimes equally convenient. Circulation comes



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to be carried on by a new wheel, which it costs less both to erectand to maintain than the old one. But in what manner thisoperation is performed, and in what manner it tends to increaseeither the gross or the net revenue of the society, is not altogetherso obvious, and may therefore require some further explication.

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

When the people of any particular country have suchconfidence in the fortune, probity, and prudence of a particularbanker, as to believe that he is always ready to pay upon demandsuch of his promissory notes as are likely to be at any timepresented to him; those notes come to have the same currency asgold and silver money, from the confidence that such money canat any time be had for them.

A particular banker lends among his customers his ownpromissory notes, to the extent, we shall suppose, of a hundredthousand pounds. As those notes serve all the purposes of money,his debtors pay him the same interest as if he had lent them somuch money. This interest is the source of his gain. Though someof 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 theextent of a hundred thousand pounds, twenty thousand pounds ingold and silver may frequently be a sufficient provision foranswering occasional demands. By this operation, therefore,twenty thousand pounds in gold and silver perform all thefunctions which a hundred thousand could otherwise haveperformed. The same exchanges may be made, the same quantity



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of consumable goods may be circulated and distributed to theirproper consumers, by means of his promissory notes, to the valueof a hundred thousand pounds, as by an equal value of gold andsilver money. Eighty thousand pounds of gold and silver,therefore, can, in this manner, be spared from the circulation ofthe country; and if different operations of the same kind should, atthe same time, be carried on by many different banks andbankers, the whole circulation may thus be conducted with a fifthpart only of the gold and silver which would otherwise have beenrequisite.

Let us suppose, for example, that the whole circulating moneyof some particular country amounted, at a particular time, to onemillion sterling, that sum being then sufficient for circulating thewhole annual produce of their land and labour. Let us suppose,too, that some time thereafter, different banks and bankers issuedpromissory notes, payable to the bearer, to the extent of onemillion, reserving in their different coffers two hundred thousandpounds for answering occasional demands. There would remain,therefore, in circulation, eight hundred thousand pounds in goldand silver, and a million of bank notes, or eighteen hundredthousand pounds of paper and money together. But the annualproduce of the land and labour of the country had before requiredonly one million to circulate and distribute it to its properconsumers, and that annual produce cannot be immediatelyaugmented by those operations of banking. One million, therefore,will be sufficient to circulate it after them. The goods to be boughtand sold being precisely the same as before, the same quantity ofmoney will be sufficient for buying and selling them.

The channel of circulation, if I may be allowed such an



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expression, will remain precisely the same as before. One millionwe have supposed sufficient to fill that channel. Whatever,therefore, is poured into it beyond this sum cannot run in it, butmust overflow. One million eight hundred thousand pounds arepoured into it. Eight hundred thousand pounds, therefore, mustoverflow, that sum being over and above what can be employed inthe circulation of the country. But though this sum cannot beemployed at home, it is too valuable to be allowed to lie idle. It will,therefore, be sent abroad, in order to seek that profitableemployment which it cannot find at home. But the paper cannotgo abroad; because at a distance from the banks which issue it,and from the country in which payment of it can be exacted bylaw, it will not be received in common payments. Gold and silver,therefore, to the amount of eight hundred thousand pounds will besent abroad, and the channel of home circulation will remain filledwith a million of paper, instead of the million of those metalswhich filled it before.

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

If they employ it in purchasing goods in one foreign country inorder to supply the consumption of another, or in what is calledthe carrying trade, whatever profit they make will be an additionto the net revenue of their own country. It is like a new fund,created for carrying on a new trade; domestic business being nowtransacted by paper, and the gold and silver being converted into



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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 arelikely to be consumed by idle people who produce nothing, such asforeign wines, foreign silks, etc.; or, secondly, they may purchasean additional stock of materials, tools, and provisions, in order tomaintain and employ an additional number of industrious people,who reproduce, with a profit, the value of their annualconsumption.

So far as it is employed in the first way, it promotes prodigality,increases expense and consumption without increasingproduction, or establishing any permanent fund for supportingthat 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 providesa permanent fund for supporting that consumption, the peoplewho consume reproducing, with a profit, the whole value of theirannual consumption. The gross revenue of the society, the annualproduce of their land and labour, is increased by the whole valuewhich the labour of those workmen adds to the materials uponwhich they are employed; and their net revenue by what remainsof this value, after deducting what is necessary for supporting thetools and instruments of their trade.

That the greater part of the gold and silver which, being forcedabroad by those operations of banking, is employed in purchasingforeign goods for home consumption, is and must be employed inpurchasing those of this second kind, seems not only probable butalmost unavoidable. Though some particular men may sometimesincrease their expense very considerably though their revenue



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does not increase at all, we may be assured that no class or orderof men ever does so; because, though the principles of commonprudence 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 ofbanking. Their expense in general, therefore, cannot be muchincreased by them, though that of a few individuals among themmay, and in reality sometimes is.

The demand of idle people, therefore, for foreign goods beingthe same, or very nearly the same, as before, a very small part ofthe money, which being forced abroad by those operations ofbanking, is employed in purchasing foreign goods for homeconsumption, is likely to be employed in purchasing those for theiruse. The greater part of it will naturally be destined for theemployment of industry, and not for the maintenance of idleness.

When we compute the quantity of industry which thecirculating capital of any society can employ, we must always haveregard 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 bededucted. In order to put industry into motion, three things arerequisite; materials to work upon, tools to work with, and thewages or recompense 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 himin money, his real revenue, like that of all other men, consists, notin money, but in the money’s worth; not in the metal pieces, but inwhat can be got for them.



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The quantity of industry which any capital can employ must,evidently, be equal to the number of workmen whom it can supplywith materials, tools, and a maintenance suitable to the nature ofthe work. Money may be requisite for purchasing the materialsand tools of the work, as well as the maintenance of the workmen.But the quantity of industry which the whole capital can employ iscertainly not equal both to the money which purchases, and to thematerials, tools, and maintenance, which are purchased with it;but only to one or other of those two values, and to the latter moreproperly 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 thewhole circulating capital can supply, may be increased by thewhole value of gold and silver which used to be employed inpurchasing them. The whole value of the great wheel ofcirculation and distribution is added to the goods which arecirculated and distributed by means of it. The operation, in somemeasure, resembles that of the undertaker of some great work,who, in consequence of some improvement in mechanics, takesdown his old machinery, and adds the difference between its priceand that of the new to his circulating capital, to the fund fromwhich he furnishes materials and wages to his workmen.

What is the proportion which the circulating money of anycountry bears to the whole value of the annual produce circulatedby means of it, it is, perhaps, impossible to determine. It has beencomputed by different authors at a fifth, at a tenth, at a twentieth,and at a thirtieth part of that value. But how small soever theproportion which the circulating money may bear to the wholevalue of the annual produce, as but a part, and frequently but a



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small part, of that produce, is ever destined for the maintenance ofindustry, it must always bear a very considerable proportion tothat part. When, therefore, by the substitution of paper, the goldand silver necessary for circulation is reduced to, perhaps, a fifthpart of the former quantity, if the value of only the greater part ofthe other four-fifths be added to the funds which are destined forthe maintenance of industry, it must make a very considerableaddition to the quantity of that industry, and, consequently, to thevalue of the annual produce of land and labour.

An operation of this kind has, within these five-and-twenty orthirty years, been performed in Scotland, by the erection of newbanking companies in almost every considerable town, and evenin some country villages. The effects of it have been preciselythose above described. The business of the country is almostentirely carried on by means of the paper of those differentbanking companies, with which purchases and payments of kindsare commonly made. Silver very seldom appears except in thechange of a twenty shillings bank note, and gold still seldomer.But though the conduct of all those different companies has notbeen unexceptionable, and has accordingly required an act ofParliament to regulate it, the country, notwithstanding, hasevidently derived great benefit from their trade.

I have heard it asserted, that the trade of the city of Glasgowdoubled in about fifteen years after the first erection of the banksthere; and that the trade of Scotland has more than quadrupledsince the first erection of the two public banks at Edinburgh, ofwhich the one, called the Bank of Scotland, was established by actof Parliament in 1695; the other, called the Royal Bank, by royalcharter in 1727. Whether the trade, either of Scotland in general,



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or the city of Glasgow in particular, has really increased in so greata proportion, during so short a period, I do not pretend to know. Ifeither of them has increased in this proportion, it seems to be aneffect too great to be accounted for by the sole operation of thiscause. That the trade and industry of Scotland, however, haveincreased very considerably during this period, and that the bankshave contributed a good deal to this increase, cannot be doubted.

The value of the silver money which circulated in Scotlandbefore the union, in 1707, and which, immediately after it, wasbrought into the Bank of Scotland in order to be recoined,amounted to £411,117 10s. 9d. sterling. No account has been got ofthe gold coin; but it appears from the ancient accounts of the mintof Scotland, that the value of the gold annually coined somewhatexceeded that of the silver.1 There were a good many people, too,upon this occasion, who, from a diffidence of repayment, did notbring their silver into the Bank of Scotland: and there was,besides, some English coin which was not called in. The wholevalue of the gold and silver, therefore, which circulated inScotland before the union, cannot be estimated at less than amillion sterling. It seems to have constituted almost the wholecirculation of that country; for though the circulation of the Bankof Scotland, which had then no rival, was considerable, it seems tohave made but a very small part of the whole. In the present timesthe whole circulation of Scotland cannot be estimated at less thantwo millions, of which that part which consists in gold and silvermost probably does not amount to half a million. But though thecirculating gold and silver of Scotland have suffered so great a

1See Ruddiman’s preface to Anderson’s Diplomata, etc., Scotiæ.



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diminution during this period, its real riches and prosperity do notappear to have suffered any. Its agriculture, manufactures, andtrade, 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, byadvancing money upon them before they are due, that the greaterpart of banks and bankers issue their promissory notes. Theydeduct always, upon whatever sum they advance, the legal interesttill the bill shall become due. The payment of the bill, when itbecomes due, replaces to the bank the value of what had beenadvanced, together with a clear profit of the interest. The bankerwho advances to the merchant whose bill he discounts, not goldand silver, but his own promissory notes, has the advantage ofbeing able to discount to a greater amount, by the whole value ofhis promissory notes, which he finds by experience are commonlyin circulation. He is thereby enabled to make his clear gain ofinterest 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 bankingcompanies were established, and those companies would have hadbut little trade had they confined their business to the discountingof bills of exchange. They invented, therefore, another method ofissuing their promissory notes; by granting what they called cashaccounts, that is by giving credit to the extent of a certain sum(two or three thousand pounds, for example) to any individual whocould procure two persons of undoubted credit and good landedestate to become surety for him, that whatever money should beadvanced to him, within the sum for which the credit had beengiven, should be repaid upon demand, together with the legal



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interest. Credits of this kind are, I believe, commonly granted bybanks and bankers in all different parts of the world. But the easyterms upon which the Scotch banking companies accept ofrepayment are, so far as I know, peculiar to them, and have,perhaps, been the principal cause, both of the great trade of thosecompanies and of the benefit which the country has received fromit.

Whoever has a credit of this kind with one of those companies,and borrows a thousand pounds upon it, for example, may repaythis sum piecemeal, by twenty and thirty pounds at a time, thecompany discounting a proportionable part of the interest of thegreat sum from the day on which each of those small sums is paidin till the whole be in this manner repaid. All merchants,therefore, and almost all men of business, find it convenient tokeep such cash accounts with them, and are thereby interested topromote the trade of those companies, by readily receiving theirnotes in all payments, and by encouraging all those with whomthey have any influence to do the same. The banks, when theircustomers apply to them for money, generally advance it to themin their own promissory notes. These the merchants pay away tothe manufacturers for goods, the manufacturers to the farmers formaterials and provisions, the farmers to their landlords for rent,the landlords repay them to the merchants for the convenienciesand luxuries with which they supply them, and the merchantsagain return them to the banks in order to balance their cashaccounts, or to replace what they may have borrowed of them; andthus almost the whole money business of the country is transactedby means of them. Hence the great trade of those companies.

By means of those cash accounts every merchant can, without



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imprudence, carry on a greater trade than he otherwise could do.If there are two merchants, one in London and the other inEdinburgh, who employ equal stocks in the same branch of trade,the Edinburgh merchant can, without imprudence, carry on agreater trade and give employment to a greater number of peoplethan the London merchant. The London merchant must alwayskeep by him a considerable sum of money, either in his owncoffers, or in those of his banker, who gives him no interest for it,in order to answer the demands continually coming upon him forpayment of the goods which he purchases upon credit.

Let the ordinary amount of this sum be supposed five hundredpounds. The value of the goods in his warehouse must always beless by five hundred pounds than it would have been had he notbeen obliged to keep such a sum unemployed. Let us suppose thathe generally disposes of his whole stock upon hand, or of goods tothe value of his whole stock upon hand, once in the year. By beingobliged to keep so great a sum unemployed, he must sell in a yearfive hundred pounds’ worth less goods than he might otherwisehave done. His annual profits must be less by all that he couldhave made by the sale of five hundred pounds worth more goods;and the number of people employed in preparing his goods for themarket must be less by all those that five hundred pounds morestock could have employed. The merchant in Edinburgh, on theother hand, keeps no money unemployed for answering suchoccasional demands. When they actually come upon him, hesatisfies them from his cash account with the bank, and graduallyreplaces the sum borrowed with the money or paper which comesin from the occasional sales of his goods. With the same stock,therefore, he can, without imprudence, have at all times in his



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warehouse a larger quantity of goods than the London merchant;and can thereby both make a greater profit himself, and giveconstant employment to a greater number of industrious peoplewho prepare those goods for the market. Hence the great benefitwhich the country has derived from this trade.

The facility of discounting bills of exchange it may be thoughtindeed, gives the English merchants a conveniency equivalent tothe cash accounts of the Scotch merchants. But the Scotchmerchants, it must be remembered, can discount their bills ofexchange 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 easilycirculate in any country never can exceed the value of the goldand silver, of which it supplies the place, or which (the commercebeing supposed the same) would circulate there, if there was nopaper money. If twenty shilling notes, for example, are the lowestpaper money current in Scotland, the whole of that currencywhich can easily circulate there cannot exceed the sum of gold andsilver which would be necessary for transacting the annualexchanges of twenty shillings value and upwards usuallytransacted within that country. Should the circulating paper atany time exceed that sum, as the excess could neither be sentabroad nor be employed in the circulation of the country, it mustimmediately return upon the banks to be exchanged for gold andsilver. Many people would immediately perceive that they hadmore of this paper than was necessary for transacting theirbusiness at home, and as they could not send it abroad, they wouldimmediately demand payment of it from the banks. When thissuperfluous paper was converted into gold and silver, they could



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easily find a use for it by sending it abroad; but they could findnone while it remained in the shape of paper. There wouldimmediately, therefore, be a run upon the banks to the wholeextent of this superfluous paper, and, if they showed any difficultyor backwardness in payment, to a much greater extent; the alarmwhich this would occasion necessarily increasing the run.

Over and above the expenses which are common to everybranch of trade; such as the expense of house-rent, the wages ofservants, clerks, accountants, etc.; the expenses peculiar to a bankconsist chiefly in two articles: first, in the expense of keeping at alltimes in its coffers, for answering the occasional demands of theholders of its notes, a large sum of money, of which it loses theinterest; and, secondly, in the expense of replenishing thosecoffers as fast as they are emptied by answering such occasionaldemands.

A banking company, which issues more paper than can beemployed in the circulation of the country, and of which the excessis continually returning upon them for payment, ought to increasethe quantity of gold and silver, which they keep at all times in theircoffers, not only in proportion to this excessive increase of theircirculation, but in a much greater proportion; their notesreturning upon them much faster than in proportion to the excessof their quantity. Such a company, therefore, ought to increase thefirst article of their expense, not only in proportion to this forcedincrease of their business, but in a much greater proportion.

The coffers of such a company too, though they ought to befilled much fuller, yet must empty themselves much faster than iftheir business was confined within more reasonable bounds, andmust require, not only a more violent, but a more constant and



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uninterrupted exertion of expense in order to replenish them. Thecoin too, which is thus continually drawn in such large quantitiesfrom their coffers, cannot be employed in the circulation of thecountry. It comes in place of a paper which is over and above whatcan be employed in that circulation, and is therefore over andabove what can be employed in it too. But as that coin will not beallowed to lie idle, it must, in one shape or another, be sentabroad, in order to find that profitable employment which itcannot find at home; and this continual exportation of gold andsilver, by enhancing the difficulty, must necessarily enhance stillfurther the expense of the bank, in finding new gold and silver inorder to replenish those coffers, which empty themselves so veryrapidly. Such a company, therefore, must, in proportion to thisforced increase of their business, increase the second article oftheir expense still more than the first.

Let us suppose that all the paper of a particular bank, which thecirculation of the country can easily absorb and employ, amountsexactly to forty thousand pounds; and that for answeringoccasional demands, this bank is obliged to keep at all times in itscoffers ten thousand pounds in gold and silver. Should this bankattempt to circulate forty-four thousand pounds, the four thousandpounds which are over and above what the circulation can easilyabsorb and employ, will return upon it almost as fast as they areissued. For answering occasional demands, therefore, this bankought to keep at all times in its coffers, not eleven thousandpounds only, but fourteen thousand pounds. It will thus gainnothing by the interest of the four thousand pounds’ excessivecirculation; and it will lose the whole expense of continuallycollecting four thousand pounds in gold and silver, which will be



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continually going out of its coffers as fast as they are brought intothem.

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

By issuing too great a quantity of paper, of which the excesswas continually returning, in order to be exchanged for gold andsilver, the Bank of England was for many years together obliged tocoin gold to the extent of between eight hundred thousand poundsand a million a year; or at an average, about eight hundred andfifty thousand pounds. For this great coinage the bank (inconsequence of the worn and degraded state into which the goldcoin had fallen a few years ago) was frequently obliged topurchase gold bullion at the high price of four pounds an ounce,which it soon after issued in coin at £3 17s. 10 1/2d. an ounce, losingin this manner between two and a half and three per cent uponthe coinage of so very large a sum. Though the bank thereforepaid no seignorage, though the government was properly at theexpense of the coinage, this liberality of government did notprevent altogether the expense of the bank.

The Scotch banks, in consequence of an excess of the samekind, were all obliged to employ constantly agents at London tocollect money for them, at an expense which was seldom belowone and a half or two per cent. This money was sent down by thewaggon, and insured by the carriers at an additional expense ofthree quarters per cent or fifteen shillings on the hundred pounds.



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Those agents were not always able to replenish the coffers of theiremployers so fast as they were emptied. In this case the resourceof the banks was to draw upon their correspondents in Londonbills of exchange to the extent of the sum which they wanted.When those correspondents afterwards drew upon them for thepayment of this sum, together with the interest and a commission,sonic of those banks, from the distress into which their excessivecirculation had thrown them, had sometimes no other means ofsatisfying this draught but by drawing a second set of bills eitherupon the same, or upon some other correspondents in London;and the same sum, or rather bills for the same sum, would in thismanner make sometimes more than two or three journeys, thedebtor, bank, paying always the interest and commission upon thewhole accumulated sum. Even those Scotch banks which neverdistinguished themselves by their extreme imprudence, weresometimes obliged to employ this ruinous resource.

The gold coin which was paid out either by the Bank ofEngland, or by the Scotch banks, in exchange for that part of theirpaper which was over and above what could be employed in thecirculation of the country, being likewise over and above whatcould be employed in that circulation, was sometimes sent abroadin the shape of coin, sometimes melted down and sent abroad inthe shape of bullion, and sometimes melted down and sold to theBank of England at the high price of four pounds an ounce. It wasthe newest, the heaviest, and the best pieces only which werecarefully picked out of the whole coin, and either sent abroad ormelted down. At home, and while they remained in the shape ofcoin, those heavy pieces were of no more value than the light. Butthey were of more value abroad, or when melted down into



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bullion, at home. The Bank of England, notwithstanding theirgreat annual coinage, found to their astonishment that there wasevery year the same scarcity of coin as there had been the yearbefore; and that notwithstanding the great quantity of good andnew coin which was every year issued from the bank, the state ofthe coin, instead of growing better and better, became every yearworse and worse. Every year they found themselves under thenecessity of coining nearly the same quantity of gold as they hadcoined the year before, and from the continual rise in the price ofgold bullion, in consequence of the continual wearing and clippingof the coin, the expense of this great annual coinage became everyyear greater and greater. The Bank of England, it is to beobserved, by supplying its own coffers with coin, is indirectlyobliged to supply the whole kingdom, into which coin iscontinually flowing from those coffers in a great variety of ways.Whatever coin therefore was wanted to support this excessivecirculation both of Scotch and English paper money, whatevervacuities this excessive circulation occasioned in the necessarycoin of the kingdom, the Bank of England was obliged to supplythem. The Scotch banks, no doubt, paid all of them very dearly fortheir own imprudence and inattention. But the Bank of Englandpaid very dearly, not only for its own imprudence, but for themuch greater imprudence of almost all the Scotch banks.

The overtrading of some bold projectors in both parts of theUnited Kingdom was the original cause of this excessivecirculation of paper money.

What a bank can with propriety advance to a merchant orundertaker of any kind, is not either the whole capital with whichhe trades, or even any considerable part of that capital; but that



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part of it only which he would otherwise be obliged to keep by himunemployed, and in ready money for answering occasionaldemands. If the paper money which the bank advances neverexceeds this value, it can never exceed the value of the gold andsilver which would necessarily circulate in the country if there wasno paper money; it can never exceed the quantity which thecirculation of the country can easily absorb and employ.

When a bank discounts to a merchant a real bill of exchangedrawn by a real creditor upon a real debtor, and which, as soon asit becomes due, is really paid by that debtor, it only advances tohim a part of the value which he would otherwise be obliged tokeep by him unemployed and in ready money for answeringoccasional demands. The payment of the bill, when it becomesdue, replaces to the bank the value of what it had advanced,together with the interest. The coffers of the bank, so far as itsdealings are confined to such customers, resemble a water pond,from which, though a stream is continually running out, yetanother is continually running in, fully equal to that which runsout; so that, without any further care or attention, the pond keepsalways equally, or very near equally full. Little or no expense canever be necessary for replenishing the coffers of such a bank.

A merchant, without overtrading, may frequently have occasionfor a sum of ready money, even when he has no bills to discount.

When a bank, besides discounting his bills, advances himlikewise upon such occasions such sums upon his cash account,and accepts of a piecemeal repayment as the money comes in fromthe occasional sale of his goods, upon the easy terms of thebanking companies of Scotland; it dispenses him entirely from thenecessity of keeping any part of his stock by him unemployed and



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in ready money for answering occasional demands. When suchdemands actually come upon him, he can answer them sufficientlyfrom his cash account. The bank, however, in dealing with suchcustomers, ought to observe with great attention, whether in thecourse of some short period (of four, five, six, or eight months forexample) the sum of the repayments which it commonly receivesfrom them is, or is not, fully equal to that of the advances which itcommonly makes to them. If, within the course of such shortperiods, the sum of the repayments from certain customers is,upon most occasions, fully equal to that of the advances, it maysafely continue to deal with such customers.

Though the stream which is in this case continually running outfrom its coffers may be very large, that which is continuallyrunning into them must be at least equally large; so that withoutany further care or attention those coffers are likely to be alwaysequally or very near equally full; and scarce ever to require anyextraordinary expense to replenish them. If, on the contrary, thesum of the repayments from certain other customers fallscommonly very much short of the advances which it makes tothem, it cannot with any safety continue to deal with suchcustomers, at least if they continue to deal with it in this manner.The stream which is in this case continually running out from itscoffers is necessarily much larger than that which is continuallyrunning in; so that, unless they are replenished by some great andcontinual effort of expense, those coffers must soon be exhaustedaltogether.

The banking companies of Scotland, accordingly, were for along time very careful to require frequent and regular repaymentsfrom all their customers, and did not care to deal with any person,



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whatever might be his fortune or credit, who did not make, whatthey called, frequent and regular operations with them. By thisattention, besides saving almost entirely the extraordinaryexpense of replenishing their coffers, they gained two other veryconsiderable advantages.

First, by this attention they were enabled to make sometolerable judgment concerning the thriving or decliningcircumstances of their debtors, without being obliged to look outfor any other evidence besides what their own books affordedthem; men being for the most part either regular or irregular intheir repayments, according as their circumstances are eitherthriving or declining. A private man who lends out his money toperhaps half a dozen or a dozen of debtors, may, either by himselfor his agents, observe and inquire both constantly and carefullyinto the conduct and situation of each of them. But a bankingcompany, which lends money to perhaps five hundred differentpeople, and of which the attention is continually occupied byobjects of a very different kind, can have no regular informationconcerning the conduct and circumstances of the greater part ofits debtors beyond what its own books afford it. In requiringfrequent and regular repayments from all their customers, thebanking companies of Scotland had probably this advantage inview.

Secondly, by this attention they secured themselves from thepossibility of issuing more paper money than what the circulationof the country could easily absorb and employ. When theyobserved that within moderate periods of time the repayments of aparticular customer were upon most occasions fully equal to theadvances which they had made to him, they might be assured that



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the paper money which they had advanced to him had not at anytime exceeded the quantity of gold and silver which he wouldotherwise have been obliged to keep by him for answeringoccasional demands; and that, consequently, the paper money,which they had circulated by his means, had not at any timeexceeded the quantity of gold and silver which would havecirculated in the country had there been no paper money. Thefrequency, regularity, and amount of his repayments wouldsufficiently demonstrate that the amount of their advances had atno time exceeded that part of his capital which he would otherwisehave been obliged to keep by him unemployed and in readymoney for answering occasional demands; that is, for the purposeof keeping the rest of his capital in constant employment. It is thispart of his capital only which, within moderate periods of time, iscontinually returning to every dealer in the shape of money,whether paper or coin, and continually going from him in thesame shape. If the advances of the bank had commonly exceededthis part of his capital, the ordinary amount of his repaymentscould not, within moderate periods of time, have equalled theordinary amount of its advances.

The stream which, by means of his dealings, was continuallyrunning into the coffers of the bank, could not have been equal tothe stream which, by means of the same dealings, was continuallyrunning out. The advances of the bank paper, by exceeding thequantity of gold and silver which, had there been no suchadvances, he would have been obliged to keep by him foranswering occasional demands, might soon come to exceed thewhole quantity of gold and silver which (the commerce beingsupposed the same) would have circulated in the country had



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there been no paper money; and consequently to exceed thequantity which the circulation of the country could easily absorband employ; and the excess of this paper money wouldimmediately have returned upon the bank in order to beexchanged for gold and silver. This second advantage, thoughequally real, was not perhaps so well understood by all thedifferent banking companies of Scotland as the first.

When, partly by the conveniency of discounting bills, and partlyby that of cash accounts, the creditable traders of any country canbe dispensed from the necessity of keeping any part of their stockby them unemployed and in ready money for answeringoccasional demands, they can reasonably expect no fartherassistance from banks and bankers, who, when they have gonethus far, cannot, consistently with their own interest and safety, gofarther. A bank cannot, consistently with its own interest, advanceto a trader the whole or even the greater part of the circulatingcapital with which he trades; because, though that capital iscontinually returning to him in the shape of money, and goingfrom him in the same shape, yet the whole of the returns is toodistant from the whole of the outgoings, and the sum of hisrepayments could not equal the sum of its advances within suchmoderate periods of time as suit the conveniency of a bank. Stillless, could a bank afford to advance him any considerable part ofhis fixed capital; of the capital which the undertaker of an ironforge, for example, employs in erecting his forge and smelting-house, his workhouses and warehouses, the dwelling-houses of hisworkmen, etc.; of the capital which the undertaker of a mineemploys in sinking his shafts, in erecting engines for drawing outthe water, in making roads and waggon-ways, etc.; of the capital



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which the person who undertakes to improve land employs inclearing, draining, enclosing, manuring, and ploughing waste anduncultivated fields, in building farm-houses, with all theirnecessary appendages of stables, granaries, etc. The returns of thefixed capital are in almost all cases much slower than those of thecirculating capital; and such expenses, even when laid out with thegreatest prudence and judgment, very seldom return to theundertaker till after a period of many years, a period by far toodistant to suit the conveniency of a bank. Traders and otherundertakers may, no doubt, with great propriety, carry on a veryconsiderable part of their projects with borrowed money. Injustice to their creditors, however, their own capital ought, in thiscase, to be sufficient to ensure, if I may say so, the capital of thosecreditors; or to render it extremely improbable that thosecreditors should incur any loss, even though the success of theproject should fall very much short of the expectation of theprojectors. Even with this precaution too, the money which isborrowed, and which it is meant should not be repaid till after aperiod of several years, ought not to be borrowed of a bank, butought to be borrowed upon bond or mortgage of such privatepeople as propose to live upon the interest of their money withouttaking the trouble themselves to employ the capital, and who areupon that account willing to lend that capital to such people ofgood credit as are likely to keep it for several years. A bank,indeed, which lends its money without the expense of stampedpaper, or of attorneys’ fees for drawing bonds and mortgages, andwhich accepts of repayment upon the easy terms of the bankingcompanies of Scotland, would, no doubt, be a very convenientcreditor to such traders and undertakers. But such traders and



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undertakers would, surely, be most inconvenient debtors to such abank.

It is now more than five-and-twenty years since the papermoney issued by the different banking companies of Scotland wasfully equal, or rather was somewhat more than fully equal, to whatthe circulation of the country could easily absorb and employ.Those companies, therefore, had so long ago given all theassistance to the traders and other undertakers of Scotland whichit is possible for banks and bankers, consistently with their owninterest, to give. They had even done somewhat more. They hadovertraded a little, and had brought upon themselves that loss, orat least that diminution of profit, which in this particular businessnever fails to attend the smallest degree of overtrading. Thosetraders and other undertakers, having got so much assistancefrom banks and bankers, wished to get still more. The banks, theyseem to have thought, could extend their credits to whatever summight be wanted, without incurring any other expense besidesthat of a few reams of paper. They complained of the contractedviews and dastardly spirit of the directors of those banks, whichdid not, they said, extend their credits in proportion to theextension of the trade of the country; meaning, no doubt, by theextension of that trade the extension of their own projects beyondwhat they could carry on, either with their own capital, or withwhat they had credit to borrow of private people in the usual wayof bond or mortgage. The banks, they seem to have thought, werein honour bound to supply the deficiency, and to provide themwith all the capital which they wanted to trade with. The banks,however, were of a different opinion, and upon their refusing toextend their credits, some of those traders had recourse to an



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expedient which, for a time, served their purpose, though at amuch greater expense, yet as effectually as the utmost extension ofbank credits could have done.

This expedient was no other than the well-known shift ofdrawing and redrawing; the shift to which unfortunate tradershave sometimes recourse when they are upon the brink ofbankruptcy. The practice of raising money in this manner hadbeen long known in England, and during the course of the latewar, when the high profits of trade afforded a great temptation toovertrading, is said to have carried on to a very great extent. FromEngland it was brought into Scotland, where, in proportion to thevery limited commerce, and to the very moderate capital of thecountry, it was soon carried on to a much greater extent than itever had been in England.

The practice of drawing and redrawing is so well known to allmen of business that it may perhaps be thought unnecessary togive an account of it. But as this book may come into the hands ofmany people who are not men of business, and as the effects ofthis practice upon the banking trade are not perhaps generallyunderstood even by men of business themselves, I shall endeavourto explain it as distinctly as I can.

The customs of merchants, which were established when thebarbarous laws of Europe did not enforce the performance of theircontracts, and which during the course of the two last centurieshave been adopted into the laws of all European nations, havegiven such extraordinary privileges to bills of exchange thatmoney is more readily advanced upon them than upon any otherspecies of obligation, especially when they are made payablewithin so short a period as two or three months after their date. If,



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when the bill becomes due, the acceptor does not pay it as soon asit is presented, he becomes from that moment a bankrupt. The billis protested, and returns upon the drawer, who, if he does notimmediately pay it, becomes likewise a bankrupt. If, before it cameto the person who presents it to the acceptor for payment, it hadpassed through the hands of several other persons, who hadsuccessively advanced to one another the contents of it either inmoney or goods, and who to express that each of them had in histurn received those contents, had all of them in their orderendorsed, that is, written their names upon the back of the bill;each endorser becomes in his turn liable to the owner of the billfor those contents, and, if he fails to pay, he becomes too from thatmoment a bankrupt. Though the drawer, acceptor, and endorsersof the bill should, all of them, be persons of doubtful credit; yet stillthe shortness of the date gives some security to the owner of thebill.

Though all of them may be very likely to become bankrupts, itis a chance if they all become so in so short a time. The house iscrazy, says a weary traveller to himself, and will not stand verylong; 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 uponB in London, payable two months after date. In reality B inLondon owes nothing to A in Edinburgh; but he agrees to acceptof A’s bill, upon condition that before the term of payment he shallredraw upon A in Edinburgh for the same sum, together with theinterest and a commission, another bill, payable likewise twomonths after date. B accordingly, before the expiration of the firsttwo months, redraws this bill upon A in Edinburgh; who again,



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before the expiration of the second two months, draws a secondbill upon B in London, payable likewise two months after date;and before the expiration of the third two months, B in Londonredraws upon A in Edinburgh another bill, payable also twomonths after date. This practice has sometimes gone on, not onlyfor several months, but for several years together, the bill alwaysreturning upon A in Edinburgh, with the accumulated interestand commission of all the former bills. The interest was five percent in the year, and the commission was never less than one halfper cent on each draft. This commission being repeated more thansix times in the year, whatever money A might raise by thisexpedient must necessarily have, cost him something more thaneight per cent in the year, and sometimes a great deal more; wheneither the price of the commission happened to rise, or when hewas obliged to pay compound interest upon the interest andcommission of former bills. This practice was called raising moneyby circulation.

In a country where the ordinary profits of stock in the greaterpart of mercantile projects are supposed to run between six andten per cent, it must have been a very fortunate speculation ofwhich the returns could not only repay the enormous expense atwhich the money was thus borrowed for carrying it on; but afford,besides, a good surplus profit to the projector. Many vast andextensive projects, however, were undertaken, and for severalyears carried on without any other fund to support them besideswhat was raised at this enormous expense. The projectors, nodoubt, had in their golden dreams the most distinct vision of thisgreat profit. Upon their awaking, however, either at the end oftheir projects, or when they were no longer able to carry them on,



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they very seldom, I believe, had the good fortune to find it.1

1The 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 Edin-

burgh and London was frequently three per cent against Edinburgh, and

those bills at sight must frequently have cost A that premium. This trans-

action 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 B 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 days 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



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

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.



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The paper which was issued upon those circulating bills ofexchange, amounted, upon many occasions, to the whole funddestined for carrying on some vast and extensive project ofagriculture, commerce, or manufactures; and not merely to thatpart of it which, had there been no paper money, the projectorwould have been obliged to keep by him, unemployed and inready money for answering occasional demands. The greater partof this paper was, consequently, over and above the value of thegold and silver which would have circulated in the country, hadthere been no paper money. It was over and above, therefore,what the circulation of the country could easily absorb andemploy, and upon that account, immediately returned upon thebanks in order to be exchanged for gold and silver, which theywere to find as they could. It was a capital which those projectorshad very artfully contrived to draw from those banks, not onlywithout their knowledge or deliberate consent, but for some time,perhaps, without their having the most distant suspicion that theyhad really advanced it.

When two people, who are continually drawing and redrawingupon one another, discount their bills always with the samebanker, he must immediately discover what they are about, andsee clearly that they are trading, not with any capital of their own,but with the capital which he advances to them. But this discoveryis not altogether so easy when they discount their bills sometimeswith one banker, and sometimes with another, and when the sametwo persons do not constantly draw and redraw upon one another,but occasionally run the round of a great circle of projectors, whofind it for their interest to assist one another in this method ofraising money, and to render it, upon that account, as difficult as



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possible to distinguish between a real and fictitious bill ofexchange; between a bill drawn by a real creditor upon a realdebtor, and a bill for which there was properly no real creditor butthe bank which discounted it, nor any real debtor but theprojector who made use of the money. When a banker had evenmade this discovery, he might sometimes make it too late, andmight find that he had already discounted the bills of thoseprojectors to so great an extent that, by refusing to discount anymore, he would necessarily make them all bankrupts, and thus, byruining them, might perhaps ruin himself.

For his own interest and safety, therefore, he might find itnecessary, in this very perilous situation, to go on for some time,endeavouring, however, to withdraw gradually, and upon thataccount making every day greater and greater difficulties aboutdiscounting, in order to force those projectors by degrees to haverecourse, either to other bankers, or to other methods of raisingmoney; so that he himself might, as soon as possible, get out of thecircle. The difficulties, accordingly, which the Bank of England,which the principal bankers in London, and which even the moreprudent Scotch banks began, after a certain time, and when all ofthem had already gone too far, to make about discounting, notonly alarmed, but enraged in the highest degree those projectors.Their own distress, of which this prudent and necessary reserve ofthe banks was, no doubt, the immediate occasion, they called thedistress of the country; and this distress of the country, they said,was altogether owing to the ignorance, pusillanimity, and badconduct of the banks, which did not give a sufficiently liberal aidto the spirited undertakings of those who exerted themselves inorder to beautify, improve, and enrich the country. It was the duty



415

of the banks, they seemed to think, to lend for as long a time, andto as great an extent as they might wish to borrow. The banks,however, by refusing in this manner to give more credit to those towhom they had already given a great deal too much, took the onlymethod by which it was now possible to save either their owncredit or the public credit of the country.

In the midst of this clamour and distress, a new bank wasestablished in Scotland for the express purpose of relieving thedistress of the country. The design was generous; but theexecution was imprudent, and the nature and causes of thedistress which it meant to relieve were not, perhaps, wellunderstood. This bank was more liberal than any other had everbeen, both in granting cash accounts, and in discounting bills ofexchange. With regard to the latter, it seems to have made scarceany distinction between real and circulating bills, but to havediscounted all equally. It was the avowed principle of this bank toadvance, upon any reasonable security, the whole capital whichwas to be employed in those improvements of which the returnsare the most slow and distant, such as the improvements of land.To promote such improvements was even said to be the chief ofthe public-spirited purposes for which it was instituted. By itsliberality in granting cash accounts, and in discounting bills ofexchange, it, no doubt, issued great quantities of its bank notes.But those bank notes being, the greater part of them, over andabove what the circulation of the country could easily absorb andemploy, returned upon it, in order to be exchanged for gold andsilver as fast as they were issued. Its coffers were never well filled.The capital which had been subscribed to this bank at twodifferent subscriptions, amounted to one hundred and sixty



416

thousand pounds, of which eighty per cent only was paid up. Thissum ought to have been paid in at several different instalments. Agreat part of the proprietors, when they paid in their firstinstalment, opened a cash account with the bank; and thedirectors, thinking themselves obliged to treat their ownproprietors with the same liberality with which they treated allother men, allowed many of them to borrow upon this cashaccount what they paid in upon all their subsequent instalments.Such payments, therefore, only put into one coffer what had themoment before been taken out of another. But had the coffers ofthis bank been filled ever so well, its excessive circulation musthave emptied them faster than they could have been replenishedby any other expedient but the ruinous one of drawing uponLondon, and when the bill became due, paying it, together withinterest and commission, by another draft upon the same place. Itscoffers having been filled so very ill, it is said to have been drivento this resource within a very few months after it began to dobusiness. The estates of the proprietors of this bank were worthseveral millions, and by their subscription to the original bond orcontract of the bank, were really pledged for answering all itsengagements. By means of the great credit which so great a pledgenecessarily gave it, it was, notwithstanding its too liberal conduct,enabled to carry on business for more than two years. When it wasobliged to stop, it had in the circulation about two hundredthousand pounds in bank notes. In order to support the circulationof those notes which were continually returning upon it as fastthey were issued, it had been constantly in the practice of drawingbills of exchange upon London, of which the number and valuewere continually increasing, and, when it stopped, amounted to



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upwards of six hundred thousand pounds. This bank, therefore,had, in little more than the course of two years, advanced todifferent people upwards of eight hundred thousand pounds atfive per cent. Upon the two hundred thousand pounds which itcirculated in bank notes, this five per cent might, perhaps, beconsidered as clear gain, without any other deduction besides theexpense of management. But upon upwards of six hundredthousand pounds, for which it was continually drawing bills ofexchange upon London, it was paying, in the way of interest andcommission, upwards of eight per cent, and was consequentlylosing more than three per cent upon more than three-fourths ofall its dealings.

The operations of this bank seem to have produced effects quiteopposite to those which were intended by the particular personswho planned and directed it. They seem to have intended tosupport the spirited undertakings, for as such they consideredthem, which were at that time carrying on in different parts of thecountry; and at the same time, by drawing the whole bankingbusiness to themselves, to supplant all the other Scotch banks,particularly those established in Edinburgh, whose backwardnessin discounting bills of exchange had given some offence. Thisbank, no doubt, gave some temporary relief to those projectors,and enabled them to carry on their projects for about two yearslonger than they could otherwise have done. But it thereby onlyenabled them to get so much deeper into debt, so that, when ruincame, it fell so much the heavier both upon them and upon theircreditors. The operations of this bank, therefore, instead ofrelieving, in reality aggravated in the long-run the distress whichthose projectors had brought both upon themselves and upon



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their country. It would have been much better for themselves,their creditors, and their country, had the greater part of thembeen obliged to stop two years sooner than they actually did. Thetemporary relief, however, which this bank afforded to thoseprojectors, proved a real and permanent relief to the other Scotchbanks. All the dealers in circulating bills of exchange, which thoseother banks had become so backward in discounting, had recourseto this new bank, where they were received with open arms. Thoseother banks, therefore, were enabled to get very easily out of thatfatal circle, from which they could not otherwise have disengagedthemselves without incurring a considerable loss, and perhaps tooeven some degree of discredit.

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

At the first setting out of this bank, it was the opinion of somepeople that how fast soever its coffers might be emptied, it mighteasily replenish them by raising money upon the securities ofthose to whom it had advanced its paper. Experience, I believe,soon convinced them that this method of raising money was bymuch too slow to answer their purpose; and that coffers whichoriginally were so ill filled, and which emptied themselves so veryfast, could be replenished by no other expedient but the ruinousone of drawing bills upon London, and when they became due,paying them by other drafts upon the same place withaccumulated interest and commission. But though they had beenable by this method to raise money as fast as they wanted it, yet,instead of making a profit, they must have suffered a loss by every



419

such operation; so that in the long-run they must have ruinedthemselves as a mercantile company, though, perhaps, not so soonas by the more expensive practice of drawing and redrawing. Theycould still have made nothing by the interest of the paper, which,being over and above what the circulation of the country couldabsorb and employ, returned upon them, in order to be exchangedfor gold and silver, as fast as they issued it; and for the payment ofwhich they were themselves continually obliged to borrow money.On the contrary, the whole expense of this borrowing, ofemploying agents to look out for people who had money to lend, ofnegotiating with those people, and of drawing the proper bond orassignment, must have fallen upon them, and have been so muchclear loss upon the balance of their accounts. The project ofreplenishing their coffers in this manner may be compared to thatof a man who had a water-pond from which a stream wascontinually running out, and into which no stream was continuallyrunning, but who proposed to keep it always equally full byemploying a number of people to go continually with buckets to awell at some miles distance in order to bring water to replenish it.

But though this operation had proved not only practicable butprofitable to the bank as a mercantile company, yet the countrycould have derived no benefit from it; but, on the contrary, musthave suffered a very considerable loss by it. This operation couldnot augment in the smallest degree the quantity of money to belent. It could only have erected this bank into a sort of general loanoffice for the whole country. Those who wanted to borrow musthave applied to this bank instead of applying to the privatepersons who had lent it their money. But a bank which lendsmoney perhaps to five hundred different people, the greater part



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of whom its directors can know very little about, is not likely to bemore judicious in the choice of its debtors than a private personwho lends out his money among a few people whom he knows,and in whose sober and frugal conduct he thinks he has goodreason to confide. The debtors of such a bank as that whoseconduct I have been giving some account of were likely, thegreater part of them, to be chimerical projectors, the drawers andre-drawers of circulating bills of exchange, who would employ themoney in extravagant undertakings, which, with all the assistancethat could be given them, they would probably never be able tocomplete, and which, if they should be completed, would neverrepay the expense which they had really cost, would never afford afund capable of maintaining a quantity of labour equal to thatwhich had been employed about them. The sober and frugaldebtors of private persons, on the contrary, would be more likelyto employ the money borrowed in sober undertakings which wereproportioned to their capitals, and which, though they might haveless of the grand and the marvellous, would have more of the solidand the profitable, which would repay with a large profit whateverhad been laid out upon them, and which would thus afford a fundcapable of maintaining a much greater quantity of labour thanthat which had been employed about them. The success of thisoperation, therefore, without increasing in the smallest degree thecapital of the country, would only have transferred a great part ofit from prudent and profitable to imprudent and unprofitableundertakings.

That the industry of Scotland languished for want of money toemploy it was the opinion of the famous Mr. Law. By establishinga bank of a particular kind, which he seems to have imagined



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might issue paper to the amount of the whole value of all the landsin the country, he proposed to remedy this want of money. TheParliament of Scotland, when he first proposed his project, did notthink proper to adopt it. It was afterwards adopted, with somevariations, by the Duke of Orleans, at that time Regent of France.The idea of the possibility of multiplying paper to almost anyextent was the real foundation of what is called the Mississippischeme, the most extravagant project both of banking and stock-jobbing that, perhaps, the world ever saw. The differentoperations of this scheme are explained so fully, so clearly, andwith so much order and distinctness, by Mr. du Verney, in hisExamination of the Political Reflections upon Commerce andFinances 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 hepublished in Scotland when he first proposed his project. Thesplendid but visionary ideas which are set forth in that and someother works upon the same principles still continue to make animpression upon many people, and have, perhaps, in part,contributed to that excess of banking which has of late beencomplained of both in Scotland and in other places.

The Bank of England is the greatest bank of circulation inEurope. It was incorporated, in pursuance of an act of Parliament,by a charter under the Great Seal, dated the 27th of July, 1694. Itat that time advanced to government the sum of one million twohundred thousand pounds, for an annuity of one hundredthousand pounds; or for £96,000 a year interest, at the rate of eightper cent, and £4000 a year for the expense of management. Thecredit of the new government, established by the Revolution, we



422

may believe, must have been very low, when it was obliged toborrow at so high an interest.

In 1697 the bank was allowed to enlarge its capital stock by anengraftment of £1,001,171 10s. Its whole capital stock therefore,amounted at this time to £2,201,171 10s. This engraftment is said tohave been for the support of public credit. In 1696, tallies had beenat forty, and fifty, and sixty per cent discount, and bank notes attwenty per cent.1 During the great recoinage of the silver, whichwas going on at this time, the bank had thought proper todiscontinue the payment of its notes, which necessarily occasionedtheir discredit.

In pursuance of the 7th Anne, c. 7, the bank advanced and paidinto 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 £4000 for expense of management. In 1708,therefore, the credit of government was as good as that of privatepersons, since it could borrow at six per cent interest the commonlegal 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.10 1/2d. at six per cent interest, and was at the same time allowedto take in subscriptions for doubling its capital. In 1708, therefore,the capital of the bank amounted to £4,402,343; and it hadadvanced to government the sum of £3,375,027 17s. 101/2d.

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

1James Postlethwaite’s History of the Public Revenue, p. 301.



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In pursuance of the 3rd George I, c. 8, the bank delivered uptwo millions of exchequer bills to be cancelled. It had at this time,therefore, advanced to government 17s. 10d. In pursuance of the8th George 1, c. 21, the bank purchased of the South Sea Companystock to the amount of 14,000,000; and in 1722, in consequence ofthe subscriptions which it had taken in for enabling it to make thispurchase, its capital stock was increased by £3,400,000. At thistime, therefore, the bank had advanced to the public £9,375,02717s. 101/2d.; and its capital stock amounted only to £8,959,995 14s.8d. It was upon this occasion that the sum which the bank hadadvanced to the public, and for which it received interest, beganfirst to exceed its capital stock, or the sum for which it paid adividend to the proprietors of bank stock; or, in other words, thatthe bank began to have an undivided capital, over and above itsdivided one. It has continued to have an undivided capital of thesame kind ever since. In 1746, the bank had, upon differentoccasions, advanced to the public £11,686,800 and its dividedcapital had been raised by different calls and subscriptions to£10,780,000. The state of those two sums has continued to be thesame ever since. In pursuance of the 4th of George III, c. 25, thebank agreed to pay to government for the renewal of its charter£110,000 without interest or repayment. This sum, therefore, didnot increase either of those two other sums.

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



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The stability of the Bank of England is equal to that of theBritish government. All that it has advanced to the public must belost before its creditors can sustain any loss. No other bankingcompany in England can be established by act of Parliament, orcan consist of more than six members. It acts, not only as anordinary bank, but as a great engine of state. It receives and paysthe greater part of the annuities which are due to the creditors ofthe public, it circulates exchequer bills, and it advances togovernment the annual amount of the land and malt taxes, whichare frequently not paid up till some years thereafter. In thosedifferent operations, its duty to the public may sometimes haveobliged it, without any fault of its directors, to overstock thecirculation with paper money. It likewise discounts merchants’bills, and has, upon several different occasions, supported thecredit of the principal houses, not only of England, but ofHamburg and Holland. Upon one occasion, in 1763, it is said tohave advanced for this purpose, in one week, about £1,600,000, agreat part of it in bullion. I do not, however, pretend to warranteither the greatness of the sum, or the shortness of the time. Uponother occasions, this great company has been reduced to thenecessity of paying in sixpences.

It is not by augmenting the capital of the country, but byrendering a greater part of that capital active and productive thanwould otherwise be so, that the most judicious operations ofbanking can increase the industry of the country. That part of hiscapital which a dealer is obliged to keep by him unemployed, andin ready money, for answering occasional demands, is so muchdead stock, which, so long as it remains in this situation, producesnothing either to him or to his country. The judicious operations of



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banking enable him to convert this dead stock into active andproductive stock; into materials to work upon, into tools to workwith, and into provisions and subsistence to work for; into stockwhich produces something both to himself and to his country. Thegold and silver money which circulates in any country, and bymeans of which the produce of its land and labour is annuallycirculated and distributed to the proper consumers, is, in the samemanner as the ready money of the dealer, all dead stock. It is avery valuable part of the capital of the country, which producesnothing to the country. The judicious operations of banking, bysubstituting paper in the room of a great part of this gold andsilver, enables the country to convert a great part of this deadstock into active and productive stock; into stock which producessomething to the country. The gold and silver money whichcirculates in any country may very properly be compared to ahighway, which, while it circulates and carries to market all thegrass and corn of the country, produces itself not a single pile ofeither. The judicious operations of banking, by providing, if I maybe allowed so violent a metaphor, a sort of waggon-way throughthe air, enable the country to convert, as it were, a great part of itshighways into good pastures and corn-fields, and thereby toincrease very considerably the annual produce of its land andlabour. The commerce and industry of the country, however, itmust be acknowledged, though they may be somewhataugmented, cannot be altogether so secure when they are thus, asit were, suspended upon the Daedalian wings of paper money aswhen they travel about upon the solid ground of gold and silver.Over and above the accidents to which they are exposed from theunskilfulness of the conductors of this paper money, they are



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liable to several others, from which no prudence or skill of thoseconductors can guard them.

An unsuccessful war, for example, in which the enemy gotpossession of the capital, and consequently of that treasure whichsupported the credit of the paper money, would occasion a muchgreater confusion in a country where the whole circulation wascarried on by paper, than in one where the greater part of it wascarried on by gold and silver. The usual instrument of commercehaving lost its value, no exchanges could be made but either bybarter or upon credit. All taxes having been usually paid in papermoney, the prince would not have wherewithal either to pay histroops, or to furnish his magazines; and the state of the countrywould be much more irretrievable than if the greater part of itscirculation had consisted in gold and silver. A prince, anxious tomaintain his dominions at all times in the state in which he canmost easily defend them, ought, upon this account, to guard, notonly against that excessive multiplication of paper money whichruins the very banks which issue it; but even against thatmultiplication of it which enables them to fill the greater part ofthe circulation of the country with it.

The circulation of every country may be considered as dividedinto two different branches: the circulation of the dealers with oneanother, and the circulation between the dealers and theconsumers.

Though the same pieces of money, whether paper or metal,may be employed sometimes in the one circulation and sometimesin 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 tocarry it on. The value of the goods circulated between the different



427

dealers, never can exceed the value of those circulated betweenthe dealers and the consumers; whatever is bought by the dealers,being ultimately destined to be sold to the consumers. Thecirculation between the dealers, as it is carried on by wholesale,requires generally a pretty large sum for every particulartransaction. That between the dealers and the consumers, on thecontrary, as it is generally carried on by retail, frequently requiresbut very small ones, a shilling, or even a halfpenny, being oftensufficient. But small sums circulate much faster than large ones. Ashilling changes masters more frequently than a guinea, and ahalfpenny more frequently than a shilling. Though the annualpurchases of all the consumers, therefore, are at least equal invalue to those of all the dealers, they can generally be transactedwith a much smaller quantity of money; the same pieces, by amore rapid circulation, serving as the instrument of many morepurchases of the one kind than of the other.

Paper money may be so regulated as either to confine itself verymuch to the circulation between the different dealers, or to extenditself likewise to a great part of that between the dealers and theconsumers. Where no bank notes are circulated under ten poundsvalue, as in London, paper money confines itself very much to thecirculation between the dealers. When a ten pound bank notecomes into the hands of a consumer, he is generally obliged tochange it at the first shop where he has occasion to purchase fiveshillings’ worth of goods, so that it often returns into the hands ofa dealer before the consumer has spent the fortieth part of themoney. Where bank notes are issued for so small sums as twentyshillings, as in Scotland, paper money extends itself to aconsiderable part of the circulation between dealers and



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consumers. Before the Act of Parliament, which put a stop to thecirculation of ten and five shilling notes, it filled a still greater partof that circulation. In the currencies of North America, paper wascommonly issued for so small a sum as a shilling, and filled almostthe whole of that circulation. In some paper currencies ofYorkshire, it was issued even for so small a sum as a sixpence.

Where the issuing of bank notes for such very small sums isallowed and commonly practised, many mean people are bothenabled and encouraged to become bankers. A person whosepromissory note for five pounds, or even for twenty shillings,would be rejected by everybody, will get it to be received withoutscruple when it is issued for so small a sum as a sixpence. But thefrequent bankruptcies to which such beggarly bankers must beliable may occasion a very considerable inconveniency, andsometimes even a very great calamity to many poor people whohad received their notes in payment.

It were better, perhaps, that no bank notes were issued in anypart of the kingdom for a smaller sum than five pounds. Papermoney would then, probably, confine itself, in every part of thekingdom, to the circulation between the different dealers, as muchas it does at present in London, where no bank notes are issuedunder ten pounds’ value; five pounds being, in most parts of thekingdom, a sum which, though it will purchase, little more thanhalf the quantity of goods, is as much considered, and is as seldomspent all at once, as ten pounds are amidst the profuse expense ofLondon.

Where paper money, it is to be observed, is pretty muchconfined to the circulation between dealers and dealers, as atLondon, there is always plenty of gold and silver. Where it extends



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itself to a considerable part of the circulation between dealers andconsumers, as in Scotland, and still more in North America, itbanishes gold and silver almost entirely from the country; almostall the ordinary transactions of its interior commerce being thuscarried on by paper. The suppression of ten and five shilling banknotes somewhat relieved the scarcity of gold and silver inScotland; and the suppression of twenty shilling notes wouldprobably relieve it still more. Those metals are said to havebecome more abundant in America since the suppression of someof their paper currencies. They are said, likewise, to have beenmore abundant before the institution of those currencies.

Though paper money should be pretty much confined to thecirculation between dealers and dealers, yet banks and bankersmight still be able to give nearly the same assistance to theindustry and commerce of the country as they had done whenpaper money filled almost the whole circulation. The ready moneywhich a dealer is obliged to keep by him, for answering occasionaldemands, is destined altogether for the circulation betweenhimself and other dealers of whom he buys goods. He has nooccasion to keep any by him for the circulation between himselfand the consumers, who are his customers, and who bring readymoney to him, instead of taking any from him. Though no papermoney, therefore, was allowed to be issued but for such sums aswould confine it pretty much to the circulation between dealersand dealers, yet, partly by discounting real bills of exchange, andpartly by lending upon cash accounts, banks and bankers mightstill be able to relieve the greater part of those dealers from thenecessity of keeping any considerable part of their stock by them,unemployed and in ready money, for answering occasional



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demands. They might still be able to give the utmost assistancewhich banks and bankers can, with propriety, give to traders ofevery kind.

To restrain private people, it may be said, from receiving inpayment the promissory notes of a banker, for any sum whethergreat or small, when they themselves are willing to receive them,or to restrain a banker from issuing such notes, when all hisneighbours are willing to accept of them, is a manifest violation ofthat natural liberty which it is the proper business of law not toinfringe, but to support. Such regulations may, no doubt, beconsidered as in some respects a violation of natural liberty. Butthose exertions of the natural liberty of a few individuals, whichmight endanger the security of the whole society, are, and ought tobe, restrained by the laws of all governments, of the most free aswell as of the most despotical. The obligation of building partywalls, in order to prevent the communication of fire, is a violationof natural liberty exactly of the same kind with the regulations ofthe banking trade which are here proposed.

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

The increase of paper money, it has been said, by augmentingthe quantity, and consequently diminishing the value of the wholecurrency, necessarily augments the money price of commodities.But as the quantity of gold and silver, which is taken from the



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currency, is always equal to the quantity of paper which is addedto it, paper money does not necessarily increase the quantity of thewhole currency. From the beginning of the last century to thepresent time, provisions never were cheaper in Scotland than in1759, though, from the circulation of ten and five shilling banknotes, there was then more paper money in the country than atpresent.

The proportion between the price of provisions in Scotland andthat in England is the same now as before the great multiplicationof banking companies in Scotland. Corn is, upon most occasions,fully as cheap in England as in France; though there is a great dealof paper money in England, and scarce any in France. In 1751 andin 1752, when Mr. Hume published his Political Discourses, andsoon 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 themultiplication of paper money.

It would be otherwise, indeed, with a paper money consisting inpromissory notes, of which the immediate payment depended, inany respect, either upon the good will of those who issued them, orupon a condition which the holder of the notes might not alwayshave it in his power to fulfil; or of which the payment was notexigible till after a certain number of years, and which in themeantime bore no interest. Such a paper money would, no doubt,fall more or less below the value of gold and silver, according asthe difficulty or uncertainty of obtaining immediate payment wassupposed to be greater or less; or according to the greater or lessdistance of time at which payment was exigible.

Some years ago the different banking companies of Scotland



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were in the practice of inserting into their bank notes, what theycalled an Optional Clause, by which they promised payment to thebearer, either as soon as the note should be presented, or, in theoption of the directors, six months after such presentment,together with the legal interest for the said six months. Thedirectors of some of those banks sometimes took advantage of thisoptional clause, and sometimes threatened those who demandedgold and silver in exchange for a considerable number of theirnotes that they Would take advantage of it, unless such demanderswould content themselves with a part of what they demanded. Thepromissory notes of those banking companies constituted at thattime the far greater part of the currency of Scotland, which thisuncertainty of payment necessarily degraded below the value ofgold and silver money. During the continuance of this abuse(which prevailed chiefly in 1762, 1763, and 1764), while theexchange between London and Carlisle was at par, that betweenLondon and Dumfries would sometimes be four per cent againstDumfries, though this town is not thirty miles distant fromCarlisle. But at Carlisle, bills were paid in gold and silver; whereasat Dumfries they were paid in Scotch bank notes, and theuncertainty of getting those bank notes exchanged for gold andsilver coin had thus degraded them four per cent below the valueof that coin. The same Act of Parliament which suppressed tenand five shilling bank notes suppressed likewise this optionalclause, and thereby restored the exchange between England andScotland to its natural rate, or to what the course of trade andremittances might happen to make it.

In the paper currencies of Yorkshire, the payment of so small asum as a sixpence sometimes depended upon the condition that



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the holder of the note should bring the change of a guinea to theperson who issued it; a condition which the holders of such notesmight frequently find it very difficult to fulfil, and which must havedegraded this currency below the value of gold and silver money.An Act of Parliament accordingly declared all such clausesunlawful, and suppressed, in the same manner as in Scotland, allpromissory notes, payable to the bearer, under twenty shillingsvalue.

The paper currencies of North America consisted, not in banknotes payable to the bearer on demand, but in government paper,of which the payment was not exigible till several years after it wasissued; and though the colony governments paid no interest to theholders of this paper, they declared it to be, and in fact rendered it,a legal tender of payment for the full value for which it was issued.But allowing the colony security to be perfectly good, a hundredpounds payable fifteen years hence, for example, in a countrywhere interest at six per cent, is worth little more than fortypounds ready money. To oblige a creditor, therefore, to accept ofthis as full payment for a debt of a hundred pounds actually paiddown in ready money was an act of such violent injustice as hasscarce, perhaps, been attempted by the government of any othercountry which pretended to be free. It bears the evident marks ofhaving originally been, what the honest and downright DoctorDouglas assures us it was, a scheme of fraudulent debtors to cheattheir creditors. The government of Pennsylvania, indeed,pretended, upon their first emission of paper money, in 1722, torender their paper of equal value with gold and silver by enactingpenalties against all those who made any difference in the price oftheir goods when they sold them for a colony paper, and when



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they sold them for gold and silver; a regulation equally tyrannical,but much less effectual than that which it was meant to support. Apositive law may render a shilling a legal tender for guinea,because it may direct the courts of justice to discharge the debtorwho has made that tender. But no positive law can oblige a personwho sells goods, and who is at liberty to sell or not to sell as hepleases, to accept of a shilling as equivalent to a guinea in theprice of them.

Notwithstanding any regulation of this kind, it appeared by thecourse of exchange with Great Britain, that a hundred poundssterling was occasionally considered as equivalent, in some of thecolonies, to a hundred and thirty pounds, and in others to so greata sum as eleven hundred pounds currency; this difference in thevalue arising from the difference in the quantity of paper emittedin the different colonies, and in the distance and probability of theterm of its final discharge and redemption.

No law, therefore, could be more equitable than the Act ofParliament, so unjustly complained of in the colonies, whichdeclared that no paper currency to be emitted there in timecoming should be a legal tender of payment.

Pennsylvania was always more moderate in its emissions ofpaper money than any other of our colonies. Its paper currency,accordingly, is said never to have sunk below the value of the goldand silver which was current in the colony before the firstemission of its paper money. Before that emission, the colony hadraised the denomination of its coin, and had, by act of assembly,ordered five shillings sterling to pass in the colony for six andthreepence, and afterwards for six and eightpence. A poundcolony currency, therefore, even when that currency was gold and



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silver, was more than thirty per cent below the value of a poundsterling, and when that currency was turned into paper it wasseldom much more than thirty per cent below that value. Thepretence for raising the denomination of the coin, was to preventthe exportation of gold and silver, by making equal quantities ofthose metals pass for greater sums in the colony than they did inthe mother country. It was found, however, that the price of allgoods from the mother country rose exactly in proportion as theyraised the denomination of their coin, so that their gold and silverwere exported as fast as ever.

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

A prince who should enact that a certain proportion of his taxesshould be paid in a paper money of a certain kind might therebygive a certain value to this paper money, even though the term ofits final discharge and redemption should depend altogether uponthe will of the prince. If the bank which issued this paper wascareful to keep the quantity of it always somewhat below whatcould easily be employed in this manner, the demand for it mightbe such as to make it even bear a premium, or sell for somewhatmore in the market than the quantity of gold or silver currency forwhich it was issued. Some people account in this manner for what



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is called the Agio of the bank of Amsterdam, or for the superiorityof bank money over current money; though this bank money, asthey pretend, cannot be taken out of the bank at the will of theowner. The greater part of foreign bills of exchange must be paidin bank money, that is, by a transfer in the books of the bank; andthe directors of the bank, they allege, are careful to keep the wholequantity of bank money always below what this use occasions ademand for. It is upon this account, they say, that bank moneysells for a premium, or bears an agio of four or five per cent abovethe same nominal sum of the gold and silver currency of thecountry. This account of the bank of Amsterdam, however, it willappear hereafter, is in a great measure chimerical.

A paper currency which falls below the value of gold and silvercoin does not thereby sink the value of those metals, or occasionequal quantities of them to exchange for a smaller quantity ofgoods of any other kind. The proportion between the value of goldand silver and that of goods of any other kind depends in all casesnot upon the nature or quantity of any particular paper money,which may be current in any particular country, but upon therichness or poverty of the mines, which happen at any particulartime to supply the great market of the commercial world withthose metals. It depends upon the proportion between thequantity of labour which is necessary in order to bring a certainquantity of gold and silver to market, and that which is necessaryin order to bring thither a certain quantity of any other sort ofgoods.

If bankers are restrained from issuing any circulating banknotes, or notes payable to the bearer, for less than a certain sum,and if they are subjected to the obligation of an immediate and



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unconditional payment of such bank notes as soon as presented,their trade may, with safety to the public, be rendered in all otherrespects perfectly free. The late multiplication of bankingcompanies in both parts of the United Kingdom, an event bywhich many people have been much alarmed, instead ofdiminishing, 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 totheir cash, to guard themselves against those malicious runs whichthe rivalship of so many competitors is always ready to bring uponthem.

It restrains the circulation of each particular company within anarrower circle, and reduces their circulating notes to a smallernumber. By dividing the whole circulation into a greater numberof parts, the failure of any one company, an accident which, in thecourse of things, must sometimes happen, becomes of lessconsequence to the public. This free competition, too, obliges allbankers to be more liberal in their dealings with their customers,lest their rivals should carry them away. In general, if any branchof trade, or any division of labour, be advantageous to the public,the freer and more general the competition, it will always be themore so.



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Chapter III

Of the Accumulation of Capital, or of Productiveand Unproductive Labour

here is one sort of labour which adds to the value of thesubject upon which it is bestowed: there is another whichhas no such effect. The former, as it produces a value, may

be called productive; the latter, unproductive1 labour. Thus thelabour of a manufacturer adds, generally, to the value of thematerials which he works upon, that of his own maintenance, andof his master’s profit. The labour of a menial servant, on thecontrary, adds to the value of nothing.

Though the manufacturer has his wages advanced to him by hismaster, he, in reality, costs him no expense, the value of thosewages being generally restored, together with a profit, in theimproved value of the subject upon which his labour is bestowed.But the maintenance of a menial servant never is restored. A mangrows rich by employing a multitude of manufacturers: he growspoor by maintaining a multitude of menial servants. The labour ofthe latter, however, has its value, and deserves its reward as wellas that of the former. But the labour of the manufacturer fixes andrealizes itself in some particular subject or vendible commodity,which lasts for some time at least after that labour is past. It is, as

1Some 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 show that their sense is an improper one.

T



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it were, a certain quantity of labour stocked and stored up to beemployed, if necessary, upon some other occasion. That subject, orwhat is the same thing, the price of that subject, can afterwards, ifnecessary, put into motion a quantity of labour equal to that whichhad originally produced it.

The labour of the menial servant, on the contrary, does not fixor realize itself in any particular subject or vendible commodity.His services generally perish in the very instant of theirperformance, and seldom leave any trace or value behind them forwhich an equal quantity of service could afterwards be procured.

The labour of some of the most respectable orders in the societyis, like that of menial servants, unproductive of any value, anddoes not fix or realize itself in any permanent subject; or vendiblecommodity, which endures after that labour is past, and for whichan equal quantity of labour could afterwards be procured. Thesovereign, for example, with all the officers both of justice and warwho serve under him, the whole army and navy, are unproductivelabourers. They are the servants of the public, and are maintainedby a part of the annual produce of the industry of other people.

Their service, how honourable, how useful, or how necessarysoever, produces nothing for which an equal quantity of servicecan afterwards be procured. The protection, security, and defenceof the commonwealth, the effect of their labour this year will notpurchase its protection, security, and defence for the year to come.In the same class must be ranked, some both of the gravest andmost 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



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by the very same principles which regulate that of every other sortof labour; and that of the noblest and most useful, producesnothing which could afterwards purchase or procure an equalquantity of labour. Like the declamation of the actor, the harangueof the orator, or the tune of the musician, the work of all of themperishes in the very instant of its production.

Both productive and unproductive labourers, and those who donot labour at all, are all equally maintained by the annual produceof the land and labour of the country. This produce, how greatsoever, can never be infinite, but must have certain limits.According, therefore, as a smaller or greater proportion of it is inany one year employed in maintaining unproductive hands, themore in the one case and the less in the other will remain for theproductive, and the next year’s produce will be greater or smalleraccordingly; the whole annual produce, if we except thespontaneous productions of the earth, being the effect ofproductive labour.

Though the whole annual produce of the land and labour ofevery country is, no doubt, ultimately destined for supplying theconsumption of its inhabitants, and for procuring a revenue tothem, yet when it first comes either from the ground, or from thehands of the productive labourers, it naturally divides itself intotwo parts. One of them, and frequently the largest, is, in the firstplace, destined for replacing a capital, or for renewing theprovisions, materials, and finished work, which had beenwithdrawn from a capital; the other for constituting a revenueeither to the owner of this capital, as the profit of his stock, or tosome other person, as the rent of his land. Thus, of the produce ofland, one part replaces the capital of the farmer; the other pays his



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profit and the rent of the landlord; and thus constitutes a revenueboth to the owner of this capital, as the profits of his stock; and tosome other person, as the rent of his land. Of the produce of agreat manufactory, in the same manner, one part, and that alwaysthe largest, replaces the capital of the undertaker of the work; theother pays his profit, and thus constitutes a revenue to the ownerof this capital.

That part of the annual produce of the land and labour of anycountry which replaces a capital never is immediately employed tomaintain any but productive hands. It pays the wages ofproductive labour only. That which is immediately destined forconstituting a revenue, either as profit or as rent, may maintainindifferently either productive or unproductive hands.

Whatever part of his stock a man employs as a capital, healways expects is to be replaced to him with a profit. He employsit, therefore, in maintaining productive bands only; and afterhaving served in the function of a capital to him, it constitutes arevenue to them. Whenever he employs any part of it inmaintaining unproductive hands of any kind, that part is, fromthat moment, withdrawn from his capital, and placed in his stockreserved for immediate consumption.

Unproductive labourers, and those who do not labour at all, areall maintained by revenue; either, first, by that part of the annualproduce which is originally destined for constituting a revenue tosome particular persons, either as the rent of land or as the profitsof stock; or, secondly, by that part which, though originallydestined for replacing a capital and for maintaining productivelabourers only, yet when it comes into their hands whatever partof it is over and above their necessary subsistence may be



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employed in maintaining indifferently either productive orunproductive hands. Thus, not only the great landlord or the richmerchant, but even the common workman, if his wages areconsiderable, may maintain a menial servant; or he maysometimes go to a play or a puppet-show, and so contribute hisshare towards maintaining one set of unproductive labourers; orhe may pay some taxes, and thus help to maintain another set,more honourable and useful indeed, but equally unproductive. Nopart of the annual produce, however, which had been originallydestined to replace a capital, is ever directed towards maintainingunproductive hands till after it has put into motion its fullcomplement of productive labour, or all that it could put intomotion in the way in which it was employed. The workman musthave earned his wages by work done before he can employ anypart of them in this manner. That part, too, is generally but a smallone. It is his spare revenue only, of which productive labourershave seldom a great deal. They generally have some, however; andin the payment of taxes the greatness of their number maycompensate, 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 theirsubsistence. These are the two sorts of revenue of which theowners have generally most to spare. They might both maintainindifferently either productive or unproductive hands. They seem,however, to have some predilection for the latter. The expense of agreat lord feeds generally more idle than industrious people. Therich merchant, though with his capital he maintains industriouspeople only, yet by his expense, that is, by the employment of hisrevenue, he feeds commonly the very same sort as the great lord.



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The proportion, therefore, between the productive andunproductive hands, depends very much in every country uponthe proportion between that part of the annual produce, which, assoon as it comes either from the ground or from the hands of theproductive labourers, is destined for replacing a capital, and thatwhich is destined for constituting a revenue, either as rent or asprofit. This proportion is very different in rich from what it is inpoor countries.

Thus, at present, in the opulent countries of Europe, a verylarge, frequently the largest portion of the produce of the land isdestined for replacing the capital of the rich and independentfarmer; the other for paying his profits and the rent of thelandlord. But anciently, during the prevalency of the feudalgovernment, a very small portion of the produce was sufficient toreplace the capital employed in cultivation. It consisted commonlyin a few wretched cattle, maintained altogether by thespontaneous produce of uncultivated land, and which might,therefore, be considered as a part of that spontaneous produce. Itgenerally, too, belonged to the landlord, and was by him advancedto the occupiers of the land. All the rest of the produce properlybelonged to him too, either as rent for his land, or as profit uponthis paltry capital. The occupiers of land were generally bondmen,whose persons and effects were equally his property. Those whowere not bondmen were tenants at will, and though the rent whichthey paid was often nominally little more than a quit-rent, it reallyamounted to the whole produce of the land.

Their lord could at all times command their labour in peace andtheir service in war. Though they lived at a distance from hishouse, they were equally dependent upon him as his retainers who



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lived in it. But the whole produce of the land undoubtedly belongsto him who can dispose of the labour and service of all those whomit maintains. In the present state of Europe, the share of thelandlord seldom exceeds a third, sometimes not a fourth part ofthe whole produce of the land. The rent of land, however, in all theimproved parts of the country, has been tripled and quadrupledsince those ancient times; and this third or fourth part of theannual produce is, it seems, three or four times greater than thewhole had been before. In the progress of improvement, rent,though it increases in proportion to the extent, diminishes inproportion to the produce of the land.

In the opulent countries of Europe, great capitals are at presentemployed in trade and manufactures. In the ancient state, the littletrade that was stirring, and the few homely and coarsemanufactures that were carried on, required but very smallcapitals. These, however, must have yielded very large profits. Therate of interest was nowhere less than ten per cent, and theirprofits must have been sufficient to afford this great interest. Atpresent the rate of interest, in the improved parts of Europe, isnowhere higher than six per cent, and in some of the mostimproved it is so low as four, three, and two per cent. Though thatpart of the revenue of the inhabitants which is derived from theprofits of stock is always much greater in rich than in poorcountries, it is because the stock is much greater: in proportion tothe stock the profits are generally much less.

That part of the annual produce, therefore, which, as soon as itcomes either from the ground or from the hands of the productivelabourers, is destined for replacing a capital, is not only muchgreater in rich than in poor countries, but bears a much greater



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proportion to that which is immediately destined for constituting arevenue either as rent or as profit. The funds destined for themaintenance of productive labour are not only much greater in theformer than in the latter, but bear a much greater proportion tothose which, though they may be employed to maintain eitherproductive or unproductive hands, have generally a predilectionfor the latter.

The proportion between those different funds necessarilydetermines in every country the general character of theinhabitants as to industry or idleness. We are more industriousthan our forefathers; because in the present times the fundsdestined for the maintenance of industry are much greater inproportion to those which are likely to be employed in themaintenance of idleness than they were two or three centuriesago. Our ancestors were idle for want of a sufficientencouragement to industry. It is better, says the proverb, to playfor nothing than to work for nothing. In mercantile andmanufacturing towns, where the inferior ranks of people arechiefly maintained by the employment of capital, they are ingeneral industrious, sober, and thriving; as in many English, andin most Dutch towns. In those towns which are principallysupported by the constant or occasional residence of a court, andin which the inferior ranks of people are chiefly maintained by thespending of revenue, they are in general idle, dissolute, and poor;as at Rome, Versailles, Compiègne, and Fontainebleu. If youexcept Rouen and Bordeaux, there is little trade or industry in anyof the parliament towns of France; and the inferior ranks ofpeople, being elderly maintained by the expense of the membersof the courts of justice, and of those who come to plead before



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them, are in general idle and poor. The great trade of Rouen andBordeaux seems to be altogether the effect of their situation.Rouen is necessarily the entrepôt of almost all the goods which arebrought either from foreign countries, or from the maritimeprovinces of France, for the consumption of the great city of Paris.Bordeaux is in the same manner the entrepôt of the wines whichgrow upon the banks of the Garonne, and of the rivers which runinto it, one of the richest wine countries in the world, and whichseems to produce the wine fittest for exportation, or best suited tothe taste of foreign nations. Such advantageous situationsnecessarily attract a great capital by the great employment whichthey afford it; and the employment of this capital is the cause ofthe industry of those two cities. In the other parliament towns ofFrance, very little more capital seems to be employed than what isnecessary for supplying their own consumption; that is, little morethan the smallest capital which can be employed in them. Thesame thing may be said of Paris, Madrid, and Vienna. Of thosethree cities, Paris is by far the most industrious; but Paris itself isthe principal market of all the manufactures established at Paris,and its own consumption is the principal object of all the tradewhich it carries on.

London, Lisbon, and Copenhagen, are, perhaps, the only threecities in Europe which are both the constant residence of a court,and can at the same time be considered as trading cities, or ascities which trade not only for their own consumption, but for thatof other cities and countries. The situation of all the three isextremely advantageous, and naturally fits them to be theentrepôts of a great part of the goods destined for the consumptionof distant places. In a city where a great revenue is spent, to



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employ with advantage a capital for any other purpose than forsupplying the consumption of that city is probably more difficultthan in one in which the inferior ranks of people have no othermaintenance but what they derive from the employment of such acapital. The idleness of the greater part of the people who aremaintained by the expense of revenue corrupts, it is probable, theindustry of those who ought to be maintained by the employmentof capital, and renders it less advantageous to employ a capitalthere than in other places. There was little trade or industry inEdinburgh before the union. When the Scotch Parliament was nolonger to be assembled in it, when it ceased to be the necessaryresidence of the principal nobility and gentry of Scotland, itbecame a city of some trade and industry. It still continues,however, to be the residence of the principal courts of justice inScotland, of the Boards of Customs and Excise, etc. A considerablerevenue, therefore, still continues to be spent in it. In trade andindustry it is much inferior to Glasgow, of which the inhabitantsare chiefly maintained by the employment of capital. Theinhabitants of a large village, it has sometimes been observed,after having made considerable progress in manufactures, havebecome idle and poor in consequence of a great lord having takenup his residence in their neighbourhood.

The proportion between capital and revenue, therefore, seemseverywhere to regulate the proportion between industry andidleness. Wherever capital predominates, industry prevails:wherever revenue, idleness. Every increase or diminution ofcapital, therefore, naturally tends to increase or diminish the realquantity of industry, the number of productive hands, andconsequently the exchangeable value of the annual produce of the



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land and labour of the country, the real wealth and revenue of allits inhabitants.

Capitals are increased by parsimony, and diminished byprodigality and misconduct.

Whatever a person saves from his revenue he adds to hiscapital, and either employs it himself in maintaining an additionalnumber of productive hands, or enables some other person to doso, by lending it to him for an interest, that is, for a share of theprofits. As the capital of an individual can be increased only bywhat he saves from his annual revenue or his annual gains, so thecapital of a society, which is the same with that of all theindividuals who compose it, can be increased only in the samemanner.

Parsimony, and not industry, is the immediate cause of theincrease of capital. Industry, indeed, provides the subject whichparsimony accumulates. But whatever industry might acquire, ifparsimony did not save and store up, the capital would never bethe greater.

Parsimony, by increasing the fund which is destined for themaintenance of productive hands, tends to increase the number ofthose hands whose labour adds to the value of the subject uponwhich it is bestowed. It tends, therefore, to increase theexchangeable value of the annual produce of the land and labourof the country. It puts into motion an additional quantity ofindustry, which gives an additional value to the annual produce.

What is annually saved is as regularly consumed as what isannually spent, and nearly in the same time too; but it isconsumed by a different set of people. That portion of his revenuewhich a rich man annually spends is in most cases consumed by



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idle guests and menial servants, who leave nothing behind them inreturn for their consumption. That portion which he annuallysaves, as for the sake of the profit it is immediately employed as acapital, is consumed in the same manner, and nearly in the sametime too, but by a different set of people, by labourers,manufacturers, and artificers, who reproduce with a profit thevalue of their annual consumption. His revenue, we shall suppose,is paid him in money.

Had he spent the whole, the food, clothing, and lodging, whichthe whole could have purchased, would have been distributedamong the former set of people. By saving a part of it, as that partis for the sake of the profit immediately employed as a capitaleither by himself or by some other person, the food, clothing, andlodging, which may be purchased with it, are necessarily reservedfor the latter. The consumption is the same, but the consumers aredifferent.

By what a frugal man annually saves, he not only affordsmaintenance to an additional number of productive hands, for thator the ensuing year, but, like the founder of a public workhouse,he establishes as it were a perpetual fund for the maintenance ofan equal number in all times to come. The perpetual allotmentand destination of this fund, indeed, is not always guarded by anypositive law, by any trust-right or deed of mortmain. It is alwaysguarded, however, by a very powerful principle, the plain andevident interest of every individual to whom any share of it shallever belong. No part of it can ever afterwards be employed tomaintain any but productive hands without an evident loss to theperson who thus perverts it from its proper destination.

The prodigal perverts it in this manner. By not confining his



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expense within his income, he encroaches upon his capital. Likehim who perverts the revenues of some pious foundation toprofane purposes, he pays the wages of idleness with those fundswhich the frugality of his forefathers had, as it were, consecratedto the maintenance of industry. By diminishing the funds destinedfor the employment of productive labour, he necessarilydiminishes, so far as it depends upon him, the quantity of thatlabour which adds a value to the subject upon which it isbestowed, and, consequently, the value of the annual produce ofthe land and labour of the whole country, the real wealth andrevenue of its inhabitants. If the prodigality of some was notcompensated by the frugality of others, the conduct of everyprodigal, by feeding the idle with the bread of the industrious,tends not only to beggar himself, but to impoverish his country.

Though the expense of the prodigal should be altogether inhome-made, and no part of it in foreign commodities, its effectupon the productive funds of the society would still be the same.Every year there would still be a certain quantity of food andclothing, which ought to have maintained productive, employed inmaintaining unproductive hands. Every year, therefore, therewould still be some diminution in what would otherwise have beenthe value of the annual produce of the land and labour of thecountry.

This expense, it may be said indeed, not being in foreign goods,and not occasioning any exportation of gold and silver, the samequantity of money would remain in the country as before. But ifthe quantity of food and clothing, which were thus consumed byunproductive, had been distributed among productive hands, theywould have reproduced, together with a profit, the full value of



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their consumption. The same quantity of money would in this caseequally have remained in the country, and there would besideshave been a reproduction of an equal value of consumable goods.There would have been two values instead of one.

The same quantity of money, besides, cannot long remain inany country in which the value of the annual produce diminishes.The sole use of money is to circulate consumable goods. By meansof 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 bedetermined by the value of the consumable goods annuallycirculated within it. These must consist either in the immediateproduce of the land and labour of the country itself, or insomething which had been, purchased with some part of thatproduce. Their value, therefore, must diminish as the value of thatproduce diminishes, and along with it the quantity of moneywhich can be employed in circulating them. But the money whichby this annual diminution of produce is annually thrown out ofdomestic circulation will not be allowed to lie idle.

The interest of whoever possesses it requires that it should beemployed. But having no employment at home, it will, in spite ofall laws and prohibitions, be sent abroad, and employed inpurchasing consumable goods which may be of some use at home.Its annual exportation will in this manner continue for some timeto add something to the annual consumption of the countrybeyond the value of its own annual produce. What in the days ofits prosperity had been saved from that annual produce, andemployed in purchasing gold and silver, will contribute for somelittle time to support its consumption in adversity. The exportation



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of gold and silver is, in this case, not the cause, but the effect of itsdeclension, and may even, for some little time, alleviate the miseryof that declension.

The quantity of money, on the contrary, must in every countrynaturally increase as the value of the annual produce increases.The value of the consumable goods annually circulated within thesociety being greater will require a greater quantity of money tocirculate them. A part of the increased produce, therefore, willnaturally be employed in purchasing, wherever it is to be had, theadditional quantity of gold and silver necessary for circulating therest. The increase of those metals will in this case be the effect, notthe cause, of the public prosperity. Gold and silver are purchasedeverywhere in the same manner. The food, clothing, and lodging,the revenue and maintenance of all those whose labour or stock isemployed in bringing them from the mine to the market, is theprice paid for them in Peru as well as in England. The countrywhich has this price to pay will never be long without the quantityof those metals which it has occasion for; and no country will everlong retain a quantity which it has no occasion for.

Whatever, therefore, we may imagine the real wealth andrevenue of a country to consist in, whether in the value of theannual produce of its land and labour, as plain reason seems todictate; or in the quantity of the precious metals which circulatewithin it, as vulgar prejudices suppose; in either view of thematter, every prodigal appears to be a public enemy, and everyfrugal man a public benefactor.

The effects of misconduct are often the same as those ofprodigality. Every injudicious and unsuccessful project inagriculture, mines, fisheries, trade, or manufactures, tends in the



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same manner to diminish the funds destined for the maintenanceof productive labour. In every such project, though the capital isconsumed by productive hands only, yet, as by the injudiciousmanner in which they are employed they do not reproduce the fullvalue of their consumption, there must always be some diminutionin what would otherwise have been the productive funds of thesociety.

It can seldom happen, indeed, that the circumstances of a greatnation can be much affected either by the prodigality ormisconduct of individuals; the profusion or imprudence of somebeing always more than compensated by the frugality and goodconduct of others.

With regard to profusion, the principle which prompts toexpense is the passion for present enjoyment; which, thoughsometimes violent and very difficult to be restrained, is in generalonly momentary and occasional. But the principle which promptsto save is the desire of bettering our condition, a desire which,though generally calm and dispassionate, comes with us from thewomb, and never leaves us till we go into the grave. In the wholeinterval which separates those two moments, there is scarceperhaps a single instant in which any man is so perfectly andcompletely satisfied with his situation as to be without any wish ofalteration or improvement of any kind. An augmentation offortune is the means by which the greater part of men propose andwish to better their condition. It is the means the most vulgar andthe most obvious; and the most likely way of augmenting theirfortune is to save and accumulate some part of what they acquire,either regularly and annually, or upon some extraordinaryoccasions. Though the principle of expense, therefore, prevails in



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almost all men upon some occasions, and in some men uponalmost all occasions, yet in the greater part of men, taking thewhole course of their life at an average, the principle of frugalityseems not only to predominate, but to predominate very greatly.

With regard to misconduct, the number of prudent andsuccessful undertakings is everywhere much greater than that ofinjudicious and unsuccessful ones. After all our complaints of thefrequency of bankruptcies, the unhappy men who fall into thismisfortune make but a very small part of the whole numberengaged in trade, and all other sorts of business; not much moreperhaps than one in a thousand. Bankruptcy is perhaps thegreatest and most humiliating calamity which can befall aninnocent man. The greater part of men, therefore, are sufficientlycareful to avoid it. Some, indeed, do not avoid it; as some do notavoid the gallows.

Great nations are never impoverished by private, though theysometimes are by public prodigality and misconduct. The whole,or almost the whole public revenue, is in most countries employedin maintaining unproductive hands. Such are the people whocompose a numerous and splendid court, a great ecclesiasticalestablishment, great fleets and armies, who in time of peaceproduce nothing, and in time of war acquire nothing which cancompensate the expense of maintaining them, even while the warlasts. Such people, as they themselves produce nothing, are allmaintained by the produce of other men’s labour. Whenmultiplied, therefore, to an unnecessary number, they may in aparticular year consume so great a share of this produce, as not toleave a sufficiency for maintaining the productive labourers, whoshould reproduce it next year. The next year’s produce, therefore,



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will be less than that of the foregoing, and if the same disordershould continue, that of the third year will be still less than that ofthe second. Those unproductive hands, who should be maintainedby a part only of the spare revenue of the people, may consume sogreat a share of their whole revenue, and thereby oblige so great anumber to encroach upon their capitals, upon the funds destinedfor the maintenance of productive labour, that all the frugality andgood conduct of individuals may not be able to compensate thewaste and degradation of produce occasioned by this violent andforced encroachment.

This frugality and good conduct, however, is upon mostoccasions, it appears from experience, sufficient to compensate,not only the private prodigality and misconduct of individuals, butthe public extravagance of government. The uniform, constant,and uninterrupted effort of every man to better his condition, theprinciple from which public and national, as well as privateopulence is originally derived, is frequently powerful enough tomaintain the natural progress of things towards improvement, inspite both of the extravagance of government and of the greatesterrors of administration. Like the unknown principle of animallife, it frequently restores health and vigour to the constitution, inspite, not only of the disease, but of the absurd prescriptions of thedoctor.

The annual produce of the land and labour of any nation can beincreased in its value by no other means but by increasing eitherthe number of its productive labourers, or the productive powersof those labourers who had before been employed. The number ofits productive labourers, it is evident, can never be muchincreased, but in consequence of an increase of capital, or of the



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funds destined for maintaining them. The productive powers ofthe same number of labourers cannot be increased, but inconsequence either of some addition and improvement to thosemachines and instruments which facilitate and abridge labour; orof a more proper division and distribution of employment. Ineither case an additional capital is almost always required. It is bymeans of an additional capital only that the undertaker of anywork can either provide his workmen with better machinery ormake a more proper distribution of employment among them.When the work to be done consists of a number of parts, to keepevery man constantly employed in one way requires a muchgreater capital than where every man is occasionally employed inevery different part of the work. When we compare, therefore, thestate of a nation at two different periods, and find, that the annualproduce of its land and labour is evidently greater at the latterthan at the former, that its lands are better cultivated, itsmanufactures more numerous and more flourishing, and its trademore extensive, we may be assured that its capital must haveincreased during the interval between those two periods, and thatmore must have been added to it by the good conduct of somethan had been taken from it either by the private misconduct ofothers or by the public extravagance of government. But we shallfind this to have been the case of almost all nations, in all tolerablyquiet and peaceable times, even of those who have not enjoyed themost prudent and parsimonious governments. To form a rightjudgment of it, indeed, we must compare the state of the countryat periods somewhat distant from one another. The progress isfrequently so gradual that, at near periods, the improvement is notonly not sensible, but from the declension either of certain



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branches of industry, or of certain districts of the country, thingswhich sometimes happen though the country in general be ingreat prosperity, there frequently arises a suspicion that the richesand industry of the whole are decaying.

The annual produce of the land and labour of England, forexample, is certainly much greater than it was, a little more than acentury ago, at the restoration of Charles II. Though, at present,few people, I believe, doubt of this, yet during this period, fiveyears have seldom passed away in which some book or pamphlethas not been published, written, too, with such abilities as to gainsome authority with the public, and pretending to demonstratethat the wealth of the nation was fast declining, that the countrywas depopulated, agriculture neglected, manufactures decaying,and trade undone. Nor have these publications been all partypamphlets, the wretched offspring of falsehood and venality. Manyof them have been written by very candid and very intelligentpeople, who wrote nothing but what they believed, and for noother 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 cansuppose it to have been about an hundred years before, at theaccession of Elizabeth. At this period, too, we have all reason tobelieve, the country was much more advanced in improvementthan it had been about a century before, towards the close of thedissensions between the houses of York and Lancaster. Even thenit was, probably, in a better condition than it had been at theNorman Conquest, and at the Norman Conquest than during theconfusion of the Saxon Heptarchy. Even at this early period, it wascertainly a more improved country than at the invasion of Julius



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Caesar, when its inhabitants were nearly in the same state withthe savages in North America.

In each of those periods, however, there was not only muchprivate and public profusion, many expensive and unnecessarywars, great perversion of the annual produce from maintainingproductive to maintain unproductive hands; but sometimes, in theconfusion of civil discord, such absolute waste and destruction ofstock, as might be supposed, not only to retard, as it certainly did,the natural accumulation of riches, but to have left the country, atthe end of the period, poorer than at the beginning. Thus, in thehappiest and most fortunate period of them all, that which haspassed since the Restoration, how many disorders andmisfortunes have occurred, which, could they have been foreseen,not only the impoverishment, but the total ruin of the countrywould have been expected from them? The fire and the plague ofLondon, the two Dutch wars, the disorders of the Revolution, thewar in Ireland, the four expensive French wars of 1688, 1702, 1742,and 1756, together with the two rebellions of 1715 and 1745. In thecourse of the four French wars, the nation has contracted morethan a hundred and forty-five millions of debt, over and above allthe other extraordinary annual expense which they occasioned, sothat the whole cannot be computed at less than two hundredmillions. So great a share of the annual produce of the land andlabour of the country has, since the Revolution, been employedupon different occasions in maintaining an extraordinary numberof unproductive hands. But had not those wars given thisparticular direction to so large a capital, the greater part of itwould naturally have been employed in maintaining productivehands, whose labour would have replaced, with a profit, the whole



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value of their consumption. The value of the annual produce of theland and labour of the country would have been considerablyincreased by it every year, and every year’s increase would haveaugmented still more that of the following year. More houseswould have been built, more lands would have been improved,and those which had been improved before would have beenbetter cultivated, more manufactures would have beenestablished. and those which had been established before wouldhave been more extended; and to what height the real wealth andrevenue of the country might, by this time, have been raised, it isnot perhaps very easy even to imagine.

But though the profusion of government must, undoubtedly,have retarded the natural progress of England towards wealth andimprovement, it has not been able to stop it. The annual produceof its land and labour is, undoubtedly, much greater at presentthan it was either at the Restoration or at the Revolution. Thecapital, therefore, annually employed in cultivating this land, andin maintaining this labour, must likewise be much greater. In themidst of all the exactions of government, this capital has beensilently and gradually accumulated by the private frugality andgood conduct of individuals, by their universal, continual, anduninterrupted effort to better their own condition. It is this effort,protected by law and allowed by liberty to exert itself in themanner that is most advantageous, which has maintained theprogress of England towards opulence and improvement in almostall former times, and which, it is to be hoped, will do so in allfuture times. England, however, as it has never been blessed witha very parsimonious government, so parsimony has at no timebeen the characteristical virtue of its inhabitants. It is the highest



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impertinence and presumption, therefore, in kings and ministers,to pretend to watch over the economy of private people, and torestrain their expense, either by sumptuary laws, or by prohibitingthe importation of foreign luxuries.

They are themselves always, and without any exception, thegreatest spendthrifts in the society. Let them look well after theirown expense, and they may safely trust private people with theirs.If their own extravagance does not ruin the state, that of theirsubjects never will.

As frugality increases and prodigality diminishes the publiccapital, so the conduct of those whose expense just equals theirrevenue, without either accumulating or encroaching, neitherincreases nor diminishes it. Some modes of expense, however,seem to contribute more to the growth of public opulence thanothers.

The revenue of an individual may be spent either in thingswhich are consumed immediately, and in which one day’s expensecan neither alleviate nor support that of another, or it may bespent in things more durable, which can therefore beaccumulated, and in which every day’s expense may, as hechooses, either alleviate or support and heighten the effect of thatof the following day. A man of fortune, for example, may eitherspend his revenue in a profuse and sumptuous table, and inmaintaining a great number of menial servants, and a multitude ofdogs and horses; or contenting himself with a frugal table and fewattendants, he may lay out the greater part of it in adorning hishouse or his country villa, in useful or ornamental buildings, inuseful or ornamental furniture, in collecting books, statues,pictures; or in things more frivolous, jewels, baubles, ingenious



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trinkets of different kinds; or, what is most trifling of all, inamassing a great wardrobe of fine clothes, like the favourite andminister of a great prince who died a few years ago.

Were two men of equal fortune to spend their revenue, the onechiefly in the one way, the other in the other, the magnificence ofthe person whose expense had been chiefly in durablecommodities, would be continually increasing, every day’sexpense contributing something to support and heighten the effectof 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 manof 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 alwaysbe worth something. No trace or vestige of the expense of thelatter would remain, and the effects of ten or twenty yearsprofusion would be as completely annihilated as if they had neverexisted.

As the one mode of expense is more favourable than the otherto 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. Theyare able to purchase them when their superiors grow weary ofthem, and the general accommodation of the whole people is thusgradually improved, when this mode of expense becomesuniversal among men of fortune. In countries which have longbeen rich, you will frequently find the inferior ranks of people inpossession both of houses and furniture perfectly good and entire,but of which neither the one could have been built, nor the otherhave been made for their use. What was formerly a seat of the



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family of Seymour is now an inn upon the Bath road. Themarriage-bed of James the First of Great Britain, which his queenbrought with her from Denmark as a present fit for a sovereign tomake to a sovereign, was, a few years ago, the ornament of analehouse at Dunfermline. In some ancient cities, which either havebeen long stationary, or have gone somewhat to decay, you willsometimes scarce find a single house which could have been builtfor its present inhabitants. If you go into those houses too, you willfrequently find many excellent, though antiquated pieces offurniture, which are still very fit for use, and which could as littlehave been made for them. Noble palaces, magnificent villas, greatcollections of books, statues, pictures and other curiosities, arefrequently both an ornament and an honour, not only to theneighbourhood, but to the whole country to which they belong.

Versailles is an ornament and an honour to France, Stowe andWilton to England. Italy still continues to command some sort ofveneration by the number of monuments of this kind which itpossesses, though the wealth which produced them has decayed,and though the genius which planned them seems to beextinguished, perhaps from not having the same employment.

The expense too, which is laid out in durable commodities, isfavourable, not only to accumulation, but to frugality. If a personshould at any time exceed in it, he can easily reform withoutexposing himself to the censure of the public. To reduce verymuch the number of his servants, to reform his table from greatprofusion to great frugality, to lay down his equipage after he hasonce set it up, are changes which cannot escape the observation ofhis neighbours, and which are supposed to imply someacknowledgment of preceding bad conduct. Few, therefore, of



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those who have once been so unfortunate as to launch out too farinto this sort of expense, have afterwards the courage to reform,till ruin and bankruptcy oblige them. But if a person has, at anytime, been at too great an expense in building, in furniture, inbooks or pictures, no imprudence can be inferred from hischanging his conduct. These are things in which further expenseis frequently rendered unnecessary by former expense; and whena person stops short, he appears to do so, not because he hasexceeded his fortune, but because he has satisfied his fancy.

The expense, besides, that is laid out in durable commoditiesgives maintenance, commonly, to a greater number of people thanthat which is employed in the most profuse hospitality. Of two orthree hundredweight of provisions, which may sometimes beserved up at a great festival, one half, perhaps, is thrown to thedunghill, and there is always a great deal wasted and abused. Butif the expense of this entertainment had been employed in settingto work masons, carpenters, upholsterers, mechanics, etc., aquantity of provisions, of equal value, would have been distributedamong a still greater number of people who would have boughtthem in pennyworths and pound weights, and not have lost orthrown away a single ounce of them. In the one way, besides, thisexpense maintains productive, in the other unproductive hands.In the one way, therefore, it increases, in the other, it does notincrease, the exchangeable value of the annual produce of the landand labour of the country.

I would not, however, by all this be understood to mean that theone species of expense always betokens a more liberal or generousspirit than the other. When a man of fortune spends his revenuechiefly in hospitality, he shares the greater part of it with his



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friends and companions; but when he employs it in purchasingsuch durable commodities, he often spends the whole upon hisown person, and gives nothing to anybody without an equivalent.The latter species of expense, therefore, especially when directedtowards frivolous objects, the little ornaments of dress andfurniture, jewels, trinkets, gewgaws, frequently indicates, not onlya trifling, but a base and selfish disposition. All that I mean is, thatthe one sort of expense, as it always occasions some accumulationof valuable commodities, as it is more favourable to privatefrugality, 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.



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Chapter IV

Of Stock Lent at Interest

he stock which is lent at interest is always considered as acapital by the lender. He expects that in due time it is to berestored to him, and that in the meantime the borrower is

to pay him a certain annual rent for the use of it. The borrowermay use it either as a capital, or as a stock reserved for immediateconsumption.

If he uses it as a capital, he employs it in the maintenance ofproductive labourers, who reproduce the value with a profit. Hecan, in this case, both restore the capital and pay the interestwithout alienating or encroaching upon any other source ofrevenue. If he uses it as a stock reserved for immediateconsumption, he acts the part of a prodigal, and dissipates in themaintenance of the idle what was destined for the support of theindustrious. He can, in this case, neither restore the capital norpay the interest without either alienating or encroaching uponsome other source of revenue, such as the property or the rent ofland.

The stock which is lent at interest is, no doubt, occasionallyemployed in both these ways, but in the former much morefrequently than in the latter. The man who borrows in order tospend will soon be ruined, and he who lends to him will generallyhave occasion to repent of his folly. To borrow or to lend for such apurpose, therefore, is in all cases, where gross usury is out of thequestion, contrary to the interest of both parties; and though it no

T



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doubt happens sometimes that people do both the one and theother; yet, from the regard that all men have for their own interest,we may be assured that it cannot happen so very frequently as weare sometimes apt to imagine. Ask any rich man of commonprudence to which of the two sorts of people he has lent thegreater part of his stock, to those who, he thinks, will employ itprofitably, or to those who will spend it idly, and he will laugh atyou for proposing the question. Even among borrowers, therefore,not the people in the world most famous for frugality, the numberof the frugal and industrious surpasses considerably that of theprodigal and idle.

The only people to whom stock is commonly lent, without theirbeing expected to make any very profitable use of it, are countrygentlemen who borrow upon mortgage. Even they scarce everborrow merely to spend. What they borrow, one may say, iscommonly spent before they borrow it. They have generallyconsumed so great a quantity of goods, advanced to them uponcredit by shopkeepers and tradesmen, that they find it necessaryto borrow at interest in order to pay the debt. The capitalborrowed replaces the capitals of those shopkeepers andtradesmen, which the country gentlemen could not have replacedfrom the rents of their estates. It is not properly borrowed in orderto be spent, but in order to replace a capital which had been spentbefore.

Almost all loans at interest are made in money, either of paper,or of gold and silver. But what the borrower really wants, andwhat the lender really supplies him with, is not the money, but themoney’s worth, or the goods which it can purchase. If he wants itas a stock for immediate consumption, it is those goods only which



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he can place in that stock. If he wants it as a capital for employingindustry, it is from those goods only that the industrious can befurnished with the tools, materials, and maintenance necessary forcarrying on their work. By means of the loan, the lender, as itwere, assigns to the borrower his right to a certain portion of theannual produce of the land and labour of the country to beemployed as the borrower pleases.

The quantity of stock, therefore, or, as it is commonlyexpressed, 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 thatcountry, 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 ofthe productive labourers, is destined not only for replacing acapital, but such a capital as the owner does not care to be at thetrouble of employing himself. As such capitals are commonly lentout and paid back in money, they constitute what is called themonied interest. It is distinct, not only from the landed, but fromthe trading and manufacturing interests, as in these last theowners themselves employ their own capitals. Even in the moniedinterest, however, the money is, as it were, but the deed ofassignment, which conveys from one hand to another thosecapitals which the owners do not care to employ themselves.Those capitals may be greater in almost any proportion than theamount of the money which serves as the instrument of theirconveyance; the same pieces of money successively serving formany different loans, as well as for many different purchases. A,for example, lends to W a thousand pounds, with which Wimmediately purchases of B a thousand pounds’ worth of goods. B



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having no occasion for the money himself, lends the identicalpieces to X, with which X immediately purchases of C anotherthousand pounds’ worth of goods. C in the same manner, and forthe same reason, lends them to Y, who again purchases goods withthem of D. In this manner the same pieces, either of coin or paper,may in the course of a few days, serve as the instrument of threedifferent loans, and of three different purchases, each of which is,in value, equal to the whole amount of those pieces. What thethree monied men A, B, and C assign to the three borrowers, W, X,Y, is the power of making those purchases. In this power consistboth the value and the use of the loans. The stock lent by the threemonied men is equal to the value of the goods which can bepurchased with it, and is three times greater than that of themoney with which the purchases are made. Those loans however,may be all perfectly well secured, the goods purchased by thedifferent 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 thesame pieces of money can thus serve as the instrument of differentloans to three, or for the same reason, to thirty times their value,so they may likewise successively serve as the instrument ofrepayment.

A capital lent at interest may, in this manner, be considered asan assignment from the lender to the borrowers of a certainconsiderable portion of the annual produce; upon condition thatthe borrower in return shall, during the continuance of the loan,annually assign to the lender a smaller portion, called the interest;and at the end of it a portion equally considerable with that whichhad originally been assigned to him, called the repayment. Thoughmoney, either coin or paper, serves generally as the deed of



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assignment both to the smaller and to the more considerableportion, it is itself altogether different from what is assigned by it.

In proportion as that share of the annual produce which, assoon as it comes either from the ground, or from the hands of theproductive labourers, is destined for replacing a capital, increasesin any country, what is called the monied interest naturallyincreases with it. The increase of those particular capitals fromwhich the owners wish to derive a revenue, without being at thetrouble of employing them themselves, naturally accompanies thegeneral increase of capitals; or, in other words, as stock increases,the quantity of stock to be lent at interest grows gradually greaterand greater.

As the quantity of stock to be lent at interest increases, theinterest, or the price which must be paid for the use of that stock,necessarily diminishes, not only from those general causes whichmake the market price of things commonly diminish as theirquantity increases, but from other causes which are peculiar tothis particular case. As capitals increase in any country, the profitswhich can be made by employing them necessarily diminish. Itbecomes gradually more and more difficult to find within thecountry a profitable method of employing any new capital. Therearises in consequence a competition between different capitals,the owner of one endeavouring to get possession of thatemployment which is occupied by another. But upon mostoccasions he can hope to jostle that other out of this employmentby no other means but by dealing upon more reasonable terms. Hemust not only sell what he deals in somewhat cheaper, but inorder to get it to sell, he must sometimes, too, buy it dearer. Thedemand for productive labour, by the increase of the funds which



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are destined for maintaining it, grows every day greater andgreater. Labourers easily find employment, but the owners ofcapitals find it difficult to get labourers to employ. Theircompetition raises the wages of labour and sinks the profits ofstock. But when the profits which can be made by the use of acapital are in this manner diminished, as it were, at both ends, theprice which can be paid for the use of it, that is, the rate ofinterest, must necessarily be diminished with them.

Mr. Locke, Mr. Law, and Mr. Montesquieu, as well as manyother writers, seem to have imagined that the increase of thequantity of gold and silver, in consequence of the discovery of theSpanish West Indies, was the real cause of the lowering of the rateof interest through the greater part of Europe. Those metals, theysay, having become of less value themselves, the use of anyparticular 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 plausible, has been so fully exposed byMr. Hume that it is, perhaps, unnecessary to say anything moreabout it. The following very short and plain argument, however,may serve to explain more distinctly the fallacy which seems tohave misled those gentlemen.

Before the discovery of the Spanish West Indies, ten per centseems to have been the common rate of interest through thegreater part of Europe. It has since that time in different countriessunk to six, five, four, and three per cent. Let us suppose that inevery particular country the value of silver has sunk precisely inthe same proportion as the rate of interest; and that in thosecountries, for example, where interest has been reduced from tento five per cent, the same quantity of silver can now purchase just



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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 opinionwhich we are going to examine; and even upon this supposition itis utterly impossible that the lowering of the value of silver couldhave the smallest tendency to lower the rate of interest. If ahundred pounds are in those countries now of no more value thanfifty pounds were then, ten pounds must now be of no more valuethan five pounds were then. Whatever were the causes whichlowered the value of the capital, the same must necessarily havelowered that of the interest, and exactly in the same proportion.The proportion between the value of the capital and that of theinterest must have remained the same, though the rate had beenaltered. By altering the rate, on the contrary, the proportionbetween those two values is necessarily altered. If a hundredpounds now are worth no more than fifty were then, five poundsnow can be worth no more than two pounds ten shillings werethen. By reducing the rate of interest, therefore, from ten to fiveper cent, we give for the use of a capital, which is supposed to beequal to one half of its former value, an interest which is equal toone fourth only of the value of the former interest.

Any increase in the quantity of silver, while that of thecommodities circulated by means of it remained the same, couldhave no other effect than to diminish the value of that metal. Thenominal value of all sorts of goods would be greater, but their realvalue would be precisely the same as before. They would beexchanged for a greater number of pieces of silver; but thequantity of labour which they could command, the number ofpeople whom they could maintain and employ, would be precisely



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the same. The capital of the country would be the same, though agreater number of pieces might be requisite for conveying anyequal portion of it from one hand to another. The deeds ofassignment, like the conveyances of a verbose attorney, would bemore cumbersome, but the thing assigned would be precisely thesame 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 wouldbe paid in a greater number of pieces of silver; but they wouldpurchase only the same quantity of goods. The profits of stockwould be the same both nominally and really. The wages of labourare commonly computed by the quantity of silver which is paid tothe labourer. When that is increased, therefore, his wages appearto be increased, though they may sometimes be no greater thanbefore. But the profits of stock are not computed by the number ofpieces of silver with which they are paid, but by the proportionwhich those pieces bear to the whole capital employed. Thus in aparticular country five shillings a week are said to be the commonwages of labour, and ten per cent the common profits of stock. Butthe whole capital of the country being the same as before, thecompetition between the different capitals of individuals intowhich it was divided would likewise be the same. They would alltrade with the same advantages and disadvantages. The commonproportion between capital and profit, therefore, would be thesame, and consequently the common interest of money; what cancommonly be given for the use of money being necessarilyregulated by what can commonly be made by the use of it.

Any increase in the quantity of commodities annually circulated



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within the country, while that of the money which circulated themremained the same, would, on the contrary, produce many otherimportant 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 bythe same quantity of money, but it would command a greaterquantity of labour. The quantity of productive labour which itcould maintain and employ would be increased, and consequentlythe demand for that labour. Its wages would naturally rise withthe demand, and yet might appear to sink. They might be paidwith a smaller quantity of money, but that smaller quantity mightpurchase a greater quantity of goods than a greater had donebefore. The profits of stock would be diminished both really and inappearance. The whole capital of the country being augmented,the competition between the different capitals of which it wascomposed would naturally be augmented along with it. Theowners of those particular capitals would be obliged to contentthemselves with a smaller proportion of the produce of that labourwhich their respective capitals employed. The interest of money,keeping pace always with the profits of stock, might, in thismanner, be greatly diminished, though the value of money, or thequantity of goods which any particular sum could purchase, wasgreatly augmented.

In some countries the interest of money has been prohibited bylaw. But as something can everywhere be made by the use ofmoney, something ought everywhere to be paid for the use of it.This regulation, instead of preventing, has been found fromexperience to increase the evil of usury; the debtor being obligedto pay, not only for the use of the money, but for the risk which his



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creditor runs by accepting a compensation for that use. He isobliged, if one may say so, to insure his creditor from the penaltiesof usury.

In countries where interest is permitted, the law, in order toprevent the extortion of usury, generally fixes the highest ratewhich can be taken without incurring a penalty. This rate oughtalways to be somewhat above the lowest market price, or the pricewhich is commonly paid for the use of money by those who cangive the most undoubted security. If this legal rate should be fixedbelow the lowest market rate, the effects of this fixation must benearly the same as those of a total prohibition of interest. Thecreditor 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 byaccepting the full value of that use. If it is fixed precisely at thelowest market price, it ruins with honest people, who respect thelaws of their country, the credit of all those who cannot give thevery best security, and obliges them to have recourse to exorbitantusurers. In a country, such as Great Britain, where money is lentto government at three per cent and to private people upon a goodsecurity at four and four and a half, the present legal rate, five percent, is perhaps as proper as any.

The legal rate, it is to be observed, though it ought to besomewhat above, ought not to be much above the lowest marketrate. If the legal rate of interest in Great Britain, for example, wasfixed so high as eight or ten per cent, the greater part of the moneywhich was to be lent would be lent to prodigals and projectors,who alone would be willing to give this high interest. Soberpeople, who will give for the use of money no more than a part ofwhat they are likely to make by the use of it, would not venture



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into the competition. A great part of the capital of the countrywould thus be kept out of the hands which were most likely tomake a profitable and advantageous use of it, and thrown intothose which were most likely to waste and destroy it. Where thelegal rate of interest, on the contrary, is fixed but a very littleabove the lowest market rate, sober people are universallypreferred, as borrowers, to prodigals and projectors. The personwho lends money gets nearly as much interest from the former ashe dares to take from the latter, and his money is much safer inthe hands of the one set of people than in those of the other. Agreat part of the capital of the country is thus thrown into thehands in which it is most likely to be employed with advantage.

No law can reduce the common rate of interest below thelowest ordinary market rate at the time when that law is made.Notwithstanding the edict of 1766, by which the French kingattempted to reduce the rate of interest from five to four per cent,money continued to be lent in France at five per cent, the lawbeing evaded in several different ways.

The ordinary market price of land, it is to be observed, dependseverywhere upon the ordinary market rate of interest. The personwho has a capital from which he wishes to derive a revenue,without taking the trouble to employ it himself, deliberateswhether he should buy land with it or lend it out at interest. Thesuperior security of land, together with some other advantageswhich almost everywhere attend upon this species of property,will generally dispose him to content himself with a smallerrevenue from land than what he might have by lending out hismoney at interest. These advantages are sufficient to compensatea certain difference of revenue; but they will compensate a certain



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difference only; and if the rent of land should fall short of theinterest 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 thancompensate the difference, everybody would buy land, whichagain would soon raise its ordinary price. When interest was at tenper cent, land was commonly sold for ten and twelve years’purchase. As interest sunk to six, five, and four per cent, the priceof 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 commonlysells at thirty, in France at twenty years’ purchase.



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Chapter V

Of the Different Employment of Capitals

hough all capitals are destined for the maintenance ofproductive labour only, yet the quantity of that labourwhich equal capitals are capable of putting into motion

varies extremely according to the diversity of their employment; asdoes likewise the value which that employment adds to the annualproduce 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 andconsumption of the society; or, secondly, in manufacturing andpreparing that rude produce for immediate use and consumption;or, thirdly, in transporting either the rude or manufacturedproduce from the places where they abound to those where theyare wanted; or, lastly, in dividing particular portions of either intosuch small parcels as suit the occasional demands of those whowant them. In the first way are employed the capitals of all thosewho undertake the improvement or cultivation of lands, mines, orfisheries; in the second, those of all master manufacturers; in thethird, those of all wholesale merchants; and in the fourth, those ofall retailers. It is difficult to conceive that a capital should beemployed in any way which may not be classed under some one orother of those four.

Each of these four methods of employing a capital is essentiallynecessary either to the existence or extension of the other three, orto the general conveniency of the society.

T



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Unless a capital was employed in furnishing rude produce to acertain degree of abundance, neither manufactures nor trade ofany kind could exist.

Unless a capital was employed in manufacturing that part ofthe rude produce which requires a good deal of preparation beforeit can be fit for use and consumption, it either would never beproduced, because there could be no demand for it; or if it wasproduced spontaneously, it would be of no value in exchange, andcould add nothing to the wealth of the society.

Unless a capital was employed in transporting either the rudeor manufactured produce from the places where it abounds tothose where it is wanted, no more of either could be producedthan was necessary for the consumption of the neighbourhood.The capital of the merchant exchanges the surplus produce of oneplace for that of another, and thus encourages the industry andincreases the enjoyments of both.

Unless a capital was employed in breaking and dividing certainportions either of the rude or manufactured produce into suchsmall parcels as suit the occasional demands of those who wantthem, every man would be obliged to purchase a greater quantityof the goods he wanted than his immediate occasions required. Ifthere was no such trade as a butcher, for example, every manwould be obliged to purchase a whole ox or a whole sheep at atime. This would generally be inconvenient to the rich, and muchmore so to the poor. If a poor workman was obliged to purchase amonth’s or six months’ provisions at a time, a great part of thestock which he employs as a capital in the instruments of histrade, or in the furniture of his shop, and which yields him arevenue. he would be forced to place in that part of his stock



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which is reserved for immediate consumption, and which yieldshim no revenue. Nothing can be more convenient for such aperson than to be able to purchase his subsistence from day today, or even from hour to hour, as he wants it. He is therebyenabled to employ almost his whole stock as a capital. He is thusenabled to furnish work to a greater value, and the profit, whichhe makes by it in this way, much more than compensates theadditional price which the profit of the retailer imposes upon thegoods. The prejudices of some political writers againstshopkeepers and tradesmen are altogether without foundation. Sofar is it from being necessary either to tax them or to restrict theirnumbers that they can never be multiplied so as to hurt the public,though they may so as to hurt one another. The quantity ofgrocery goods, for example, which can be sold in a particular townis limited by the demand of that town and its neighbourhood. Thecapital, therefore, which can be employed in the grocery tradecannot exceed what is sufficient to purchase that quantity. If thiscapital is divided between two different grocers, their competitionwill tend to make both of them sell cheaper than if it were in thehands of one only; and if it were divided among twenty, theircompetition would be just so much the greater, and the chance oftheir combining together, in order to raise the price, just so muchthe less. Their competition might perhaps ruin some ofthemselves; but to take care of this is the business of the partiesconcerned, and it may safely be trusted to their discretion. It cannever hurt either the consumer or the producer; on the contrary, itmust tend to make the retailers both sell cheaper and buy dearerthan if the whole trade was monopolized by one or two persons.Some of them, perhaps, may sometimes decoy a weak customer to



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buy what he has no occasion for. This evil, however, is of too littleimportance to deserve the public attention, nor would itnecessarily be prevented by restricting their numbers. It is not themultitude of ale-houses, to give the most suspicious example, thatoccasions a general disposition to drunkenness among thecommon people; but that disposition arising from other causesnecessarily gives employment to a multitude of ale-houses.

The persons whose capitals are employed in any of those fourways are themselves productive labourers. Their labour, whenproperly directed, fixes and realizes itself in the subject orvendible commodity upon which it is bestowed, and generallyadds to its price the value at least of their own maintenance andconsumption. The profits of the farmer, of the manufacturer, ofthe merchant, and retailer, are all drawn from the price of thegoods which the two first produce, and the two last buy and sell.Equal capitals, however, employed in each of those four differentways, will immediately put into motion very different quantities ofproductive labour, and augment, too, in very different proportionsthe value of the annual produce of the land and labour of thesociety to which they belong.

The capital of the retailer replaces, together with its profits,that of the merchant of whom he purchases goods, and therebyenables him to continue his business. The retailer himself is theonly productive labourer whom it immediately employs. In hisprofits consists the whole value which its employment adds to theannual produce of the land and labour of the society.

The capital of the wholesale merchant replaces, together withtheir profits, the capitals of the farmers and manufacturers ofwhom he purchases the rude and manufactured produce which he



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deals in, and thereby enables them to continue their respectivetrades. It is by this service chiefly that he contributes indirectly tosupport the productive labour of the society, and to increase thevalue of its annual produce. His capital employs, too, the sailorsand carriers who transport his goods from one place to another,and it augments the price of those goods by the value, not only ofhis profits, but of their wages. This is all the productive labourwhich it immediately puts into motion, and all the value which itimmediately adds to the annual produce. Its operation in boththese respects is a good deal superior to that of the capital of theretailer.

Part of the capital of the master manufacturer is employed as afixed capital in the instruments of his trade, and replaces, togetherwith its profits, that of some other artificer of whom he purchasesthem. Part of his circulating capital is employed in purchasingmaterials, and replaces, with their profits, the capitals of thefarmers and miners of whom he purchases them. But a great partof it is always, either annually, or in a much shorter period,distributed among the different workmen whom he employs. Itaugments the value of those materials by their wages, and by theirmatters’ profits upon the whole stock of wages, materials, andinstruments of trade employed in the business. It putsimmediately into motion, therefore, a much greater quantity ofproductive labour, and adds a much greater value to the annualproduce of the land and labour of the society than an equal capitalin the hands of any wholesale merchant.

No equal capital puts into motion a greater quantity ofproductive labour than that of the farmer. Not only his labouringservants, but his labouring cattle, are productive labourers. In



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agriculture, too, nature labours along with man; and though herlabour costs no expense, its produce has its value, as well as that ofthe most expensive workmen. The most important operations ofagriculture seem intended not so much to increase, though theydo that too, as to direct the fertility of nature towards theproduction of the plants most profitable to man. A field overgrownwith briars and brambles may frequently produce as great aquantity of vegetables as the best cultivated vineyard or corn field.Planting and tillage frequently regulate more than they animatethe active fertility of nature; and after all their labour, a great partof the work always remains to be done by her. The labourers andlabouring cattle, therefore, employed in agriculture, not onlyoccasion, like the workmen in manufactures, the reproduction of avalue equal to their own consumption, or to the capital whichemploys them, together with its owners’ profits; but of a muchgreater value. Over and above the capital of the farmer and all itsprofits, they regularly occasion the reproduction of the rent of thelandlord. This rent may be considered as the produce of thosepowers of nature, the use of which the landlord lends to thefarmer. It is greater or smaller according to the supposed extent ofthose powers, or in other words, according to the supposed naturalor improved fertility of the land.

It is the work of nature which remains after deducting orcompensating everything which can be regarded as the work ofman. It is seldom less than a fourth, and frequently more than athird of the whole produce. No equal quantity of productive labouremployed in manufactures can ever occasion so great areproduction. In them nature does nothing; man does all; and thereproduction must always be in proportion to the strength of the



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agents that occasion it. The capital employed in agriculture,therefore, not only puts into motion a greater quantity ofproductive labour than any equal capital employed inmanufactures, but in proportion, too, to the quantity of productivelabour which it employs, it adds a much greater value to theannual produce of the land and labour of the country, to the realwealth and revenue of its inhabitants. Of all the ways in which acapital can be employed, it is by far the most advantageous to thesociety.

The capitals employed in the agriculture and in the retail tradeof any society must always reside within that society. Theiremployment is confined almost to a precise spot, to the farm andto the shop of the retailer. They must generally, too, though thereare some exceptions to this, belong to resident members of thesociety.

The capital of a wholesale merchant, on the contrary, seems tohave no fixed or necessary residence anywhere, but may wanderabout from place to place, according as it can either buy cheap orsell dear.

The capital of the manufacturer must no doubt reside wherethe manufacture is carried on; but where this shall be is notalways necessarily determined. It may frequently be at a greatdistance both from the place where the materials grow, and fromthat where the complete manufacture is consumed. Lyons is verydistant both from the places which afford the materials of itsmanufactures, and from those which consume them. The people offashion in Sicily are clothed in silks made in other countries, fromthe materials which their own produces. Part of the wool of Spainis manufactured in Great Britain, and some part of that cloth is



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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 littleimportance. If he is a foreigner, the number of their productivelabourers is necessarily less than if he had been a native by oneman only, and the value of their annual produce by the profits ofthat one man. The sailors or carriers whom he employs may stillbelong indifferently either to his country or to their country, or tosome third country, in the same manner as if he had been a native.The capital of a foreigner gives a value to their surplus produceequally with that of a native by exchanging it for something forwhich there is a demand at home. It as effectually replaces thecapital of the person who produces that surplus, and as effectuallyenables him to continue his business; the service by which thecapital of a wholesale merchant chiefly contributes to support theproductive labour, and to augment the value of the annualproduce of the society to which he belongs.

It is of more consequence that the capital of the manufacturershould reside within the country. It necessarily puts into motion agreater quantity of productive labour, and adds a greater value tothe annual produce of the land and labour of the society. It may,however, be very useful to the country, though it should not residewithin it. The capitals of the British manufacturers who work upthe flax and hemp annually imported from the coasts of the Balticare surely very useful to the countries which produce them. Thosematerials are a part of the surplus produce of those countrieswhich, unless it was annually exchanged for something which is indemand there, would be of no value, and would soon cease to beproduced. The merchants who export it replace the capitals of the



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people who produce it, and thereby encourage them to continuethe production; and the British manufacturers replace the capitalsof those merchants.

A particular country, in the same manner as a particularperson, may frequently not have capital sufficient both to improveand cultivate all its lands, to manufacture and prepare their wholerude produce for immediate use and consumption, and totransport the surplus part either of the rude or manufacturedproduce to those distant markets where it can be exchanged forsomething for which there is a demand at home. The inhabitantsof many different parts of Great Britain have not capital sufficientto improve and cultivate all their lands. The wool of the southerncounties of Scotland is, a great part of it, after a long land carriagethrough very bad roads, manufactured in Yorkshire, for want ofcapital to manufacture it at home. There are many littlemanufacturing towns in Great Britain, of which the inhabitantshave not capital sufficient to transport the produce of their ownindustry to those distant markets where there is demand andconsumption for it. If there are any merchants among them, theyare properly only the agents of wealthier merchants who reside insome of the greater commercial cities.

When the capital of any country is not sufficient for all thosethree purposes, in proportion as a greater share of it is employedin agriculture, the greater will be the quantity of productive labourwhich it puts into motion within the country; as will likewise bethe value which its employment adds to the annual produce of theland and labour of the society. After agriculture, the capitalemployed in manufactures puts into motion the greatest quantityof productive labour, and adds the greatest value to the annual



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produce. That which is employed in the trade of exportation hasthe least effect of any of the three.

The country, indeed, which has not capital sufficient for allthose three purposes has not arrived at that degree of opulence forwhich it seems naturally destined. To attempt, however,prematurely and with an insufficient capital to do all the three iscertainly not the shortest way for a society, no more than it wouldbe for an individual, to acquire a sufficient one. The capital of allthe individuals of a nation has its limits in the same manner asthat of a single individual, and is capable of executing only certainpurposes. The capital of all the individuals of a nation is increasedin the same manner as that of a single individual by theircontinually accumulating and adding to it whatever they save outof their revenue. It is likely to increase the fastest, therefore, whenit is employed in the way that affords the greatest revenue to allthe inhabitants of the country, as they will thus be enabled tomake the greatest savings. But the revenue of all the inhabitants ofthe country is necessarily in proportion to the value of the annualproduce of their land and labour.

It has been the principal cause of the rapid progress of ourAmerican colonies towards wealth and greatness that almost theirwhole capitals have hitherto been employed in agriculture. Theyhave no manufactures, those household and courser manufacturesexcepted which necessarily accompany the progress ofagriculture, and which are the work of the women and children inevery private family. The greater part both of the exportation andcoasting trade of America is carried on by the capitals ofmerchants who reside in Great Britain. Even the stores andwarehouses from which goods are retailed in some provinces,



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particularly in Virginia and Maryland, belong many of them tomerchants who reside in the mother country, and afford one of thefew instances of the retail trade of a society being carried on by thecapitals of those who are not resident members of it. Were theAmericans, either by combination or by any other sort of violence,to stop the importation of European manufactures, and, by thusgiving a monopoly to such of their own countrymen as couldmanufacture the like goods, divert any considerable part of theircapital into this employment, they would retard instead ofaccelerating the further increase in the value of their annualproduce, and would obstruct instead of promoting the progress oftheir country towards real wealth and greatness. This would bestill more the case were they to attempt, in the same manner, tomonopolize to themselves their whole exportation trade.

The course of human prosperity, indeed, seems scarce ever tohave been of so long continuance as to enable any great country toacquire capital sufficient for all those three purposes; unlessperhaps, we give credit to the wonderful accounts of the wealthand cultivation of China, of those of ancient Egypt, and of theancient state of Indostan. Even those three countries, thewealthiest, according to all accounts, that ever were in the world,are chiefly renowned for their superiority in agriculture andmanufactures. They do not appear to have been eminent forforeign trade. The ancient Egyptians had a superstitious antipathyto the sea; a superstition nearly of the same kind prevails amongthe Indians; and the Chinese have never excelled in foreigncommerce. The greater part of the surplus produce of all thosethree countries seems to have been always exported by foreigners,who gave in exchange for it something else for which they found a



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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 adda greater or smaller value to the annual produce of its land andlabour, according to the different proportions in which it isemployed in agriculture, manufactures, and wholesale trade. Thedifference, too, is very great, according to the different sorts ofwholesale trade in which any part of it is employed.

All wholesale trade, all buying in order to sell again bywholesale, may be reduced to three different sorts. The hometrade, the foreign trade of consumption, and the carrying trade.The home trade is employed in purchasing in one part of the samecountry, and selling in another, the produce of the industry of thatcountry. It comprehends both the inland and the coasting trade.The foreign trade of consumption is employed in purchasingforeign goods for home consumption. The carrying trade isemployed in transacting the commerce of foreign countries, or incarrying the surplus produce of one to another.

The capital which is employed in purchasing in one part of thecountry in order to sell in another the produce of the industry ofthat country, generally replaces by every such operation twodistinct capitals that had both been employed in the agriculture ormanufactures of that country, and thereby enables them tocontinue that employment. When it sends out from the residenceof the merchant a certain value of commodities, it generally bringsback in return at least an equal value of other commodities. Whenboth are the produce of domestic industry, it necessarily replacesby every such operation two distinct capitals which had both beenemployed in supporting productive labour, and thereby enables



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them to continue that support. The capital which sends Scotchmanufactures to London, and brings back English corn andmanufactures to Edinburgh, necessarily replaces by every suchoperation, two British capitals which had both been employed inthe agriculture or manufactures of Great Britain.

The capital employed in purchasing foreign goods for homeconsumption, when this purchase is made with the produce ofdomestic industry, replaces too, by every such operation, twodistinct capitals; but one of them only is employed in supportingdomestic industry. The capital which sends British goods toPortugal, and brings back Portuguese goods to Great Britain,replaces by every such operation only one British capital. Theother is a Portuguese one. Though the returns, therefore, of theforeign trade of consumption should be as quick as those of thehome trade, the capital employed in it will give but one half theencouragement to the industry or productive labour of thecountry.

But the returns of the foreign trade of consumption are veryseldom so quick as those of the home trade. The returns of thehome trade generally come in before the end of the year, andsometimes three or four times in the year. The returns of theforeign trade of consumption seldom come in before the end of theyear, and sometimes not till after two or three years. A capital,therefore, employed in the home trade will sometimes maketwelve operations, or be sent out and returned twelve times,before a capital employed in the foreign trade of consumption hasmade one. If the capitals are equal, therefore, the one will givefour-and-twenty times more encouragement and support to theindustry of the country than the other.



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The foreign goods for home consumption may sometimes bepurchased, not with the produce of domestic industry, but withsome other foreign goods. These last, however, must have beenpurchased either immediately with the produce of domesticindustry, or with something else that had been purchased with it;for, the case of war and conquest excepted, foreign goods can everbe acquired but in exchange for something that had beenproduced at home, either immediately, or after two or moredifferent exchanges. The effects, therefore, of a capital employedin such a roundabout foreign trade of consumption, are, in everyrespect, the same as those of one employed in the most directtrade of the same kind, except that the final returns are likely to bestill more distant, as they must depend upon the returns of two orthree distinct foreign trades. If the flax and hemp of Riga arepurchased with the tobacco of Virginia, which had been purchasedwith British manufactures, the merchant must wait for the returnsof two distinct foreign trades before he can employ the samecapital in re-purchasing a like quantity of British manufactures. Ifthe tobacco of Virginia had been purchased, not with Britishmanufactures, but with the sugar and rum of Jamaica which hadbeen purchased with those manufactures, he must wait for thereturns of three. If those two or three distinct foreign tradesshould happen to be carried on by two or three distinct merchants,of whom the second buys the goods imported by the first, and thethird buys those imported by the second, in order to export themagain, each merchant indeed will in this case receive the returns ofhis own capital more quickly; but the final returns of the wholecapital employed in the trade will be just as slow as ever. Whetherthe whole capital employed in such a round-about trade belong to



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one merchant or to three can make no difference with regard tothe country, though it may with regard to the particularmerchants.

Three times a greater capital must in both cases be employed inorder to exchange a certain value of British manufactures for acertain quantity of flax and hemp than would have been necessaryhad the manufactures and the flax and hemp been directlyexchanged for one another. The whole capital employed,therefore, in such a round-about foreign trade of consumption willgenerally give less encouragement and support to the productivelabour of the country than an equal capital employed in a moredirect trade of the same kind.

Whatever be the foreign commodity with which the foreigngoods for home consumption are purchased, it can occasion noessential difference either in the nature of the trade, or in theencouragement and support which it can give to the productivelabour of the country from which it is carried on. If they arepurchased with the gold of Brazil, for example, or with the silverof Peru, this gold and silver, like the tobacco of Virginia, musthave been purchased with something that either was the produceof the industry of the country, or that had been purchased withsomething else that was so.

So far, therefore, as the productive labour of the country isconcerned, the foreign trade of consumption which is carried onby means of gold and silver has all the advantages and all theinconveniences of any other equally round-about foreign trade ofconsumption, and will replace just as fast or just as slow thecapital which is immediately employed in supporting thatproductive labour. It seems even to have one advantage over any



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other equally roundabout foreign trade. The transportation ofthose metals from one place to another, on account of their smallbulk and great value, is less expensive than that of almost anyother foreign goods of equal value. Their freight is much less, andtheir insurance not greater; and no goods, besides, are less liableto suffer by the carriage. An equal quantity of foreign goods,therefore, may frequently be purchased with a smaller quantity ofthe produce of domestic industry, by the intervention of gold andsilver, than by that of any other foreign goods. The demand of thecountry may frequently, in this manner, be supplied morecompletely and at a smaller expense than in any other. Whether,by the continual exportation of those metals, a trade of this kind islikely to impoverish the country from which it is carried on, in anyother way, I shall have occasion to examine at great lengthhereafter.

That part of the capital of any country which is employed in thecarrying trade is altogether withdrawn from supporting theproductive labour of that particular country, to support that ofsome foreign countries. Though it may replace by every operationtwo distinct capitals, yet neither of them belongs to that particularcountry. The capital of the Dutch merchant, which carries thecorn of Poland to Portugal, and brings back the fruits and wines ofPortugal to Poland, replaces by every such operation two capitals,neither of which had been employed in supporting the productivelabour of Holland; but one of them in supporting that of Poland,and the other that of Portugal. The profits only return regularly toHolland, and constitute the whole addition which this tradenecessarily makes to the annual produce of the land and labour ofthat country. When, indeed, the carrying trade of any particular



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country is carried on with the ships and sailors of that country,that part of the capital employed in it which pays the freight isdistributed among, and puts into motion, a certain number ofproductive labourers of that country. Almost all nations that havehad any considerable share of the carrying trade have, in fact,carried it on in this manner. The trade itself has probably derivedits name from it, the people of such countries being the carriers toother countries. It does not, however, seem essential to the natureof the trade that it should be so. A Dutch merchant may, forexample, employ his capital in transacting the commerce ofPoland and Portugal, by carrying part of the surplus produce ofthe one to the other, not in Dutch, but in British bottoms. It maybe presumed that he actually does so upon some particularoccasions. It is upon this account, however, that the carrying tradehas been supposed peculiarly advantageous to such a country asGreat Britain, of which the defence and security depend upon thenumber of its sailors and shipping. But the same capital mayemploy as many sailors and shipping, either in the foreign trade ofconsumption, or even in the home trade, when carried on bycoasting vessels, as it could in the carrying trade. The number ofsailors and shipping which any particular capital can employ doesnot depend upon the nature of the trade, but partly upon the bulkof the goods in proportion to their value, and partly upon thedistance of the ports between which they are to be carried; chieflyupon 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, byextraordinary encouragements, a larger share of the capital of any



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country into the carrying trade than what would naturally go to itwill not always necessarily increase the shipping of that country.

The capital, therefore, employed in the home trade of anycountry will generally give encouragement and support to agreater quantity of productive labour in that country, and increasethe value of its annual produce more than an equal capitalemployed in the foreign trade of consumption: and the capitalemployed in this latter trade has in both these respects a stillgreater advantage over an equal capital employed in the carryingtrade. The riches, and so far as power depends upon riches, thepower of every country must always be in proportion to the valueof its annual produce, the fund from which all taxes mustultimately be paid. But the great object of the political economy ofevery country is to increase the riches and power of that country.It ought, therefore, to give no preference nor superiorencouragement to the foreign trade of consumption above thehome trade, nor to the carrying trade above either of the othertwo. It ought neither to force nor to allure into either of those twochannels a greater share of the capital of the country than whatwould naturally flow into them of its own accord.

When the produce of any particular branch of industry exceedswhat the demand of the country requires, the surplus must be sentabroad and exchanged for something for which there is a demandat home. Without such exportation a part of the productive labourof the country must cease, and the value of its annual producediminish.

The land and labour of Great Britain produce generally morecorn, woollens, and hardware than the demand of the homemarket requires. The surplus part of them, therefore, must be sent



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abroad, and exchanged for something for which there is a demandat home. It is only by means of such exportation that this surpluscan acquire a value sufficient to compensate the labour andexpense of producing it. The neighbourhood of the sea-coast, andthe banks of all navigable rivers, are advantageous situations forindustry, only because they facilitate the exportation andexchange of such surplus produce for something else which ismore in demand there.

When the foreign goods which are thus purchased with thesurplus produce of domestic industry exceed the demand of thehome market, the surplus part of them must be sent abroad againand exchanged for something more in demand at home. Aboutninety-six thousand hogsheads of tobacco are annually purchasedin Virginia and Maryland with a part of the surplus produce ofBritish industry. But the demand of Great Britain does notrequire, perhaps, more than fourteen thousand. If the remainingeighty-two thousand, therefore, could not be sent abroad andexchanged for something more in demand at home, theimportation of them must cease immediately, and with it theproductive labour of all those inhabitants of Great Britain, who areat present employed in preparing the goods with which theseeighty-two thousand hogsheads are annually purchased. Thosegoods, which are part of the produce of the land and labour ofGreat Britain, having no market at home, and being deprived ofthat which they had abroad, must cease to be produced. The mostround-about foreign trade of consumption, therefore may, uponsome occasions, be as necessary for supporting the productivelabour of the country, and the value of its annual produce, as themost direct.



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When the capital stock of any country is increased to such adegree that it cannot be all employed in supplying theconsumption and supporting the productive labour of thatparticular country, the surplus part of it naturally disgorges itselfinto the carrying trade, and is employed in performing the sameoffices to other countries. The carrying trade is the natural effectand symptom of great national wealth; but it does not seem to bethe natural cause of it. Those statesmen who have been disposedto favour it with particular encouragements seem to havemistaken the effect and symptom for the cause. Holland, inproportion to the extent of the land and the number of itsinhabitants, 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, islikewise supposed to have a considerable share of it; though whatcommonly passes for the carrying trade of England will frequently,perhaps, be found to be no more than a round-about foreign tradeof consumption. Such are, in a great measure, the trades whichcarry the goods of the East and West Indies, and of America, todifferent European markets. Those goods are generally purchasedeither immediately with the produce of British industry, or withsomething else which had been purchased with that produce, andthe final returns of those trades are generally used or consumed inGreat Britain. The trade which is carried on in British bottomsbetween the different ports of the Mediterranean, and some tradeof the same kind carried on by British merchants between thedifferent ports of India, make, perhaps, the principal branches ofwhat is properly the carrying trade of Great Britain.

The extent of the home trade and of the capital which can be



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employed in it, is necessarily limited by the value of the surplusproduce of all those distant places within the country which haveoccasion to exchange their respective productions with another:that of the foreign trade of consumption, by the value of thesurplus produce of the whole country and of what can bepurchased with it: that of the carrying trade by the value of thesurplus produce of all the different countries in the world. Itspossible extent, therefore, is in a manner infinite in comparison ofthat of the other two, and is capable of absorbing the greatestcapitals.

The consideration of his own private profit is the sole motivewhich determines the owner of any capital to employ it either inagriculture, in manufactures, or in some particular branch of thewholesale or retail trade. The different quantities of productivelabour which it may put into motion, and the different valueswhich it may add to the annual, produce of the land and labour ofthe society, according as it is employed in one or other of thosedifferent ways, never enter into his thoughts. In countries,therefore, where agriculture is the most profitable of allemployments, and farming and improving the most direct roads toa splendid fortune, the capitals of individuals will naturally beemployed in the manner most advantageous to the whole society.The profits of agriculture, however, seem to have no superiorityover those of other employments in any part of Europe. Projectors,indeed, in every corner of it, have within these few years amusedthe public with most magnificent accounts of the profits to bemade by the cultivation and improvement of land. Withoutentering into any particular discussion of their calculations, a verysimple observation may satisfy us that the result of them must be



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false. We see every day the most splendid fortunes that have beenacquired in the course of a single life by trade and manufacturers,frequently from a very small capital, sometimes from no capital. Asingle instance of such a fortune acquired by agriculture in thesame time, and from such a capital, has not, perhaps, occurred inEurope during the course of the present century. In all the greatcountries of Europe, however, much good land still remainsuncultivated, and the greater part of what is cultivated is far frombeing improved to the degree of which it is capable. Agriculture,therefore, is almost everywhere capable of absorbing a muchgreater capital than has ever yet been employed in it. Whatcircumstances in the policy of Europe have given the trades whichare carried on in towns so great an advantage over that which iscarried on in the country that private persons frequently find itmore for their advantage to employ their capitals in the mostdistant carrying trades of Asia and America than in theimprovement and cultivation of the most fertile fields in their ownneighbourhood, I shall endeavour to explain at full length in thetwo following books.

Book Three

Of the DifferentProgress ofOpulence in

Different Nations



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Chapter I

Of the Natural Progress of Opulence

he great commerce of every civilised society is that carriedon between the inhabitants of the town and those of thecountry. It consists in the exchange of rude for

manufactured produce, either immediately, or by the interventionof money, or of some sort of paper which represents money. Thecountry supplies the town with the means of subsistence and thematerials of manufacture. The town repays this supply by sendingback a part of the manufactured produce to the inhabitants of thecountry. The town, in which there neither is nor can be anyreproduction of substances, may very properly be said to gain itswhole wealth and subsistence from the country. We must not,however, upon this account, imagine that the gain of the town isthe loss of the country. The gains of both are mutual andreciprocal, and the division of labour is in this, as in all othercases, advantageous to all the different persons employed in thevarious occupations into which it is subdivided. The inhabitants ofthe country purchase of the town a greater quantity ofmanufactured goods, with the produce of a much smaller quantityof their own labour, than they must have employed had theyattempted to prepare them themselves. The town affords a marketfor the surplus produce of the country, or what is over and abovethe maintenance of the cultivators, and it is there that theinhabitants of the country exchange it for something else which isin demand among them. The greater the number and revenue of

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the inhabitants of the town, the more extensive is the marketwhich it affords to those of the country; and the more extensivethat market, it is always the more advantageous to a great number.The corn which grows within a mile of the town sells there for thesame price with that which comes from twenty miles distance. Butthe price of the latter must generally not only pay the expense ofraising and bringing it to market, but afford, too, the ordinaryprofits of agriculture to the farmer. The proprietors andcultivators of the country, therefore, which lies in theneighbourhood of the town, over and above the ordinary profits ofagriculture, gain, in the price of what they sell, the whole value ofthe carriage of the like produce that is brought from more distantparts, and they have, besides, the whole value of this carriage inthe price of what they buy. Compare the cultivation of the lands inthe neighbourhood of any considerable town with that of thosewhich lie at some distance from it, and you will easily satisfyyourself how much the country is benefited by the commerce ofthe town. Among all the absurd speculations that have beenpropagated concerning the balance of trade, it has never beenpretended that either the country loses by its commerce with thetown, or the town by that with the country which maintains it.

As subsistence is, in the nature of things, prior to conveniencyand luxury, so the industry which procures the former mustnecessarily be prior to that which ministers to the latter. Thecultivation and improvement of the country, therefore, whichaffords subsistence, must, necessarily, be prior to the increase ofthe town, which furnishes only the means of conveniency andluxury. It is the surplus produce of the country only, or what isover and above the maintenance of the cultivators, that constitutes



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the subsistence of the town, which can therefore increase onlywith the increase of this surplus produce. The town, indeed, maynot always derive its whole subsistence from the country in itsneighbourhood, or even from the territory to which it belongs, butfrom very distant countries; and this, though it forms no exceptionfrom the general rule, has occasioned considerable variations inthe 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 particularcountry, promoted by the natural inclinations of man. If humaninstitutions had never thwarted those natural inclinations, thetowns could nowhere have increased beyond what theimprovement and cultivation of the territory in which they weresituated could support; till such time, at least, as the whole of thatterritory was completely cultivated and improved. Upon equal, ornearly equal profits, most men will choose to employ their capitalsrather in the improvement and cultivation of land than either inmanufactures or in foreign trade. The man who employs hiscapital in land has it more under his view and command, and hisfortune is much less liable to accidents than that of the trader, whois obliged frequently to commit it, not only to the winds and thewaves, but to the more uncertain elements of human folly andinjustice, by giving great credits in distant countries to men withwhose character and situation he can seldom be thoroughlyacquainted. The capital of the landlord, on the contrary, which isfixed in the improvement of his land, seems to be as well securedas the nature of human affairs can admit of. The beauty of thecountry besides, the pleasures of a country life, the tranquillity ofmind which it promises, and wherever the injustice of human laws



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does not disturb it, the independency which it really affords, havecharms that more or less attract everybody; and as to cultivate theground was the original destination of man, so in every stage of hisexistence he seems to retain a predilection for this primitiveemployment.

Without the assistance of some artificers, indeed, thecultivation of land cannot be carried on but with greatinconveniency and continual interruption. Smiths, carpenters,wheelwrights, and ploughwrights, masons, and bricklayers,tanners, shoemakers, and tailors are people whose service thefarmer has frequent occasion for.

Such artificers, too, stand occasionally in need of the assistanceof one another; and as their residence is not, like that of thefarmer, necessarily tied down to a precise spot, they naturallysettle in the neighbourhood of one another, and thus form a smalltown or village. The butcher, the brewer, and the baker soon jointhem, together with many other artificers and retailers, necessaryor useful for supplying their occasional wants, and who contributestill further to augment the town. The inhabitants of the town andthose of the country are mutually the servants of one another. Thetown is a continual fair or market, to which the inhabitants of thecountry resort in order to exchange their rude for manufacturedproduce. It is this commerce which supplies the inhabitants of thetown both with the materials of their work, and the means of theirsubsistence. The quantity of the finished work which they sell tothe inhabitants of the country necessarily regulates the quantity ofthe materials and provisions which they buy. Neither theiremployment nor subsistence, therefore, can augment but inproportion to the augmentation of the demand from the country



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for finished work; and this demand can augment only inproportion to the extension of improvement and cultivation.

Had human institutions, therefore, never disturbed the naturalcourse of things, the progressive wealth and increase of the townswould, in every political society, be consequential, and inproportion to the improvement and cultivation of the territory orcountry.

In our North American colonies, where uncultivated land isstill to be had upon easy terms, no manufactures for distant salehave ever yet been established in any of their towns. When anartificer has acquired a little more stock than is necessary forcarrying on his own business in supplying the neighbouringcountry, he does not, in North America, attempt to establish withit a manufacture for more distant sale, but employs it in thepurchase and improvement of uncultivated land. From artificer hebecomes planter, and neither the large wages nor the easysubsistence which that country affords to artificers can bribe himrather to work for other people than for himself. He feels that anartificer is the servant of his customers, from whom he derives hissubsistence; but that a planter who cultivates his own land, andderives his necessary subsistence from the labour of his ownfamily, is really a master, and independent of all the world.

In countries, on the contrary, where there is either nouncultivated land, or none that can be had upon easy terms, everyartificer who has acquired more stock than he can employ in theoccasional jobs of the neighbourhood endeavours to prepare workfor more distant sale. The smith erects some sort of iron, theweaver some sort of linen or woollen manufactory. Those differentmanufactures come, in process of time, to be gradually subdivided,



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and thereby improved and refined in a great variety of ways,which may easily be conceived, and which it is thereforeunnecessary to explain any further.

In seeking for employment to a capital, manufactures are, uponequal or nearly equal profits, naturally preferred to foreigncommerce, for the same reason that agriculture is naturallypreferred to manufactures. As the capital of the landlord or farmeris more secure than that of the manufacturer, so the capital of themanufacturer, being at all times more within his view andcommand, is more secure than that of the foreign merchant. Inevery period, indeed, of every society, the surplus part both of therude and manufactured produce, or that for which there is nodemand at home, must be sent abroad in order to be exchangedfor something for which there is some demand at home. Butwhether the capital, which carries this surplus produce abroad, bea foreign or a domestic one is of very little importance. If thesociety has not acquired sufficient capital both to cultivate all itslands, and to manufacture in the completest manner the whole ofits rude produce, there is even a considerable advantage that rudeproduce should be exported by a foreign capital, in order that thewhole stock of the society may be employed in more usefulpurposes. The wealth of ancient Egypt, that of China andIndostan, sufficiently demonstrate that a nation may attain a veryhigh degree of opulence though the greater part of its exportationtrade be carried on by foreigners. The progress of our NorthAmerican and West Indian colonies would have been much lessrapid had no capital but what belonged to themselves beenemployed in exporting their surplus produce.

According to the natural course of things, therefore, the



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greater part of the capital of every growing society is, first,directed to agriculture, afterwards to manufactures, and last of allto foreign commerce. This order of things is so very natural that inevery society that had any territory it has always, I believe, been insome degree observed. Some of their lands must have beencultivated before any considerable towns could be established, andsome sort of coarse industry of the manufacturing kind must havebeen carried on in those towns, before they could well think ofemploying themselves in foreign commerce.

But though this natural order of things must have taken placein some degree in every such society, it has, in all the modernstates of Europe, been, in many respects, entirely inverted. Theforeign commerce of some of their cities has introduced all theirfiner manufactures, or such as were fit for distant sale; andmanufactures and foreign commerce together have given birth tothe principal improvements of agriculture. The manners andcustoms 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.



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Chapter II

Of the Discouragement of Agriculture in the ancientState of Europe after the Fall of the Roman Empire

hen the German and Scythian nations overran thewestern provinces of the Roman empire, the confusionswhich followed so great a revolution lasted for several

centuries. The rapine and violence which the barbarians exercisedagainst the ancient inhabitants interrupted the commercebetween the towns and the country. The towns were deserted, andthe country was left uncultivated, and the western provinces ofEurope, which had enjoyed a considerable degree of opulenceunder the Roman empire, sunk into the lowest state of povertyand barbarism. During the continuance of those confusions, thechiefs and principal leaders of those nations acquired or usurpedto themselves the greater part of the lands of those countries. Agreat part of them was uncultivated; but no part of them, whethercultivated or uncultivated, was left without a proprietor. All ofthem were engrossed, and the greater part by a few greatproprietors.

This original engrossing of uncultivated lands, though a great,might have been but a transitory evil. They might soon have beendivided again, and broke into small parcels either by succession orby alienation. The law of primogeniture hindered them from beingdivided by succession: the introduction of entails prevented theirbeing broke into small parcels by alienation.

When land, like movables, is considered as the means only of

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subsistence and enjoyment, the natural law of succession dividesit, like them, among all the children of the family; of an of whomthe subsistence and enjoyment may be supposed equally dear tothe father. This natural law of succession accordingly took placeamong the Romans, who made no more distinction between elderand younger, between male and female, in the inheritance of landsthan we do in the distribution of movables. But when land wasconsidered as the means, not of subsistence merely, but of powerand protection, it was thought better that it should descendundivided to one. In those disorderly times every great landlordwas a sort of petty prince. His tenants were his subjects. He wastheir judge, and in some respects their legislator in peace, andtheir leader in war. He made war according to his own discretion,frequently against his neighbours, and sometimes against hissovereign. The security of a landed estate, therefore, theprotection which its owner could afford to those who dwelt on it,depended upon its greatness. To divide it was to ruin it, and toexpose every part of it to be oppressed and swallowed up by theincursions of its neighbours. The law of primogeniture, therefore,came to take place, not immediately, indeed, but in process oftime, in the succession of landed estates, for the same reason thatit has generally taken place in that of monarchies, though notalways at their first institution. That the power, and consequentlythe security of the monarchy, may not be weakened by division, itmust descend entire to one of the children. To which of them soimportant a preference shall be given must be determined bysome general rule, founded not upon the doubtful distinctions ofpersonal merit, but upon some plain and evident difference whichcan admit of no dispute. Among the children of the same family,



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there can be no indisputable difference but that of sex, and that ofage. The male sex is universally preferred to the female; and whenall other things are equal, the elder everywhere takes place of theyounger. Hence the origin of the right of primogeniture, and ofwhat is called lineal succession.

Laws frequently continue in force long after the circumstanceswhich first gave occasion to them, and which could alone renderthem reasonable, are no more. In the present state of Europe, theproprietor of a single acre of land is as perfectly secure of hispossession as the proprietor of a hundred thousand. The right ofprimogeniture, however, still continues to be respected, and as ofall institutions it is the fittest to support the pride of familydistinctions, it is still likely to endure for many centuries. In everyother respect, nothing can be more contrary to the real interest ofa 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 ofprimogeniture. They were introduced to preserve a certain linealsuccession, of which the law of primogeniture first gave the idea,and to hinder any part of the original estate from being carried outof the proposed line either by gift, or devise, or alienation; eitherby the folly, or by the misfortune of any of its successive owners.They were altogether unknown to the Romans. Neither theirsubstitutions nor fideicommisses bear any resemblance to entails,though some French lawyers have thought proper to dress themodern institution in the language and garb of those ancient ones.

When great landed estates were a sort of principalities, entailsmight not be unreasonable. Like what are called the fundamentallaws of some monarchies, they might frequently hinder the



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security of thousands from being endangered by the caprice orextravagance of one man. But in the present state of Europe, whensmall as well as great estates derive their security from the laws oftheir country, nothing can be more completely absurd. They arefounded upon the most absurd of all suppositions, the suppositionthat every successive generation of men have not an equal right tothe earth, and to all that it possesses; but that the property of thepresent generation should be restrained and regulated accordingto the fancy of those who died perhaps five hundred years ago.Entails, however, are still respected through the greater part ofEurope, in those countries particularly in which noble birth is anecessary qualification for the enjoyment either of civil or militaryhonours. Entails are thought necessary for maintaining thisexclusive privilege of the nobility to the great offices and honoursof their country; and that order having usurped one unjustadvantage over the rest of their fellow citizens, lest their povertyshould render it ridiculous, it is thought reasonable that theyshould have another. The common law of England, indeed, is saidto abhor perpetuities, and they are accordingly more restrictedthere than in any other European monarchy; though evenEngland is not altogether without them. In Scotland more thanone-fifth, perhaps more than one-third, part of the whole lands ofthe country are at present supposed to be under strict entail.

Great tracts of uncultivated land were, in this manner, not onlyengrossed by particular families, but the possibility of their beingdivided again was as much as possible precluded for ever. Itseldom happens, however, that a great proprietor is a greatimprover. In the disorderly times which gave birth to thosebarbarous institutions, the great proprietor was sufficiently



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employed in defending his own territories, or in extending hisjurisdiction and authority over those of his neighbours. He had noleisure to attend to the cultivation and improvement of land. Whenthe establishment of law and order afforded him this leisure, heoften wanted the inclination, and almost always the requisiteabilities. If the expense of his house and person either equalled orexceeded his revenue, as it did very frequently, he had no stock toemploy in this manner. If he was an economist, he generally foundit more profitable to employ his annual savings in new purchasesthan in the improvement of his old estate. To improve land withprofit, like all other commercial projects, requires an exactattention to small savings and small gains, of which a man born toa great fortune, even though naturally frugal, is very seldomcapable.

The situation of such a person naturally disposes him to attendrather to ornament which pleases his fancy than to profit forwhich he has so little occasion. The elegance of his dress, of hisequipage, of his house, and household furniture, are objects whichfrom his infancy he has been accustomed to have some anxietyabout. The turn of mind which this habit naturally forms followshim when he comes to think of the improvement of land. Heembellishes perhaps four or five hundred acres in theneighbourhood of his house, at ten times the expense which theland is worth after all his improvements; and finds that if he was toimprove his whole estate in the same manner, and he has littletaste for any other, he would be a bankrupt before he had finishedthe tenth part of it. There still remain in both parts of the UnitedKingdom some great estates which have continued withoutinterruption in the hands of the same family since the times of



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feudal anarchy. Compare the present condition of those estateswith the possessions of the small proprietors in theirneighbourhood, and you will require no other argument toconvince you how unfavourable such extensive property is toimprovement.

If little improvement was to be expected from such greatproprietors, still less was to be hoped for from those who occupiedthe land under them. In the ancient state of Europe, the occupiersof 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 theancient Greeks and Romans, or even in our West Indian colonies.

They were supposed to belong more directly to the land than totheir master. They could, therefore, be sold with it, but notseparately. They could marry, provided it was with the consent oftheir master; and he could not afterwards dissolve the marriage byselling the man and wife to different persons. If he maimed ormurdered any of them, he was liable to some penalty, thoughgenerally but to a small one.

They were not, however, capable of acquiring property.Whatever they acquired was acquired to their master, and hecould take it from them at pleasure. Whatever cultivation andimprovement could be carried on by means of such slaves wasproperly carried on by their master. It was at his expense. Theseed, the cattle, and the instruments of husbandry were all his. Itwas for his benefit. Such slaves could acquire nothing but theirdaily maintenance. It was properly the proprietor himself,therefore, that, in this case, occupied his own lands, and cultivatedthem by his own bondmen. This species of slavery still subsists inRussia, Poland, Hungary, Bohemia, Moravia, and other parts of



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Germany. It is only in the western and southwestern provinces ofEurope that it has gradually been abolished altogether.

But if great improvements are seldom to be expected fromgreat proprietors, they are least of all to be expected when theyemploy slaves for their workmen. The experience of all ages andnations, I believe, demonstrates that the work done by slaves,though it appears to cost only their maintenance, is in the end thedearest of any. A person who can acquire no property, can have noother interest but to eat as much, and to labour as little aspossible. Whatever work he does beyond what is sufficient topurchase his own maintenance can be squeezed out of him byviolence 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 themanagement of slaves, is remarked by both Pliny and Columella.In the time of Aristotle it had not been much better in ancientGreece. Speaking of the ideal republic described in the laws ofPlato, to maintain five thousand idle men (the number of warriorssupposed necessary for its defence) together with their womenand servants, would require, he says, a territory of boundlessextent and fertility, like the plains of Babylon.

The pride of man makes him love to domineer, and nothingmortifies him so much as to be obliged to condescend to persuadehis inferiors. Wherever the law allows it, and the nature of thework can afford it, therefore, he will generally prefer the service ofslaves to that of freemen. The planting of sugar and tobacco canafford the expense of slave-cultivation. The raising of corn, itseems, in the present times, cannot. In the English colonies, ofwhich the principal produce is corn, the far greater part of the



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work is done by freemen. The late resolution of the Quakers inPennsylvania to set at liberty all their negro slaves may satisfy usthat their number cannot be very great. Had they made anyconsiderable part of their property, such a resolution could neverhave been agreed to. In our sugar colonies, on the contrary, thewhole work is done by slaves, and in our tobacco colonies a verygreat part of it. The profits of a sugar-plantation in any of our WestIndian colonies are generally much greater than those of any othercultivation that is known either in Europe or America; and theprofits of a tobacco plantation, though inferior to those of sugar,are superior to those of corn, as has already been observed. Bothcan afford the expense of slave-cultivation, but sugar can afford itstill better than tobacco. The number of negroes accordingly ismuch greater, in proportion to that of whites, in our sugar than inour tobacco colonies.

To the slave cultivators of ancient times gradually succeeded aspecies of farmers known at present in France by the name ofmetayers. They are called in Latin, Coloni partiarii. They havebeen so long in disuse in England that at present I know noEnglish name for them. The proprietor furnished them with theseed, cattle, and instruments of husbandry, the whole stock, inshort, necessary for cultivating the farm. The produce was dividedequally between the proprietor and the farmer, after setting asidewhat was judged necessary for keeping up the stock, which wasrestored to the proprietor when the farmer either quitted, or wasturned out of the farm.

Land occupied by such tenants is properly cultivated at theexpense of the proprietor as much as that occupied by slaves.There is, however, one very essential difference between them.



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Such tenants, being freemen, are capable of acquiring property,and having a certain proportion of the produce of the land, theyhave a plain interest that the whole produce should be as great aspossible, in order that their own proportion may be so. A slave, onthe contrary, who can acquire nothing but his maintenance,consults his own ease by making the land produce as little aspossible over and above that maintenance. It is probable that itwas partly upon account of this advantage, and partly uponaccount of the encroachments which the sovereign, always jealousof the great lords, gradually encouraged their villains to makeupon their authority, and which seem at last to have been such asrendered this species of servitude altogether inconvenient, thattenure in villanage gradually wore out through the greater part ofEurope. The time and manner, however, in which so important arevolution was brought about is one of the most obscure points inmodern history. The Church of Rome claims great merit in it; andit is certain that so early as the twelfth century, Alexander IIIpublished a bull for the general emancipation of slaves. It seems,however, to have been rather a pious exhortation than a law towhich exact obedience was required from the faithful. Slaverycontinued to take place almost universally for several centuriesafterwards, till it was gradually abolished by the joint operation ofthe two interests above mentioned, that of the proprietor on theone hand, and that of the sovereign on the other. A villainenfranchised, and at the same time allowed to continue inpossession of the land, having no stock of his own, could cultivateit only by means of what the landlord advanced to him, and must,therefore, have been what the French called a metayer.

It could never, however, be the interest even of this last species



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of cultivators to lay out, in the further improvement of the land,any part of the little stock which they might save from their ownshare of the produce, because the lord, who laid out nothing, wasto get one half of whatever it produced. The tithe, which is but atenth of the produce, is found to be a very great hindrance toimprovement. A tax, therefore, which amounted to one half musthave been an effectual bar to it. It might be the interest of ametayer to make the land produce as much as could be broughtout of it by means of the stock furnished by the proprietor; but itcould never be his interest to mix any part of his own with it. InFrance, where five parts out of six of the whole kingdom are saidto be still occupied by this species of cultivators, the proprietorscomplain that their metayers take every opportunity of employingthe master’s cattle rather in carriage than in cultivation; becausein the one case they get the whole profits to themselves, in theother 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 Doctor Blackstone tohave been rather bailiffs of the landlord than farmers properly socalled, were probably of the same kind.

To this species of tenancy succeeded, though by very slowdegrees, farmers properly so called, who cultivated the land withtheir own stock, paying a rent certain to the landlord. When suchfarmers have a lease for a term of years, they may sometimes findit for their interest to lay out part of their capital in the furtherimprovement of the farm; because they may sometimes expect torecover it, with a large profit, before the expiration of the lease.The possession even of such farmers, however, was long extremely



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precarious, and still is so in many parts of Europe. They couldbefore the expiration of their term be legally outed of their leaseby a new purchaser; in England, even by the fictitious action of acommon recovery. If they were turned out illegally by the violenceof their master, the action by which they obtained redress wasextremely imperfect. It did not always reinstate them in thepossession of the land, but gave them damages which neveramounted to the real loss.

Even in England, the country perhaps of Europe where theyeomanry has always been most respected, it was not till about the14th of Henry VII that the action of ejectment was invented, bywhich the tenant recovers, not damages only but possession, andin which his claim is not necessarily concluded by the uncertaindecision of a single assize. This action has been found so effectuala remedy that, in the modern practice, when the landlord hasoccasion to sue for the possession of the land, he seldom makesuse of the actions which properly belong to him as landlord, theWrit of Right or the Writ of Entry, but sues in the name of histenant by the Writ of Ejectment. In England, therefore, thesecurity of the tenant is equal to that of the proprietor. In England,besides, a lease for life of forty shillings a year value is a freehold,and entitles the lessee to vote for a Member of Parliament; and asa great part of the yeomanry have freeholds of this kind, the wholeorder becomes respectable to their landlords on account of thepolitical consideration which this gives them. There is, I believe,nowhere in Europe, except in England, any instance of the tenantbuilding upon the land of which he had no lease, and trusting thatthe honour of his landlord would take no advantage of soimportant an improvement. Those laws and customs so favourable



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to the yeomanry have perhaps contributed more to the presentgrandeur of England than all their boasted regulations ofcommerce taken together.

The law which secures the longest leases against successors ofevery kind is, so far as I know, peculiar to Great Britain. It wasintroduced into Scotland so early as 1449, a law of James II. Itsbeneficial influence, however, has been much obstructed byentails; the heirs of entail being generally restrained from lettingleases for any long term of years, frequently for more than oneyear. A late Act of Parliament has, in this respect, somewhatslackened their fetters, though they are still by much too strait. InScotland, besides, as no leasehold gives a vote for a Member ofParliament, the yeomanry are upon this account less respectableto their landlords than in England.

In other parts of Europe, after it was found convenient tosecure tenants both against heirs and purchasers, the term of theirsecurity was still limited to a very short period; in France, forexample, to nine years from the commencement of the lease. It hasin that country, indeed, been lately extended to twenty-seven, aperiod still too short to encourage the tenant to make the mostimportant improvements. The proprietors of land were ancientlythe legislators of every part of Europe. The laws relating to land,therefore, were all calculated for what they supposed the interestof the proprietor. It was for his interest, they had imagined, thatno lease granted by any of his predecessors should hinder himfrom enjoying, during a long term of years, the full value of hisland.

Avarice and injustice are always short-sighted, and they did notforesee how much this regulation must obstruct improvement, and



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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 thelandlord, which were seldom either specified in the lease, orregulated by any precise rule, but by the use and wont of themanor or barony. These services, therefore, being almost entirelyarbitrary, subjected the tenant to many vexations. In Scotland theabolition of all services not precisely stipulated in the lease has inthe course of a few years very much altered for the better thecondition of the yeomanry of that country.

The public services to which the yeomanry were bound werenot less arbitrary than the private ones. To make and maintain thehigh 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 householdor 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 Britainis, I believe, the only monarchy in Europe where the oppression ofpurveyance has been entirely abolished. It still subsists in Franceand Germany.

The public taxes to which they were subject were as irregularand oppressive as the services. The ancient lords, thoughextremely unwilling to grant themselves any pecuniary aid to theirsovereign, easily allowed him to tallage, as they called it theirtenants, and had not knowledge enough to foresee how much thismust in the end affect their own revenue. The taille, as it stillsubsists in France, may serve as an example of those ancienttallages. It is a tax upon the supposed profits of the farmer, which



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they estimate by the stock that he has upon the farm. It is hisinterest, therefore, to appear to have as little as possible, andconsequently to employ as little as possible in its cultivation, andnone in its improvement.

Should any stock happen to accumulate in the hands of aFrench farmer, the taille is almost equal to a prohibition of its everbeing employed upon the land. This tax, besides, is supposed todishonour whoever is subject to it, and to degrade him below, notonly the rank of a gentleman, but that of a burgher, and whoeverrents the lands of another becomes subject to it. No gentleman,nor even any burgher who has stock, will submit to thisdegradation. This tax, therefore, not only hinders the stock whichaccumulates upon the land from being employed in itsimprovement, but drives away an other stock from it. The ancienttenths and fifteenths, so usual in England in former times, seem,so far as they affected the land, to have been taxes of the samenature with the taille.

Under all these discouragements, little improvement could beexpected from the occupiers of land. That order of people, with allthe liberty and security which law can give, must always improveunder great disadvantages. The farmer, compared with theproprietor, is as a merchant who trades with borrowed moneycompared with one who trades with his own. The stock of bothmay improve, but that of the one, with only equal good conduct,must always improve more slowly than that of the other, onaccount of the large share of the profits which is consumed by theinterest of the loan. The lands cultivated by the farmer must, inthe same manner, with only equal good conduct, be improvedmore slowly than those cultivated by the proprietor, on account of



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the large share of the produce which is consumed in the rent, andwhich, had the farmer been proprietor, he might have employed inthe further improvement of the land. The station of a farmerbesides is, from the nature of things, inferior to that of aproprietor. Through the greater part of Europe the yeomanry areregarded as an inferior rank of people, even to the better sort oftradesmen and mechanics, and in all parts of Europe to the greatmerchants and master manufacturers. It can seldom happen,therefore, that a man of any considerable stock should quit thesuperior in order to place himself in an inferior station. Even inthe present state of Europe, therefore, little stock is likely to gofrom any other profession to the improvement of land in the wayof farming. More does perhaps in Great Britain than in any othercountry, though even there the great stocks which are, in someplaces, employed in farming have generally been acquired byfarming, the trade, perhaps, in which of all others stock iscommonly acquired most slowly. After small proprietors, however,rich and great farmers are, in every country, the principalimprovers. There are more such perhaps in England than in anyother European monarchy. In the republican governments ofHolland and of Berne in Switzerland, the farmers are said to benot inferior to those of England.

The ancient policy of Europe was, over and above all this,unfavourable to the improvement and cultivation of land, whethercarried on by the proprietor or by the farmer; first, by the generalprohibition of the exportation of corn without a special licence,which seems to have been a very universal regulation; andsecondly, by the restraints which were laid upon the inlandcommerce, not only of corn, but of almost every other part of the



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produce of the farm by the absurd laws against engrossers,regrators, and forestallers, and by the privileges of fairs andmarkets. It has already been observed in what manner theprohibition of the exportation of corn, together with someencouragement given to the importation of foreign corn,obstructed the cultivation of ancient Italy, naturally the mostfertile country in Europe, and at that time the seat of the greatestempire in the world. To what degree such restraints upon theinland commerce of this commodity, joined to the generalprohibition of exportation, must have discouraged the cultivationof countries less fertile and less favourably circumstanced, it is notperhaps very easy to imagine.



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Chapter III

Of the Rise and Progress of Cities and Towns afterthe Fall of the Roman Empire

he inhabitants of cities and towns were, after the fall of theRoman empire, not more favoured than those of thecountry. They consisted, indeed, of a very different order

of people from the first inhabitants of the ancient republics ofGreece and Italy.

These last were composed chiefly of the proprietors of lands,among whom the public territory was originally divided, and whofound it convenient to build their houses in the neighbourhood ofone another, and to surround them with a wall, for the sake ofcommon defence. After the fall of the Roman empire, on thecontrary, the proprietors of land seem generally to have lived infortified castles on their own estates, and in the midst of their owntenants and dependants. The towns were chiefly inhabited bytradesmen and mechanics, who seem in those days to have been ofservile, or very nearly of servile condition. The privileges which wefind granted by ancient charters to the inhabitants of some of theprincipal towns in Europe sufficiently show what they were beforethose grants. The people to whom it is granted as a privilege thatthey might give away their own daughters in marriage without theconsent of their lord, that upon their death their own children, andnot their lord, should succeed to their goods, and that they mightdispose of their own effects by will, must, before those grants, havebeen either altogether or very nearly in the same state of villanage

T



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with the occupiers of land in the country. They seem, indeed, to have been a very poor, mean set of

people, who used to travel about with their goods from place toplace, and from fair to fair, like the hawkers and pedlars of thepresent times. In all the different countries of Europe then, in thesame manner as in several of the Tartar governments of Asia atpresent, taxes used to be levied upon the persons and goods oftravellers when they passed through certain manors, when theywent over certain bridges, when they carried about their goodsfrom place to place in a fair, when they erected in it a booth or stallto sell them in.

These different taxes were known in England by the names ofpassage, 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 suchparticularly as lived in their own demesnes, a general exemptionfrom such taxes. Such traders, though in other respects of servile,or very nearly of servile condition, were upon this account calledfree-traders. They in return usually paid to their protector a sort ofannual poll-tax. In those days protection was seldom grantedwithout a valuable consideration, and this tax might, perhaps, beconsidered as compensation for what their patrons might lose bytheir exemption from other taxes. At first, both those poll-taxesand those exemptions seem to have been altogether personal, andto have affected only particular individuals during either theirlives or the pleasure of their protectors. In the very imperfectaccounts which have been published from Domesday Book ofseveral of the towns of England, mention is frequently madesometimes of the tax which particular burghers paid, each of



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them, either to the king or to some other great lord for this sort ofprotection; and sometimes of the general amount only of all thosetaxes.1

But how servile soever may have been originally the conditionof the inhabitants of the towns, it appears evidently that theyarrived at liberty and independency much earlier than theoccupiers of land in the country. That part of the king’s revenuewhich arose from such poll-taxes in any particular town usedcommonly to be let in farm during a term of years for a rentcertain, sometimes to the sheriff of the county, and sometimes toother persons. The burghers themselves frequently got creditenough to be admitted to farm the revenues of this sort whicharose out of their own town, they becoming jointly and severallyanswerable for the whole rent.2 To let a farm in this manner wasquite agreeable to the usual economy of, I believe, the sovereignsof all the different countries of Europe, who used frequently to letwhole manors to all the tenants of those manors, they becomingjointly and severally answerable for the whole rent; but in returnbeing allowed to collect it in their own way, and to pay it into theking’s exchequer by the hands of their own bailiff, and being thusaltogether freed from the insolence of the king’s officers—acircumstance in those days regarded as of the greatestimportance.

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

1See Brady’s Historical Treatise of Cities and Burroughs, p. 3, etc.2See Madox, Firma Burgi, p. 18, also History of the Exchequer, ch. 10, sect.

V., p. 233, first edition.



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years only. In process of time, however, it seems to have becomethe general practice to grant it to them in fee, that is for ever,reserving a rent certain never afterwards to be augmented. Thepayment having thus become perpetual, the exemptions, in returnfor which it was made, naturally became perpetual too. Thoseexemptions, therefore, ceased to be personal, and could notafterwards be considered as belonging to individuals asindividuals, but as burghers of a particular burgh, which, uponthis account, was called a free burgh, for the same reason that theyhad been called free burghers or free traders.

Along with this grant, the important privileges abovementioned, that they might give away their own daughters inmarriage, that their children should succeed to them, and thatthey might dispose of their own effects by will, were generallybestowed upon the burghers of the town to whom it was given.Whether such privileges had before been usually granted alongwith the freedom of trade to particular burghers, as individuals, Iknow not. I reckon it not improbable that they were, though Icannot produce any direct evidence of it. But however this mayhave been, the principal attributes of villanage and slavery beingthus taken away from them, they now, at least, became really freein our present sense of the word Freedom.

Nor was this all. They were generally at the same time erectedinto a commonalty or corporation, with the privilege of havingmagistrates and a town council of their own, of making bye-lawsfor their own government, of building walls for their own defence,and of reducing all their inhabitants under a sort of militarydiscipline by obliging them to watch and ward, that is, as ancientlyunderstood, to guard and defend those walls against all attacks



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and surprises by night as well as by day. In England they weregenerally exempted from suit to the hundred and county courts;and all such pleas as should arise among them, the pleas of thecrown excepted, were left to the decision of their own magistrates.In other countries much greater and more extensive jurisdictionswere frequently granted to them.1

It might, probably, be necessary to grant to such towns as wereadmitted to farm their own revenues some sort of compulsivejurisdiction to oblige their own citizens to make payment. In thosedisorderly times it might have been extremely inconvenient tohave left them to seek this sort of justice from any other tribunal.But it must seem extraordinary that the sovereigns of all thedifferent countries of Europe should have exchanged in thismanner for a rent certain, never more to be augmented, thatbranch of the revenue which was, perhaps, of all others the mostlikely to be improved by the natural course of things, withouteither expense or attention of their own: and that they should,besides, have in this manner voluntarily erected a sort ofindependent republics in the heart of their own dominions.

In order to understand this, it must be remembered that inthose days the sovereign of perhaps no country in Europe was ableto protect, through the whole extent of his dominions, the weakerpart of his subjects from the oppression of the great lords. Thosewhom the law could not protect, and who were not strong enoughto defend themselves, were obliged either to have recourse to theprotection of some great lord, and in order to obtain it to become

1See Madox, Firma Burgi: See also Pfeffel in the remarkable events

under Frederic II and his successors of the house of Suabia.



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either his slaves or vassals; or to enter into a league of mutualdefence for the common protection of one another. Theinhabitants of cities and burghs, considered as single individuals,had no power to defend themselves; but by entering into a leagueof mutual defence with their neighbours, they were capable ofmaking no contemptible resistance.

The lords despised the burghers, whom they considered notonly as of a different order, but as a parcel of emancipated slaves,almost of a different species from themselves. The wealth of theburghers never failed to provoke their envy and indignation, andthey plundered them upon every occasion without mercy orremorse. The burghers naturally hated and feared the lords. Theking hated and feared them too; but though perhaps he mightdespise, he had no reason either to hate or fear the burghers.Mutual interest, therefore, disposed them to support the king, andthe king to support them against the lords. They were the enemiesof his enemies, and it was his interest to render them as secureand independent of those enemies as he could. By granting themmagistrates of their own, the privilege of making bye-laws for theirown government, that of building walls for their own defence, andthat of reducing all their inhabitants under a sort of militarydiscipline, he gave them all the means of security andindependency of the barons which it was in his power to bestow.

Without the establishment of some regular government of thiskind, without some authority to compel their inhabitants to actaccording to some certain plan or system, no voluntary league ofmutual defence could either have afforded them any permanentsecurity, or have enabled them to give the king any considerablesupport. By granting them the farm of their town in fee, he took



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away from those whom he wished to have for his friends, and, ifone may say so, for his allies, all ground of jealousy and suspicionthat he was ever afterwards to oppress them, either by raising thefarm rent of their town or by granting it to some other farmer.

The princes who lived upon the worst terms with their baronsseem accordingly to have been the most liberal in grants of thiskind to their burghs. King John of England, for example, appearsto have been a most munificent benefactor to his towns.1 Philip theFirst of France lost all authority over his barons. Towards the endof his reign, his son Lewis, known afterwards by the name ofLewis the Fat, consulted, according to Father Daniel, with thebishops of the royal demesnes concerning the most proper meansof restraining the violence of the great lords. Their adviceconsisted of two different proposals. One was to erect a new orderof jurisdiction, by establishing magistrates and a town council inevery considerable town of his demesnes. The other was to form anew militia, by making the inhabitants of those towns, under thecommand of their own magistrates, march out upon properoccasions to the assistance of the king. It is from this period,according to the French antiquarians, that we are to date theinstitution of the magistrates and councils of cities in France. Itwas during the unprosperous reigns of the princes of the house ofSuabia that the greater part of the free towns of Germany receivedthe first grants of their privileges, and that the famous Hanseaticleague first became formidable.2

The militia of the cities seems, in those times, not to have been

1See Madox.2See Pfeffel.



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inferior to that of the country, and as they could be more readilyassembled upon any sudden occasion, they frequently had theadvantage in their disputes with the neighbouring lords. Incountries, such as Italy and Switzerland, in which, on accounteither of their distance from the principal seat of government, ofthe natural strength of the country itself, or of some other reason,the sovereign came to lose the whole of his authority, the citiesgenerally became independent republics, and conquered all thenobility in their neighbourhood, obliging them to pull down theircastles in the country and to live, like other peaceable inhabitants,in the city. This is the short history of the republic of Berne as wellas of several other cities in Switzerland. If you except Venice, forof that city the history is somewhat different, it is the history of allthe considerable Italian republics, of which so great a numberarose and perished between the end of the twelfth and thebeginning of the sixteenth century.

In countries such as France or England, where the authority ofthe sovereign, though frequently very low, never was destroyedaltogether, the cities had no opportunity of becoming entirelyindependent. They became, however, so considerable that thesovereign 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 statesof the kingdom, where they might join with the clergy and thebarons in granting, upon urgent occasions, some extraordinary aidto the king. Being generally, too, more favourable to his power,their deputies seem, sometimes, to have been employed by him asa counterbalance in those assemblies to the authority of the greatlords. Hence the origin of the representation of burghs in the



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states-general of all the great monarchies in Europe. Order and good government, and along with them the liberty

and security of individuals, were, in this manner, established incities at a time when the occupiers of land in the country wereexposed to every sort of violence. But men in this defenceless statenaturally content themselves with their necessary subsistence,because to acquire more might only tempt the injustice of theiroppressors. On the contrary, when they are secure of enjoying thefruits of their industry, they naturally exert it to better theircondition, and to acquire not only the necessaries, but theconveniences and elegancies of life. That industry, therefore,which aims at something more than necessary subsistence, wasestablished in cities long before it was commonly practised by theoccupiers of land in the country. If in the hands of a poorcultivator, oppressed with the servitude of villanage, some littlestock should accumulate, he would naturally conceal it with greatcare from his master, to whom it would otherwise have belonged,and take the first opportunity of running away to a town. The lawwas at that time so indulgent to the inhabitants of towns, and sodesirous of diminishing the authority of the lords over those of thecountry, that if he could conceal himself there from the pursuit ofhis lord for a year, he was free for ever. Whatever stock, therefore,accumulated in the hands of the industrious part of theinhabitants of the country naturally took refuge in cities as theonly sanctuaries in which it could be secure to the person thatacquired it.

The inhabitants of a city, it is true, must always ultimatelyderive their subsistence, and the whole materials and means oftheir industry, from the country. But those of a city, situated near



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either the sea coast or the banks of a navigable river, are notnecessarily confined to derive them from the country in theirneighbourhood. They have a much wider range, and may drawthem from the most remote corners of the world, either inexchange for the manufactured produce of their own industry, orby performing the office of carriers between distant countries andexchanging the produce of one for that of another. A city might inthis manner grow up to great wealth and splendour, while not onlythe 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 itssubsistence or of its employment, but all of them taken togethercould afford it both a great subsistence and a great employment.There were, however, within the narrow circle of the commerce ofthose times, some countries that were opulent and industrious.Such was the Greek empire as long as it subsisted, and that of theSaracens during the reigns of the Abassides. Such too was Egypttill it was conquered by the Turks, some part of the coast ofBarbary, and all those provinces of Spain which were under thegovernment of the Moors.

The cities of Italy seem to have been the first in Europe whichwere raised by commerce to any considerable degree of opulence.

Italy lay in the centre of what was at that time the improvedand civilised part of the world. The Crusades too, though by thegreat waste of stock and destruction of inhabitants which theyoccasioned they must necessarily have retarded the progress ofthe greater part of Europe, were extremely favourable to that ofsome Italian cities. The great armies which marched from all partsto the conquest of the Holy Land gave extraordinary



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encouragement to the shipping of Venice, Genoa, and Pisa,sometimes in transporting them thither, and always in supplyingthem with provisions. They were the commissaries, if one may sayso, of those armies; and the most destructive frenzy that everbefell the European nations was a source of opulence to thoserepublics.

The inhabitants of trading cities, by importing the improvedmanufactures and expensive luxuries of richer countries, affordedsome food to the vanity of the great proprietors, who eagerlypurchased them with great quantities of the rude produce of theirown lands. The commerce of a great part of Europe in those times,accordingly, consisted chiefly in the exchange of their own rudefor the, manufactured produce of more civilised nations. Thus thewool of England used to be exchanged for the wines of France andthe fine cloths of Flanders, in the same manner as the corn inPoland is at this day exchanged for the wines and brandies ofFrance and for the silks and velvets of France and Italy.

A taste for the finer and more improved manufactures was inthis manner introduced by foreign commerce into countries whereno such works were carried on. But when this taste became sogeneral as to occasion a considerable demand, the merchants, inorder to save the expense of carriage, naturally endeavoured toestablish some manufactures of the same kind in their owncountry. Hence the origin of the first manufactures for distant salethat seem to have been established in the western provinces ofEurope after the fall of the Roman empire. No large country, itmust be observed, ever did or could subsist without some sort ofmanufactures being carried on in it; and when it is said of anysuch country that it has no manufactures, it must always be



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understood of the finer and more improved or of such as are fit fordistant sale. In every large country both the clothing andhousehold furniture of the far greater part of the people are theproduce of their own industry. This is even more universally thecase in those poor countries which are commonly said to have nomanufactures than in those rich ones that are said to abound inthem. In the latter, you will generally find, both in the clothes andhousehold furniture of the lowest rank of people, a much greaterproportion of foreign productions than in the former.

Those manufactures which are fit for distant sale seem to havebeen introduced into different countries in two different ways.

Sometimes they have been introduced, in the manner abovementioned, by the violent operation, if one may say so, of thestocks of particular merchants and undertakers, who establishedthem in imitation of some foreign manufactures of the same kind.Such manufactures, therefore, are the offspring of foreigncommerce, and such seem to have been the ancient manufacturesof silks, velvets, and brocades, which flourished in Lucca duringthe thirteenth century. They were banished from thence by thetyranny of one of Machiavel’s heroes, Castruccio Castracani. In1310, nine hundred families were driven out of Lucca, of whomthirty-one retired to Venice and offered to introduce there the silkmanufacture.1 Their offer was accepted; many privileges wereconferred upon them, and they began the manufacture with threehundred workmen. Such, too, seem to have been themanufactures of fine cloths that anciently flourished in Flanders,and which were introduced into England in the beginning of the

1See Sandi, Isortia civile de Vinezia, part ii., vol. i., pp. 247 and 256.



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reign of Elizabeth; and such are the present silk manufactures ofLyons and Spitalfields. Manufactures introduced in this mannerare generally employed upon foreign materials, being imitations offoreign manufactures. When the Venetian manufacture was firstestablished, the materials were all brought from Sicily and theLevant. The more ancient manufacture of Lucca was likewisecarried on with foreign materials. The cultivation of mulberrytrees and the breeding of silk-worms seem not to have beencommon in the northern parts of Italy before the sixteenthcentury. Those arts were not introduced into France till the reignof Charles IX. The manufactures of Flanders were carried onchiefly with Spanish and English wool. Spanish wool was thematerial, not of the first woollen manufacture of England, but ofthe first that was fit for distant sale. More than one half thematerials of the Lyons manufacture is at this day, foreign silk;when it was first established, the whole or very nearly the wholewas so. No part of the materials of the Spitalfields manufacture isever likely be the produce of England. The seat of suchmanufactures, as they are generally introduced by the scheme andproject of a few individuals, is sometimes established in amaritime city, and sometimes in an inland town, according as theirinterest, judgment, or caprice happen to determine.

At other times, manufactures for distant sale group upnaturally, and as it were of their own accord, by the gradualrefinement of those household and coarser manufactures whichmust at all times be carried on even in the poorest and rudestcountries. Such manufactures are generally employed upon thematerials which the country produces, and they seem frequentlyto have been first refined and improved in such inland countries



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as were, not indeed at a very great, but at a considerable distancefrom the sea coast, and sometimes even from all water carriage.An inland country, naturally fertile and easily cultivated, producesa great surplus of provisions beyond what is necessary formaintaining the cultivators, and on account of the expense of landcarriage, and inconveniency of river navigation, it may frequentlybe difficult to send this surplus abroad. Abundance, therefore,renders provisions cheap, and encourages a great number ofworkmen to settle in the neighbourhood, who find that theirindustry can there procure them more of the necessaries andconveniencies of life than in other places. They work up thematerials of manufacture which the land produces, and exchangetheir finished work, or what is the same thing the price of it, formore materials and provisions. They give a new value to thesurplus part of the rude produce by saving the expense of carryingit to the water side or to some distant market; and they furnish thecultivators with something in exchange for it that is either usefulor agreeable to them upon easier terms than they could haveobtained it before. The cultivators get a better price for theirsurplus produce, and can purchase cheaper other convenienceswhich they have occasion for. They are thus both encouraged andenabled to increase this surplus produce by a furtherimprovement and better cultivation of the land; and as the fertilityof the land had given birth to the manufacture, so the progress ofthe manufacture reacts upon the land and increases still furtherits fertility. The manufacturers first supply the neighbourhood,and afterwards, as their work improves and refines, more distantmarkets. For though neither the rude produce nor even the coarsemanufacture could, without the greatest difficulty, support the



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expense of a considerable land carriage, the refined and improvedmanufacture easily may. In a small bulk it frequently contains theprice of a great quantity of rude produce. A piece of fine cloth, forexample, which weighs only eighty pounds, contains in it, theprice, not only of eighty pounds’ weight of wool, but sometimes ofseveral thousand weight of corn, the maintenance of the differentworking people and of their immediate employers. The corn,which could with difficulty have been carried abroad in its ownshape, is in this manner virtually exported in that of the completemanufacture, and may easily be sent to the remotest corners of theworld. In this manner have grown up naturally, and as it were oftheir own accord, the manufactures of Leeds, Halifax, Sheffield,Birmingham, and Wolverhampton. Such manufactures are theoffspring of agriculture.

In the modern history of Europe, their extension andimprovement have generally been posterior to those which werethe offspring of foreign commerce. England was noted for themanufacture of fine cloths made of Spanish wool more than acentury before any of those which now flourish in the places abovementioned were fit for foreign sale.

The extension and improvement of these last could not takeplace but in consequence of the extension and improvement ofagriculture the last and greatest effect of foreign commerce, and ofthe manufactures immediately introduced by it, and which I shallnow proceed to explain.



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Chapter IV

How the Commerce of the Towns Contributed tothe Improvement of the Country

he increase and riches of commercial and manufacturingtowns contributed to the improvement and cultivation ofthe 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 cultivationand further improvement. This benefit was not even confined tothe countries in which they were situated, but extended more orless to all those with which they had any dealings. To all of themthey afforded a market for some part either of their rude ormanufactured produce, and consequently gave someencouragement to the industry and improvement of all. Their owncountry, however, on account of its neighbourhood, necessarilyderived the greatest benefit from this market. Its rude producebeing charged with less carriage, the traders could pay thegrowers a better price for it, and yet afford it as cheap to theconsumers as that of more distant countries.

Secondly, the wealth acquired by the inhabitants of cities wasfrequently employed in purchasing such lands as were to be sold,of which a great part would frequently be uncultivated. Merchantsare commonly ambitious of becoming country gentlemen, andwhen they do, they are generally the best of all improvers. Amerchant is accustomed to employ his money chiefly in profitable

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projects, whereas a mere country gentleman is accustomed toemploy it chiefly in expense. The one often sees his money go fromhim and return to him again with a profit; the other, when once heparts with it, very seldom expects to see any more of it. Thosedifferent habits naturally affect their temper and disposition inevery sort of business. A merchant is commonly a bold, a countrygentleman a timid undertaker. The one is not afraid to lay out atonce a large capital upon the improvement of his land when hehas a probable prospect of raising the value of it in proportion tothe expense. The other, if he has any capital, which is not alwaysthe case, seldom ventures to employ it in this manner. If heimproves at all, it is commonly not with a capital, but with what hecan save out of his annual revenue. Whoever has had the fortuneto live in a mercantile town situated in an unimproved countrymust have frequently observed how much more spirited theoperations of merchants were in this way than those of merecountry gentlemen. The habits, besides, of order, economy, andattention, to which mercantile business naturally forms amerchant, render him much fitter to execute, with profit andsuccess, any project of improvement.

Thirdly, and lastly, commerce and manufactures graduallyintroduced order and good government, and with them, the libertyand security of individuals, among the inhabitants of the country,who had before lived almost in a continual state of war with theirneighbours and of servile dependency upon their superiors. This,though it has been the least observed, is by far the most importantof all their effects. Mr. Hume is the only writer who, so far as Iknow, has hitherto taken notice of it.

In a country which has neither foreign commerce, nor any of



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the finer manufactures, a great proprietor, having nothing forwhich he can exchange the greater part of the produce of his landswhich is over and above the maintenance of the cultivators,consumes the whole in rustic hospitality at home. If this surplusproduce is sufficient to maintain a hundred or a thousand men, hecan make use of it in no other way than by maintaining a hundredor a thousand men. He is at all times, therefore, surrounded with amultitude of retainers and dependants, who, having no equivalentto give in return for their maintenance, but being fed entirely byhis bounty, must obey him, for the same reason that soldiers mustobey the prince who pays them. Before the extension of commerceand manufacture in Europe, the hospitality of the rich, and thegreat, from the sovereign down to the smallest baron, exceededeverything which in the present times we can easily form a notionof. Westminster Hall was the dining-room of William Rufus, andmight frequently, perhaps, not be too large for his company. It wasreckoned a piece of magnificence in Thomas Becket that hestrewed the floor of his hall with clean hay or rushes in the season,in order that the knights and squires who could not get seatsmight not spoil their fine clothes when they sat down on the floorto eat their dinner. The great Earl of Warwick is said to haveentertained every day at his different manors thirty thousandpeople, and though the number here may have been exaggerated,it must, however, have been very great to admit of suchexaggeration. A hospitality nearly of the same kind was exercisednot many years ago in many different parts of the highlands ofScotland. It seems to be common in all nations to whom commerceand manufactures are little known. “I have seen,” says DoctorPocock, “an Arabian chief dine in the streets of a town where he



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had come to sell his cattle, and invite all passengers, even commonbeggars, to sit down with him and partake of his banquet.”

The occupiers of land were in every respect as dependent uponthe great proprietor as his retainers. Even such of them as werenot in a state of villanage were tenants at will, who paid a rent inno respect equivalent to the subsistence which the land affordedthem. A crown, half a crown, a sheep, a lamb, was some years agoin the highlands of Scotland a common rent for lands whichmaintained a family. In some places it is so at this day; nor willmoney at present purchase a greater quantity of commoditiesthere than in other places.

In a country where the surplus produce of a large estate mustbe consumed upon the estate itself, it will frequently be moreconvenient for the proprietor that part of it be consumed at adistance from his own house provided they who consume it are asdependent upon him as either his retainers or his menial servants.He is thereby saved from the embarrassment of either too large acompany or too large a family. A tenant at will, who possesses landsufficient to maintain his family for little more than a quit-rent, isas dependent upon the proprietor as any servant or retainerwhatever and must obey him with as little reserve. Such aproprietor, as he feeds his servants and retainers at his own house,so he feeds his tenants at their houses. The subsistence of both isderived from his bounty, and its continuance depends upon hisgood pleasure.

Upon the authority which the great proprietor necessarily hadin such a state of things over their tenants and retainers wasfounded the power of the ancient barons. They necessarily becamethe judges in peace, and the leaders in war, of all who dwelt upon



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their estates.They could maintain order and execute the law within their

respective demesnes, because each of them could there turn thewhole force of all the inhabitants against the injustice of any one.No other persons had sufficient authority to do this. The king inparticular had not. In those ancient times he was little more thanthe greatest proprietor in his dominions, to whom, for the sake ofcommon defence against their common enemies, the other greatproprietors paid certain respects. To have enforced payment of asmall debt within the lands of a great proprietor, where all theinhabitants were armed and accustomed to stand by one another,would have cost the king, had he attempted it by his ownauthority, almost the same effort as to extinguish a civil war. Hewas, therefore, obliged to abandon the administration of justicethrough the greater part of the country to those who were capableof administering it; and for the same reason to leave the commandof the country militia to those whom that militia would obey.

It is a mistake to imagine that those territorial jurisdictionstook their origin from the feudal law. Not only the highestjurisdictions both civil and criminal, but the power of levyingtroops, of coining money, and even that of making bye-laws for thegovernment of their own people, were all rights possessedallodially by the great proprietors of land several centuries beforeeven the name of the feudal law was known in Europe. Theauthority and jurisdiction of the Saxon lords in England appear tohave been as great before the Conquest as that of any of theNorman lords after it.

But the feudal law is not supposed to have become the commonlaw of England till after the Conquest. That the most extensive



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authority and jurisdictions were possessed by the great lords inFrance allodially long before the feudal law was introduced intothat country is a matter of fact that admits of no doubt. Thatauthority and those jurisdictions all necessarily flowed from thestate of property and manners just now described. Withoutremounting to the remote antiquities of either the French orEnglish monarchies, we may find in much later times many proofsthat such effects must always flow from such causes. It is not thirtyyears ago since Mr. Cameron of Lochiel, a gentleman of Lochabarin Scotland, without any legal warrant whatever, not being whatwas then called a lord of regality, nor even a tenant in chief, but avassal of the Duke of Argyle, and without being so much as ajustice of peace, used, notwithstanding, to exercise the highestcriminal jurisdiction over his own people. He is said to have doneso with great equity, though without any of the formalities ofjustice; and it is not improbable that the state of that part of thecountry at that time made it necessary for him to assume thisauthority in order to maintain the public peace. That gentleman,whose rent never exceeded five hundred pounds a year, carried, in1745, eight hundred of his own people into the rebellion with him.

The introduction of the feudal law, so far from extending, maybe regarded as an attempt to moderate the authority of the greatallodial lords. It established a regular subordination, accompaniedwith a long train of services and duties, from the king down to thesmallest proprietor. During the minority of the proprietor, therent, together with the management of his lands, fell into thehands of his immediate superior, and, consequently, those of allgreat proprietors into the hands of the king, who was charged withthe maintenance and education of the pupil, and who, from his



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authority as guardian, was supposed to have a right of disposing ofhim in marriage, provided it was in a manner not unsuitable to hisrank.

But though this institution necessarily tended to strengthen theauthority of the king, and to weaken that of the great proprietors,it could not do either sufficiently for establishing order and goodgovernment among the inhabitants of the country, because itcould not alter sufficiently that state of property and mannersfrom which the disorders arose. The authority of government stillcontinued to be, as before, too weak in the head and too strong inthe inferior members, and the excessive strength of the inferiormembers was the cause of the weakness of the head. After theinstitution of feudal subordination, the king was as incapable ofrestraining the violence of the great lords as before. They stillcontinued to make war according to their own discretion, almostcontinually 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 neverhave effected, the silent and insensible operation of foreigncommerce and manufactures gradually brought about. Thesegradually furnished the great proprietors with something forwhich they could exchange the whole surplus produce of theirlands, and which they could consume themselves without sharingit either with tenants or retainers. All for ourselves and nothing forother people, seems, in every age of the world, to have been thevile maxim of the masters of mankind. As soon, therefore, as theycould find a method of consuming the whole value of their rentsthemselves, they had no disposition to share them with any other



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persons. For a pair of diamond buckles, perhaps, or for somethingas frivolous and useless, they exchanged the maintenance, or whatis the same thing, the price of the maintenance of a thousand menfor a year, and with it the whole weight and authority which itcould 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 haveshared with at least a thousand people. With the judges that wereto 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 theirwhole power and authority.

In a country where there is no foreign commerce, nor any ofthe finer manufactures, a man of ten thousand a year cannot wellemploy his revenue in any other way than in maintaining,perhaps, a thousand families, who are all of them necessarily at hiscommand.

In the present state of Europe, a man of ten thousand a yearcan spend his whole revenue, and he generally does so, withoutdirectly maintaining twenty people, or being able to commandmore than ten footmen not worth the commanding. Indirectly,perhaps, he maintains as great or even a greater number of peoplethan he could have done by the ancient method of expense. Forthough the quantity of precious productions for which heexchanges his whole revenue be very small, the number ofworkmen employed in collecting and preparing it must necessarilyhave been very great. Its great price generally arises from thewages of their labour, and the profits of all their immediateemployers. By paying that price he indirectly pays all those wages



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and profits and thus indirectly contributes to the maintenance ofall the workmen and their employers. He generally contributes,however, but a very small proportion to that of each, to very fewperhaps a tenth, to many not a hundredth, and to some not athousandth, nor even a ten-thousandth part of their whole annualmaintenance. Though he contributes, therefore, to themaintenance of them all, they are all more or less independent ofhim, because generally they can all be maintained without him.

When the great proprietors of land spend their rents inmaintaining their tenants and retainers, each of them maintainsentirely all his own tenants and all his own retainers. But whenthey spend them in maintaining tradesmen and artificers, theymay, all of them taken together, perhaps, maintain as great, or, onaccount of the waste which attends rustic hospitality, a greaternumber of people than before. Each of them, however, takensingly, contributes often but a very small share to the maintenanceof any individual of this greater number. Each tradesman orartificer derives his subsistence from the employment, not of one,but of a hundred or a thousand different customers. Though insome measure obliged to them all, therefore, he is not absolutelydependent upon any one of them.

The personal expense of the great proprietors having in thismanner gradually increased, it was impossible that the number oftheir retainers should not as gradually diminish till they were atlast dismissed altogether. The same cause gradually led them todismiss the unnecessary part of their tenants. Farms wereenlarged, and the occupiers of land, notwithstanding thecomplaints of depopulation, reduced to the number necessary forcultivating it, according to the imperfect state of cultivation and



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improvement in those times. By the removal of the unnecessarymouths, 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 greatersurplus, was obtained for the proprietor, which the merchants andmanufacturers soon furnished him with a method of spendingupon his own person in the same manner as he had done the rest.The same cause continuing to operate, he was desirous to raise hisrents above what his lands, in the actual state of theirimprovement, could afford. His tenants could agree to this uponone condition only, that they should be secured in their possessionfor such a term of years as might give them time to recover withprofit whatever they should lay out in the further improvement ofthe land. The expensive vanity of the landlord made him willing toaccept of this condition; and hence the origin of long leases.

Even a tenant at will, who pays the full value of the land, is notaltogether dependent upon the landlord. The pecuniaryadvantages which they receive from one another are mutual andequal, and such a tenant will expose neither his life nor his fortunein the service of the proprietor. But if he has a lease for a longterm of years, he is altogether independent; and his landlord mustnot expect from him the most trifling service beyond what is eitherexpressly stipulated in the lease or imposed upon him by thecommon and known law of the country.

The tenants having in this manner become independent, andthe retainers being dismissed, the great proprietors were nolonger capable of interrupting the regular execution of justice or ofdisturbing the peace of the country. Having sold their birthright,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



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be the playthings of children than the serious pursuits of men,they became as insignificant as any substantial burgher ortradesman in a city. A regular government was established in thecountry as well as in the city, nobody having sufficient power todisturb its operations in the one any more than in the other.

It does not, perhaps, relate to the present subject, but I cannothelp remarking it, that very old families, such as have possessedsome considerable estate from father to son for many successivegenerations are very rare in commercial countries. In countrieswhich have little commerce, on the contrary, such as Wales or thehighlands of Scotland, they are very common. The Arabianhistories seem to be all full of genealogies, and there is a historywritten by a Tartar Khan, which has been translated into severalEuropean languages, and which contains scarce anything else; aproof that ancient families are very common among those nations.In countries where a rich man can spend his revenue in no otherway than by maintaining as many people as it can maintain, he isnot apt to run out, and his benevolence it seems is seldom soviolent as to attempt to maintain more than he can afford. Butwhere he can spend the greatest revenue upon his own person, hefrequently has no bounds to his expense, because he frequentlyhas no bounds to his vanity or to his affection for his own person.In commercial countries, therefore, riches, in spite of the mostviolent regulations of law to prevent their dissipation, very seldomremain long in the same family. Among simple nations, on thecontrary, they frequently do without any regulations of law, foramong nations of shepherds, such as the Tartars and Arabs, theconsumable nature of their property necessarily renders all suchregulations impossible.



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A revolution of the greatest importance to the public happinesswas in this manner brought about by two different orders ofpeople who had not the least intention to serve the public. Togratify the most childish vanity was the sole motive of the greatproprietors. The merchants and artificers, much less ridiculous,acted merely from a view to their own interest, and in pursuit oftheir own pedlar principle of turning a penny wherever a pennywas to be got. Neither of them had either knowledge or foresightof that great revolution which the folly of the one, and the industryof the other, was gradually bringing about.

It is thus that through the greater part of Europe thecommerce and manufactures of cities, instead of being the effect,have been the cause and occasion of the improvement andcultivation of the country.

This order, however, being contrary to the natural course ofthings, is necessarily both slow and uncertain. Compare the slowprogress of those European countries of which the wealth dependsvery much upon their commerce and manufactures with the rapidadvances of our North American colonies, of which the wealth isfounded altogether in agriculture. Through the greater part ofEurope the number of inhabitants is not supposed to double inless than five hundred years. In several of our North Americancolonies, it is found to double in twenty or five-and-twenty years.In Europe, the law of primogeniture and perpetuities of differentkinds prevent the division of great estates, and thereby hinder themultiplication of small proprietors. A small proprietor, however,who knows every part of his little territory, who views it with allthe affection which property, especially small property, naturallyinspires, and who upon that account takes pleasure not only in



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cultivating but in adorning it, is generally of all improvers themost industrious, the most intelligent, and the most successful.The same regulations, besides, keep so much land out of themarket that there are always more capitals to buy than there island 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 towhich the interest of money is not liable. To purchase land iseverywhere in Europe a most unprofitable employment of a smallcapital. For the sake of the superior security, indeed, a man ofmoderate circumstances, when he retires from business, willsometimes choose to lay out his little capital in land. A man ofprofession too, whose revenue is derived from another source,often loves to secure his savings in the same way. But a youngman, who, instead of applying to trade or to some profession,should employ a capital of two or three thousand pounds in thepurchase and cultivation of a small piece of land, might indeedexpect to live very happily, and very independently, but must bidadieu forever to all hope of either great fortune or greatillustration, which by a different employment of his stock he mighthave had the same chance of acquiring with other people. Such aperson too, though he cannot aspire at being a proprietor, willoften disdain to be a farmer. The small quantity of land, therefore,which is brought to market, and the high price of what is broughtthither, prevents a great number of capitals from being employedin its cultivation and improvement which would otherwise havetaken that direction. In North America, on the contrary, fifty orsixty pounds is often found a sufficient stock to begin a plantationwith. The purchase and improvement of uncultivated land is there



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the most profitable employment of the smallest as well as of thegreatest capitals, and the most direct road to all the fortune andillustration which can be acquired in that country. Such land,indeed, is in North America to be had almost for nothing, or at aprice much below the value of the natural produce—a thingimpossible in Europe, or, indeed, in any country where all landshave long been private property. If landed estates, however, weredivided equally among all the children upon the death of anyproprietor who left a numerous family, the estate would generallybe sold. So much land would come to market that it could nolonger sell at a monopoly price. The free rent of the land would gonearer to pay the interest of the purchase-money, and a smallcapital might be employed in purchasing land as profitably as inany other way.

England, on account of the natural fertility of the soil, of thegreat extent of the sea-coast in proportion to that of the wholecountry, and of the many navigable rivers which run through itand afford the conveniency of water carriage to some of the mostinland parts of it, is perhaps as well fitted by nature as any largecountry in Europe to be the seat of foreign commerce, ofmanufactures for distant sale, and of all the improvements whichthese can occasion. From the beginning of the reign of Elizabethtoo, the English legislature has been peculiarly attentive to theinterests of commerce and manufactures, and in reality there is nocountry 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 continuallyadvancing during all this period. The cultivation and improvementof the country has, no doubt, been gradually advancing too; but it



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seems to have followed slowly, and at a distance, the more rapidprogress of commerce and manufactures. The greater part of thecountry must probably have been cultivated before the reign ofElizabeth; and a very great part of it still remains uncultivated,and the cultivation of the far greater part much inferior to what itmight be. The law of England, however, favours agriculture notonly indirectly by the protection of commerce, but by severaldirect encouragements. Except in times of scarcity, theexportation of corn is not only free, but encouraged by a bounty.In times of moderate plenty, the importation of foreign corn isloaded with duties that amount to a prohibition.

The importation of live cattle, except from Ireland, is prohibitedat all times, and it is but of late that it was permitted from thence.

Those who cultivate the land, therefore, have a monopolyagainst their countrymen for the two greatest and most importantarticles of land produce, bread and butcher’s meat. Theseencouragements, though at bottom, perhaps, as I shall endeavourto show hereafter, altogether illusory, sufficiently demonstrate atleast the good intention of the legislature to favour agriculture.But what is of much more importance than all of them, theyeomanry of England are rendered as secure, as independent, andas respectable as law can make them. No country, therefore, inwhich 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 toagriculture than England. Such, however, notwithstanding, is thestate of its cultivation. What would it have been had the law givenno direct encouragement to agriculture besides what arisesindirectly from the progress of commerce, and had left the



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yeomanry in the same condition as in most other countries ofEurope? It is now more than two hundred years since thebeginning of the reign of Elizabeth, a period as long as the courseof human prosperity usually endures.

France seems to have had a considerable share of foreigncommerce near a century before England was distinguished as acommercial country. The marine of France was considerable,according to the notions of the times, before the expedition ofCharles VIII to Naples. The cultivation and improvement ofFrance, however, is, upon the whole, inferior to that of England.The law of the country has never given the same directencouragement to agriculture.

The foreign commerce of Spain and Portugal to the other partsof Europe, though chiefly carried on in foreign ships, is veryconsiderable. That to their colonies is carried on in their own, andis much greater, on account of the great riches and extent of thosecolonies. But it has never introduced any considerablemanufactures for distant sale into either of those countries, andthe greater part of both still remains uncultivated. The foreigncommerce of Portugal is of older standing than that of any greatcountry in Europe, except Italy.

Italy is the only great country of Europe which seems to havebeen cultivated and improved in every part by means of foreigncommerce and manufactures for distant sale. Before the invasionof Charles VIII, Italy according to Guicciardin, was cultivated notless in the most mountainous and barren parts of the country thanin the plainest and most fertile. The advantageous situation of thecountry, and the great number of independent states which at thattime subsisted in it, probably contributed not a little to this



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general cultivation. It is not impossible too, notwithstanding thisgeneral expression of one of the most judicious and reserved ofmodern historians, that Italy was not at that time better cultivatedthan England is at present.

The capital, however, that is acquired to any country bycommerce and manufactures is all a very precarious anduncertain possession till some part of it has been secured andrealized in the cultivation and improvement of its lands. Amerchant, it has been said very properly, is not necessarily thecitizen of any particular country. It is in a great measureindifferent to him from what place he carries on his trade; and avery trifling disgust will make him remove his capital, andtogether with it all the industry which it supports, from onecountry to another. No part of it can be said to belong to anyparticular country, till it has been spread as it were over the faceof that country, either in buildings or in the lasting improvementof lands. No vestige now remains of the great wealth said to havebeen possessed by the greater part of the Hans towns except in theobscure histories of the thirteenth and fourteenth centuries. It iseven uncertain where some of them were situated or to whattowns in Europe the Latin names given to some of them belong.But though the misfortunes of Italy in the end of the fifteenth andbeginning of the sixteenth centuries greatly diminished thecommerce and manufactures of the cities of Lombardy andTuscany, those countries still continue to be among the mostpopulous and best cultivated in Europe. The civil wars ofFlanders, 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



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cultivated, and most populous provinces of Europe. The ordinaryrevolutions of war and government easily dry up the sources ofthat wealth which arises from commerce only. That which arisesfrom the more solid improvements of agriculture is much moredurable and cannot be destroyed but by those more violentconvulsions occasioned by the depredations of hostile andbarbarous nations continued for a century or two together, such asthose that happened for some time before and after the fall of theRoman empire in the western provinces of Europe.

Book Four

Of Systems ofPolitical Economy



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Introduction

olitical economy, considered as a branch of the science of astatesman 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 revenueor subsistence for themselves; and secondly, to supply the state orcommonwealth with a revenue sufficient for the public services. Itproposes to enrich both the people and the sovereign.

The different progress of opulence in different ages and nationshas given occasion to two different systems of political economywith regard to enriching the people. The one may be called thesystem of commerce, the other that of agriculture. I shallendeavour to explain both as fully and distinctly as I can, and shallbegin with the system of commerce. It is the modern system, andis best understood in our own country and in our own times.

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Chapter I

Of the Principle of the Commercial, or MercantileSystem

hat wealth consists in money, or and silver, is a popularnotion which naturally arises from the double function ofmoney, as the instrument of commerce and as the

measure of value. In consequence of its being the instrument ofcommerce, when we have money we can more readily obtainwhatever else we have occasion for than by means of any othercommodity. The great affair, we always find, is to get money.When that is obtained, there is no difficulty in making anysubsequent purchase. In consequence of its being the measure ofvalue, we estimate that of all other commodities by the quantity ofmoney which they will exchange for. We say of a rich man that heis worth a great deal, and of a poor man that he is worth very littlemoney. A frugal man, or a man eager to be rich, is said to lovemoney; and a careless, a generous, or a profuse man, is said to beindifferent about it. To grow rich is to get money; and wealth andmoney, in short, are, in common language, considered as in everyrespect synonymous.

A rich country, in the same manner as a rich man, is supposedto be a country abounding in money; and to heap up gold andsaver in any country is supposed to be the readiest way to enrichit. For some time after the discovery of America, the first inquiryof the Spaniards, when they arrived upon an unknown coast, usedto be, if there was any gold or silver to be found in the

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neighbourhood. By the information which they received, theyjudged whether it was worth while to make a settlement there, orif the country was worth the conquering. Plano Carpino, a monk,sent ambassador from the King of France to one of the sons of thefamous Genghis Khan, says that the Tartars used frequently to askhim if there was plenty of sheep and oxen in the kingdom ofFrance. Their inquiry had the same object with that of theSpaniards. They wanted to know if the country was rich enough tobe worth the conquering. Among the Tartars, as among all othernations of shepherds, who are generally ignorant of the use ofmoney, cattle are the instruments of commerce and the measuresof value. Wealth, therefore, according to them, consisted in cattle,as according to the Spaniards it consisted in gold and silver. Of thetwo, the Tartar notion, perhaps, was the nearest to the truth.

Mr. Locke remarks a distinction between money and othermovable goods. All other movable goods, he says, are of soconsumable a nature that the wealth which consists in themcannot be much depended on, and a nation which abounds inthem one year may, without any exportation, but merely their ownwaste and extravagance, be in great want of them the next. Money,on the contrary, is a steady friend, which, though it may travelabout from hand to hand, yet if it can be kept from going out of thecountry, is not very liable to be wasted and consumed. Gold andsilver, therefore, are, according to him, the most solid andsubstantial part of the movable wealth of a nation, and to multiplythose metals ought, he thinks, upon that account, to be the greatobject of its political economy.

Others admit that if a nation could be separated from all theworld, it would be of no consequence how much, or how little



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money circulated in it. The consumable goods which werecirculated by means of this money would only be exchanged for agreater or a smaller number of pieces; but the real wealth orpoverty of the country, they allow, would depend altogether uponthe abundance or scarcity of those consumable goods. But it isotherwise, they think, with countries which have connections withforeign nations, and which are obliged to carry on foreign wars,and to maintain fleets and armies in distant countries. This, theysay, cannot be done but by sending abroad money to pay themwith; and a nation cannot send much money abroad unless it has agood deal at home. Every such nation, therefore, must endeavourin time of peace to accumulate gold and silver that, when occasionrequires, it may have wherewithal to carry on foreign wars.

In consequence of these popular notions, all the differentnations of Europe have studied, though to little purpose, everypossible means of accumulating gold and silver in their respectivecountries. Spain and Portugal, the proprietors of the principalmines which supply Europe with those metals, have eitherprohibited their exportation under the severest penalties, orsubjected it to a considerable duty. The like prohibition seemsanciently to have made a part of the policy of most other Europeannations. It is even to be found, where we should least of all expectto find it, in some old Scotch acts of Parliament, which forbidunder heavy penalties the carrying gold or silver forth of thekingdom. The like policy anciently took place both in France andEngland.

When those countries became commercial, the merchantsfound this prohibition, upon many occasions, extremelyinconvenient. They could frequently buy more advantageously



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with gold and silver than with any other commodity the foreigngoods which they wanted, either to import into their own, or tocarry to some other foreign country. They remonstrated,therefore, against this prohibition as hurtful to trade.

They represented, first, that the exportation of gold and silverin order to purchase foreign goods, did not always diminish thequantity of those metals in the kingdom. That, on the contrary, itmight frequently increase that quantity; because, if theconsumption of foreign goods was not thereby increased in thecountry, those goods might be re-exported to foreign countries,and, being there sold for a large profit, might bring back muchmore treasure than was originally sent out to purchase them. Mr.Mun compares this operation of foreign trade to the seed-time andharvest of agriculture. “If we only behold,” says he, “the actions ofthe husbandman in the seed-time, when he casteth away muchgood corn into the ground, we shall account him rather a madmanthan a husbandman. But when we consider his labours in theharvest, which is the end of his endeavours, we shall find theworth and plentiful increase of his action.”

They represented, secondly, that this prohibition could nothinder the exportation of gold and silver, which, on account of thesmallness of their bulk in proportion to their value, could easily besmuggled abroad. That this exportation could only be preventedby a proper attention to, what they called, the balance of trade.That when the country exported to a greater value than itimported, a balance became due to it from foreign nations, whichwas necessarily paid to it in gold and silver, and thereby increasedthe quantity of those metals in the kingdom. But that when itimported to a greater value than it exported, a contrary balance



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became due to foreign nations, which was necessarily paid to themin the same manner, and thereby diminished that quantity. Thatin this case to prohibit the exportation of those metals could notprevent it, but only, by making it more dangerous, render it moreexpensive. That the exchange was thereby turned more againstthe country which owed the balance than it otherwise might havebeen; the merchant who purchased a bill upon the foreign countrybeing obliged to pay the banker who sold it, not only for thenatural risk, trouble, and expense of sending the money thither,but for the extraordinary risk arising from the prohibition. Butthat the more the exchange was against any country, the more thebalance of trade became necessarily against it; the money of thatcountry becoming necessarily of so much less value in comparisonwith that of the country to which the balance was due. That if theexchange between England and Holland, for example, was five percent against England, it would require a hundred and five ouncesof silver in England to purchase a bill for a hundred ounces ofsilver in Holland: that a hundred and five ounces of silver inEngland, therefore, would be worth only a hundred ounces ofsilver in Holland, and would purchase only a proportionablequantity of Dutch goods; but that a hundred ounces of silver inHolland, on the contrary, would be worth a hundred and fiveounces in England, and would purchase a proportionable quantityof English goods: that the English goods which were sold toHolland would be sold so much cheaper; and the Dutch goodswhich were sold to England so much dearer by the difference ofthe exchange; that the one would draw so much less Dutch moneyto England, and the other so much more English money toHolland, as this difference amounted to: and that the balance of



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trade, therefore, would necessarily be so much more againstEngland, and would require a greater balance of gold and silver tobe 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 thecountry. They were solid, too, in asserting that no prohibitioncould prevent their exportation when private people found anyadvantage in exporting them.

But they were sophistical in supposing that either to preserveor to augment the quantity of those metals required more theattention of government than to preserve or to augment thequantity of any other useful commodities, which the freedom oftrade, without any such attention, never fails to supply in theproper quantity. They were sophistical too, perhaps, in assertingthat the high price of exchange necessarily increased what theycalled the unfavourable balance of trade, or occasioned theexportation of a greater quantity of gold and silver. That highprice, indeed, was extremely disadvantageous to the merchantswho had any money to pay in foreign countries. They paid somuch dearer for the bills which their bankers granted them uponthose countries. But though the risk arising from the prohibitionmight occasion some extraordinary expense to the bankers, itwould not necessarily carry any more money out of the country.This expense would generally be all laid out in the country, insmuggling the money out of it, and could seldom occasion theexportation of a single sixpence beyond the precise sum drawn for.The high price of exchange too would naturally dispose themerchants to endeavour to make their exports nearly balance



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their imports, in order that they might have this high exchange topay upon as small a sum as possible. The high price of exchange,besides, must necessarily have operated as a tax, in raising theprice of foreign goods, and thereby diminishing theirconsumption. It would tend, therefore, not to increase but todiminish what they called the unfavourable balance of trade, andconsequently the exportation of gold and silver.

Such as they were, however, those arguments convinced thepeople to whom they were addressed. They were addressed bymerchants to parliaments and to the councils of princes, to noblesand to country gentlemen, by those who were supposed tounderstand trade to those who were conscious to themselves thatthey knew nothing about the matter. That foreign trade enrichedthe country, experience demonstrated to the nobles and countrygentlemen as well as to the merchants; but how, or in whatmanner, none of them well knew. The merchants knew perfectlyin what manner it enriched themselves. It was their business toknow it. But to know in what manner it enriched the country wasno part of their business. This subject never came into theirconsideration but when they had occasion to apply to theircountry for some change in the laws relating to foreign trade.

It then became necessary to say something about the beneficialeffects of foreign trade, and the manner in which those effectswere obstructed by the laws as they then stood. To the judges whowere to decide the business it appeared a most satisfactoryaccount of the matter, when they were told that foreign tradebrought money into the country, but that the laws in questionhindered it from bringing so much as it otherwise would do. Thosearguments therefore produced the wished-for effect. The



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prohibition of exporting gold and silver was in France andEngland confined to the coin of those respective countries. Theexportation of foreign coin and of bullion was made free. InHolland, and in some other places, this liberty was extended evento the coin of the country. The attention of government was turnedaway from guarding against the exportation of gold and silver towatch over the balance of trade as the only cause which couldoccasion any augmentation or diminution of those metals.

From one fruitless care it was turned away to another caremuch more intricate, much more embarrassing, and just equallyfruitless. The title of Mun’s book, England’s Treasure in ForeignTrade, became a fundamental maxim in the political economy, notof England only, but of all other commercial countries. The inlandor home trade, the most important of all, the trade in which anequal capital affords the greatest revenue, and creates the greatestemployment to the people of the country, was considered assubsidiary only to foreign trade. It neither brought money into thecountry, it was said, nor carried any out of it. The country,therefore, could never become either richer or poorer by means ofit, except so far as its prosperity or decay might indirectlyinfluence the state of foreign trade.

A country that has no mines of its own must undoubtedly drawits gold and silver from foreign countries in the same manner asone that has no vineyards of its own must draw its wines. It doesnot seem necessary, however, that the attention of governmentshould be more turned towards the one than towards the otherobject. A country that has wherewithal to buy wine will always getthe wine which it has occasion for; and a country that haswherewithal to buy gold and silver will never be in want of those



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metals. They are to be bought for a certain price like all othercommodities, and as they are the price of all other commodities, soall other commodities are the price of those metals. We trust withperfect security that the freedom of trade, without any attention ofgovernment, will always supply us with the wine which we haveoccasion for: and we may trust with equal security that it willalways supply us with all the gold and silver which we can affordto purchase or to employ, either in circulating our commodities, orin other uses.

The quantity of every commodity which human industry caneither purchase or produce naturally regulates itself in everycountry according to the effectual demand, or according to thedemand of those who are willing to pay the whole rent, labour, andprofits which must be paid in order to prepare and bring it tomarket. But no commodities regulate themselves more easily ormore exactly according to this effectual demand than gold andsilver; because, on account of the small bulk and great value ofthose metals, no commodities can be more easily transported fromone place to another, from the places where they are cheap tothose where they are dear, from the places where they exceed tothose where they fall short of this effectual demand. If there werein England, for example, an effectual demand for an additionalquantity of gold, a packet-boat could bring from Lisbon, or fromwherever else it was to be had, fifty tons of gold, which could becoined into more than five millions of guineas. But if there were aneffectual demand for grain to the same value, to import it wouldrequire, at five guineas a ton, a million of tons of shipping, or athousand ships of a thousand tons each. The navy of Englandwould not be sufficient.



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When the quantity of gold and silver imported into any countryexceeds the effectual demand, no vigilance of government canprevent their exportation. All the sanguinary laws of Spain andPortugal are not able to keep their gold and silver at home. Thecontinual importations from Peru and Brazil exceed the effectualdemand of those countries, and sink the price of those metalsthere below that in the neighbouring countries. If, on the contrary,in any particular country their quantity fell short of the effectualdemand, so as to raise their price above that of the neighbouringcountries, the government would have no occasion to take anypains to import them. If it were even to take pains to prevent theirimportation, it would not be able to effectuate it. Those metals,when the Spartans had got wherewithal to purchase them, brokethrough all the barriers which the laws of Lycurgus opposed totheir entrance into Lacedemon. All the sanguinary laws of thecustoms are not able to prevent the importation of the teas of theDutch and Gottenburgh East India Companies, because somewhatcheaper than those of the British company. A pound of tea,however, is about a hundred times the bulk of one of the highestprices, sixteen shillings, that is commonly paid for it in silver, andmore 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 silverfrom the places where they abound to those where they arewanted that the price of those metals does not fluctuatecontinually like that of the greater part of other commodities,which are hindered by their bulk from shifting their situationwhen the market happens to be either over or under-stocked withthem. The. price of those metals, indeed, is not altogether



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exempted from variation, but the changes to which it is liable aregenerally slow, gradual and uniform. In Europe, for example, it issupposed, without much foundation, perhaps, that during thecourse of the present and preceding century they have beenconstantly, but gradually, sinking in their value, on account of thecontinual importations from the Spanish West Indies. But to makeany sudden change in the price of gold and silver, so as to raise orlower at once, sensibly and remarkably, the money price of allother commodities, requires such a revolution in commerce asthat occasioned by the discovery of America.

If, notwithstanding all this, gold and silver should at any timefall short in a country which has wherewithal to purchase them,there are more expedients for supplying their place than that ofalmost any other commodity. If the materials of manufacture arewanted, industry must stop. If provisions are wanted, the peoplemust starve. But if money is wanted, barter will supply its place,though with a good deal of inconveniency. Buying and sellingupon credit, and the different dealers compensating their creditswith one another, once a month or once a year, will supply it withless inconveniency. A well-regulated paper money will supply it,not only without any inconveniency, but, in some cases, with someadvantages.

Upon every account, therefore, the attention of governmentnever was so unnecessarily employed as when directed to watchover the preservation or increase of the quantity of money in anycountry.

No complaint, however, is more common than that of a scarcityof money. Money, like wine, must always be scarce with those whohave neither wherewithal to buy it nor credit to borrow it. Those



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who have either will seldom be in want either of the money or ofthe wine which they have occasion for. This complaint, however,of the scarcity of money is not always confined to improvidentspendthrifts. It is sometimes general through a whole mercantiletown and the country in its neighbourhood. Overtrading is thecommon cause of it. Sober men, whose projects have beendisproportioned to their capitals, are as likely to have neitherwherewithal to buy money nor credit to borrow it, as prodigalswhose expense has been disproportioned to their revenue. Beforetheir projects can be brought to bear, their stock is gone, and theircredit with it. They run about everywhere to borrow money, andeverybody tells them that they have none to lend. Even suchgeneral complaints of the scarcity of money do not always provethat the usual number of gold and silver pieces are not circulatingin the country, but that many people want those pieces who havenothing to give for them. When the profits of trade happen to begreater than ordinary, overtrading becomes a general error bothamong great and small dealers. They do not always send moremoney abroad than usual, but they buy upon credit, both at homeand abroad, an unusual quantity of goods, which they send tosome distant market in hopes that the returns will come in beforethe demand for payment. The demand comes before the returns,and they have nothing at hand with which they can eitherpurchase money, or give solid security for borrowing. It is not anyscarcity of gold and silver, but the difficulty which such peoplefind in borrowing, and which their creditors find in gettingpayment, that occasions the general complaint of the scarcity ofmoney.

It would be too ridiculous to go about seriously to prove that



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wealth does not consist in money, or in gold and silver; but in whatmoney purchases, and is valuable only for purchasing. Money, nodoubt, makes always a part of the national capital; but it hasalready been shown that it generally makes but a small part, andalways the most unprofitable part of it.

It is not because wealth consists more essentially in money thanin goods that the merchant find it generally more easy to buygoods with money than to buy money with goods; but becausemoney is the known and established instrument of commerce, forwhich everything is readily given in exchange, but which is notalways with equal readiness to be got in exchange for everything.The greater part of goods, besides, are more perishable thanmoney, and he may frequently sustain a much greater loss bykeeping them. When his goods are upon hand, too, he is moreliable to such demands for money as he may not be able to answerthan when he has got their price in his coffers. Over and above allthis, his profit arises more directly from selling than from buying,and he is upon all these accounts generally much more anxious toexchange his goods for money than his money for goods. Butthough a particular merchant, with abundance of goods in hiswarehouse, may sometimes be ruined by not being able to sellthem in time, a nation or country is not liable to the same accident.The whole capital of a merchant frequently consists in perish, ablegoods destined for purchasing money. But it is but a very smallpart of the annual produce of the land and labour of a countrywhich can ever be destined for purchasing gold and silver fromtheir neighbours. The far greater part is circulated and consumedamong themselves; and even of the surplus which is sent abroad,the greater part is generally destined for the purchase of other



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foreign goods. Though gold and silver, therefore, could not be hadin exchange for the goods destined to purchase them, the nationwould not be ruined. It might, indeed, suffer some loss andinconveniency, and be forced upon some of those expedientswhich are necessary for supplying the place of money. The annualproduce of its land and labour, however, would be the same, orvery nearly the same, as usual, because the same, or very nearlythe same, consumable capital would be employed in maintainingit. And though goods do not always draw money so readily asmoney draws goods, in the long run they draw it more necessarilythan even it draws them. Goods can serve many other purposesbesides purchasing money, but money can serve no other purposebesides purchasing goods. Money, therefore, necessarily runs aftergoods, but goods do not always or necessarily run after money.

The man who buys does not always mean to sell again, butfrequently to use or to consume; whereas he who sells alwaysmeans to buy again. The one may frequently have done the whole,but the other can never have done more than the one-half of hisbusiness. It is not for its own sake that men desire money, but forthe 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 itnot for this continual exportation, might be accumulated for agestogether, to the incredible augmentation of the real wealth of thecountry.

Nothing, therefore, it is pretended, can be moredisadvantageous to any country than the trade which consists inthe exchange of such lasting for such perishable commodities. Wedo not, however, reckon that trade disadvantageous which



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consists in the exchange of the hardware of England for the winesof France; and yet hardware is a very durable commodity, andwere it not for this continual exportation might, too, beaccumulated for ages together, to the incredible augmentation ofthe pots and pans of the country. But it readily occurs that thenumber of such utensils is in every country necessarily limited bythe use which there is for them; that it would be absurd to havemore pots and pans than were necessary for cooking the victualsusually consumed there; and that if the quantity of victuals were toincrease, the number of pots and pans would readily increasealong with it, a part of the increased quantity of victuals beingemployed in purchasing them, or in maintaining an additionalnumber of workmen whose business it was to make them. Itshould as readily occur that the quantity of gold and silver is inevery country limited by the use which there is for those metals;that their use consists in circulating commodities as coin, and inaffording a species of household furniture as plate; that thequantity of coin in every country is regulated by the value of thecommodities 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 requisitefor circulating them: that the quantity of plate is regulated by thenumber and wealth of those private families who choose toindulge themselves in that sort of magnificence: increase thenumber and wealth of such families, and a part of this increasedwealth will most probably be employed in purchasing, wherever itis to be found, an additional quantity of plate: that to attempt toincrease the wealth of any country, either by introducing or bydetaining in it an unnecessary quantity of gold and silver, is as



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absurd as it would be to attempt to increase the good cheer ofprivate families by obliging them to keep an unnecessary numberof kitchen utensils. As the expense of purchasing thoseunnecessary utensils would diminish instead of increasing eitherthe quantity of goodness of the family provisions, so the expense ofpurchasing an unnecessary quantity of gold and silver must, inevery 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, areutensils, it must be remembered, as much as the furniture of thekitchen. Increase the use for them, increase the consumablecommodities which are to be circulated, managed, and preparedby means of them, and you will infallibly increase the quantity; butif 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 userequires. Were they ever to be accumulated beyond this quantity,their transportation is so easy, and the loss which attends theirlying idle and unemployed so great, that no law could preventtheir being immediately sent out of the country.

It is not always necessary to accumulate gold and silver in orderto enable a country to carry on foreign wars, and to maintain fleetsand armies in distant countries. Fleets and armies are maintained,not with gold and silver, but with consumable goods. The nationwhich, from the annual produce of its domestic industry, from theannual revenue arising out of its lands, labour, and consumablestock, has wherewithal to purchase those consumable goods indistant countries, can maintain foreign wars there.

A nation may purchase the pay and provisions of an army in a



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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 asaccumulated or stored up in any country may be distinguishedinto three parts: first, the circulating money; secondly, the plate ofprivate families; and, last of all, the money which may have beencollected by many years’ parsimony, and laid up in the treasury ofthe prince.

It can seldom happen that much can be spared from thecirculating money of the country; because in that there can seldombe much redundancy. The value of goods annually bought andsold in any country requires a certain quantity of money tocirculate and distribute them to their proper consumers, and cangive employment to no more. The channel of circulationnecessarily draws to itself a sum sufficient to fill it, and neveradmits any more. Something, however, is generally withdrawnfrom this channel in the case of foreign war. By the great numberof people who are maintained abroad, fewer are maintained athome. Fewer goods are circulated there, and less money becomesnecessary to circulate them. An extraordinary quantity of papermoney, of some sort or other, such as exchequer notes, navy bills,and bank bills in England, is generally issued upon suchoccasions, and by supplying the place of circulating gold andsilver, gives an opportunity of sending a greater quantity of itabroad. All this, however, could afford but a poor resource formaintaining a foreign war of great expense and several yearsduration.



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The melting down the plate of private families has upon everyoccasion been found a still more insignificant one. The French, inthe beginning of the last war, did not derive so much advantagefrom 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 presenttimes, if you except the king of Prussia, to accumulate treasureseems to be no part of the policy of European princes.

The funds which maintained the foreign wars of the presentcentury, the most expensive perhaps which history records, seemto have had little dependency upon the exportation either of thecirculating money, or of the plate of private families, or of thetreasure of the prince. The last French war cost Great Britainupwards of ninety millions, including not only the seventy-fivemillions of new debt that was contracted, but the additional twoshillings in the pound land-tax, and what was annually borrowedof the sinking fund. More than two-thirds of this expense were laidout in distant countries; in Germany, Portugal, America, in theports of the Mediterranean, in the East and West Indies. The kingsof England had no accumulated treasure. We never heard of anyextraordinary quantity of plate being melted down. Thecirculating gold and silver of the country had not been supposed toexceed eighteen millions.

Since the late recoinage of the gold, however, it is believed tohave been a good deal under-rated. Let us suppose, therefore,according to the most exaggerated computation which I rememberto have either seen or heard of, that, gold and silver together, itamounted to thirty millions. Had the war been carried on bymeans of our money, the whole of it must, even according to this



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computation, have been sent out and returned again at least twicein a period of between six and seven years. Should this besupposed, it would afford the most decisive argument todemonstrate how unnecessary it is for government to watch overthe preservation of money, since upon this supposition the wholemoney of the country must have gone from it and returned to itagain, two different times in so short a period, without anybody’sknowing anything of the matter. The channel of circulation,however, never appeared more empty than usual during any partof this period. Few people wanted money who had wherewithal topay for it. The profits of foreign trade, indeed, were greater thanusual during the whole war; but especially towards the end of it.This occasioned, what it always occasions, a general overtrading inall the parts of Great Britain; and this again occasioned the usualcomplaint of the scarcity of money, which always followsovertrading. Many people wanted it, who had neither wherewithalto buy it, nor credit to borrow it; and because the debtors found itdifficult 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 havebeen chiefly defrayed, not by the exportation of gold and silver,but by that of British commodities of some kind or other. Whenthe government, or those who acted under them, contracted with amerchant for a remittance to some foreign country, he wouldnaturally endeavour to pay his foreign correspondent, upon whomhe had granted a bill, by sending abroad rather commodities thangold and silver. If the commodities of Great Britain were not indemand in that country, he would endeavour to send them to



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some other country, in which he could purchase a bill upon thatcountry. The transportation of commodities, when properly suitedto 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 foreigncommodities, the merchant’s profit arises, not from the purchase,but from the sale of the returns. But when they are sent abroadmerely to pay a debt, he gets no returns, and consequently noprofit. He naturally, therefore, exerts his invention to find out away of paying his foreign debts rather by the exportation ofcommodities than by that of gold and silver. The great quantity ofBritish goods exported during the course of the late war, withoutbringing back any returns, is accordingly remarked by the authorof 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 bullionalternately imported and exported for the purposes of foreigntrade.

This bullion, as it circulates among different commercialcountries in the same manner as the national coin circulates inevery particular country, may be considered as the money of thegreat mercantile republic. The national coin receives itsmovement and direction from the commodities circulated withinthe precincts of each particular country: the money of themercantile republic, from those circulated between differentcountries. Both are employed in facilitating exchanges, the onebetween different individuals of the same, the other between thoseof different nations. Part of this money of the great mercantilerepublic may have been, and probably was, employed in carrying



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on the late war. In time of a general war, it is natural to supposethat a movement and direction should be impressed upon it,different from what it usually follows in profound peace; that itshould circulate more about the seat of the war, and be moreemployed in purchasing there, and in the neighbouring countries,the pay and provisions of the different armies. But whatever partof this money of the mercantile republic Great Britain may haveannually employed in this manner, it must have been annuallypurchased, either with British commodities, or with somethingelse that had been purchased with them; which still brings us backto commodities, to the annual produce of the land and labour ofthe country, as the ultimate resources which enabled us to carryon the war. It is natural indeed to suppose that so great an annualexpense must have been defrayed from a great annual produce.The expense of 1761, for example, amounted to more thannineteen millions. No accumulation could have supported so greatan annual profusion. There is no annual produce even of gold andsilver which could have supported it. The whole gold and silverannually imported into both Spain and Portugal, according to thebest accounts, does not commonly much exceed six millionssterling, which, in some years, would scarce have paid fourmonth’s expense of the late war.

The commodities most proper for being transported to distantcountries, in order to purchase there either the pay and provisionsof an army, or some part of the money of the mercantile republicto be employed in purchasing them, seem to be the finer and moreimproved manufactures; such as contain a great value in a smallbulk, and can, therefore, be exported to a great distance at littleexpense. A country whose industry produces a great annual



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surplus of such manufactures, which are usually exported toforeign countries, may carry on for many years a very expensiveforeign war without either exporting any considerable quantity ofgold and silver, or even having any such quantity to export. Aconsiderable part of the annual surplus of its manufactures must,indeed, in this case be exported without bringing back any returnsto the country, though it does to the merchant; the governmentpurchasing of the merchant his bills upon foreign countries, inorder to purchase there the pay and provisions of an army. Somepart of this surplus, however, may still continue to bring back areturn. The manufacturers, during the war, will have a doubledemand upon them, and be called upon, first, to work up goods tobe sent abroad, for paying the bills drawn upon foreign countriesfor the pay and provisions of the army; and, secondly, to work upsuch as are necessary for purchasing the common returns that hadusually been consumed in the country. In the midst of the mostdestructive foreign war, therefore, the greater part ofmanufactures may frequently flourish greatly; and, on thecontrary, they may decline on the return of the peace. They mayflourish amidst the ruin of their country, and begin to decay uponthe return of its prosperity. The different state of many differentbranches of the British manufactures during the late war, and forsome time after the peace, may serve as an illustration of what hasbeen just now said.

No foreign war of great expense or duration could convenientlybe carried on by the exportation of the rude produce of the soil.The expense of sending such a quantity of it to a foreign countryas might purchase the pay and provisions of an army would be toogreat. Few countries produce much more rude produce than what



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is sufficient for the subsistence of their own inhabitants. To sendabroad any great quantity of it, therefore, would be to send abroada part of the necessary subsistence of the people.

It is otherwise with the exportation of manufactures. Themaintenance of the people employed in them is kept at home, andonly the surplus part of their work is exported. Mr. Humefrequently takes notice of the inability of the ancient kings ofEngland to carry on, without interruption, any foreign war of longduration. The English, in those days, had nothing wherewithal topurchase the pay and provisions of their armies in foreigncountries, but either the rude produce of the soil, of which noconsiderable part could be spared from the home consumption, ora few manufactures of the coarsest kind, of which, as well as of therude produce, the transportation was too expensive. This inabilitydid not arise from the want of money, but of the finer and moreimproved manufactures. Buying and selling was transacted bymeans of money in England then as well as now. The quantity ofcirculating money must have borne the same proportion to thenumber and value of purchases and sales usually transacted atthat time, which it does to those transacted at present; or rather itmust have borne a greater proportion, because there was then nopaper, which now occupies a great part of the employment of goldand silver. Among nations to whom commerce and manufacturesare little known, the sovereign, upon extraordinary occasions, canseldom draw any considerable aid from his subjects, for reasonswhich 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 ofthis necessity, he is in such a situation naturally disposed to the



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parsimony requisite for accumulation. In that simple state, theexpense even of a sovereign is not directed by the vanity whichdelights in the gaudy finery of a court, but is employed in bountyto his tenants, and hospitality to his retainers. But bounty andhospitality very seldom lead to extravagance; though vanity almostalways does. Every Tartar chief, accordingly, has a treasure. Thetreasures of Mazepa, chief of the Cossacs in the Ukraine, thefamous ally of Charles the XII, are said to have been very great.The French kings of the Merovingian race all had treasures. Whenthey divided their kingdom among their different children, theydivided their treasure too. The Saxon princes, and the first kingsafter the Conquest, seem likewise to have accumulated treasures.The first exploit of every new reign was commonly to seize thetreasure of the preceding king, as the most essential measure forsecuring the succession. The sovereigns of improved andcommercial countries are not under the same necessity ofaccumulating treasures, because they can generally draw fromtheir subjects extraordinary aids upon extraordinary occasions.They are likewise less disposed to do so. They naturally, perhapsnecessarily, follow the mode of the times, and their expense comesto be regulated by the same extravagant vanity which directs thatof all the other great proprietors in their dominions. Theinsignificant pageantry of their court becomes every day morebrilliant, and the expense of it not only prevents accumulation, butfrequently encroaches upon the funds destined for more necessaryexpenses. What Dercyllidas said of the court of Persia may beapplied to that of several European princes, that he saw theremuch splendour but little strength, and many servants but fewsoldiers.



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The importation of gold and silver is not the principal, muchless the sole benefit which a nation derives from its foreign trade.

Between whatever places foreign trade is carried on, they all ofthem derive two distinct benefits from it. It carries out that surpluspart of the produce of their land and labour for which there is nodemand among them, and brings back in return for it somethingelse for which there is a demand. It gives a value to theirsuperfluities, by exchanging them for something else, which maysatisfy a part of their wants, and increase their enjoyments. Bymeans of it the narrowness of the home market does not hinderthe division of labour in any particular branch of art ormanufacture from being carried to the highest perfection. Byopening a more extensive market for whatever part of the produceof their labour may exceed the home consumption, it encouragesthem to improve its productive powers, and to augment its annualproduce to the utmost, and thereby to increase the real revenueand wealth of the society. These great and important servicesforeign trade is continually occupied in performing to all thedifferent countries between which it is carried on. They all derivegreat benefit from it, though that in which the merchant residesgenerally derives the greatest, as he is generally more employed insupplying the wants, and carrying out the superfluities of his own,than of any other particular country. To import the gold and silverwhich 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 carriedon foreign trade merely upon this account could scarce haveoccasion to freight a ship in a century.

It is not by the importation of gold and silver that the discovery



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of America has enriched Europe. By the abundance of theAmerican mines, those metals have become cheaper. A service ofplate can now be purchased for about a third part of the corn, or athird part of the labour, which it would have cost in the fifteenthcentury. With the same annual expense of labour andcommodities, Europe can annually purchase about three times thequantity of plate which it could have purchased at that time. Butwhen a commodity comes to be sold for a third part of what hadbeen its usual price, not only those who purchased it before canpurchase three times their former quantity, but it is brought downto the level of a much greater number of purchasers, perhaps tomore than ten, perhaps to more than twenty times the formernumber. So that there may be in Europe at present not only morethan three times, but more than twenty or thirty times thequantity of plate which would have been in it, even in its presentstate of improvement, had the discovery of the American minesnever been made. So far Europe has, no doubt, gained a realconveniency, though surely a very trifling one. The cheapness ofgold and silver renders those metals rather less fit for the purposesof money than they were before. In order to make the samepurchases, we must load ourselves with a greater quantity ofthem, and carry about a shilling in our pocket where a groat wouldhave done before. It is difficult to say which is most trifling, thisinconveniency or the opposite conveniency. Neither the one northe other could have made any very essential change in the stateof Europe. The discovery of America, however, certainly made amost essential one. By opening a new and inexhaustible market toall the commodities of Europe, it gave occasion to new divisions oflabour and improvements of art, which in the narrow circle of the



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ancient commerce, could never have taken place for want of amarket to take off the greater part of their produce. Theproductive powers of labour were improved, and its produceincreased in all the different countries of Europe, and togetherwith it the real revenue and wealth of the inhabitants. Thecommodities of Europe were almost all new to America, and manyof those of America were new to Europe. A new set of exchanges,therefore, began to take place which had never been thought ofbefore, and which should naturally have proved as advantageousto the new, as it certainly did to the old continent. The savageinjustice of the Europeans rendered an event, which ought to havebeen beneficial to all, ruinous and destructive to several of thoseunfortunate countries.

The discovery of a passage to the East Indies by the Cape ofGood Hope, which happened much about the same time, openedperhaps a still more extensive range to foreign commerce thaneven that of America, notwithstanding the greater distance. Therewere but two nations in America in any respect superior tosavages, 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 havingricher mines of gold or silver, were in every other respect muchricher, better cultivated, and more advanced in all arts andmanufactures than either Mexico or Peru, even though we shouldcredit, what plainly deserves no credit, the exaggerated accountsof the Spanish writers concerning the ancient state of thoseempires. But rich and civilised nations can always exchange to amuch greater value with one another than with savages andbarbarians. Europe, however, has hitherto derived much less



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advantage from its commerce with the East Indies than from thatwith America. The Portuguese monopolized the East India tradeto themselves for about a century, and it was only indirectly andthrough them that the other nations of Europe could either sendout or receive any goods from that country. When the Dutch, inthe beginning of the last century, began to encroach upon them,they vested their whole East India commerce in an exclusivecompany. The English, French, Swedes, and Danes have allfollowed their example, so that no great nation in Europe has everyet had the benefit of a free commerce to the East Indies. No otherreason need be assigned why it has never been so advantageous asthe trade to America, which, between almost every nation ofEurope and its own colonies, is free to all its subjects. Theexclusive privileges of those East India companies, their greatriches, the great favour and protection which these have procuredthem from their respective governments, have excited much envyagainst them. This envy has frequently represented their trade asaltogether pernicious, on account of the great quantities of silverwhich it every year exports from the countries from which it iscarried on. The parties concerned have replied that their trade, bythis continual exportation of silver, might indeed tend toimpoverish Europe in general, but not the particular country fromwhich it was carried on; because, by the exportation of a part ofthe returns to other European countries, it annually brought homea much greater quantity of that metal than it carried out. Both theobjection and the reply are founded in the popular notion which Ihave been just now examining. It is therefore unnecessary to sayanything further about either. By the annual exportation of silverto the East Indies, plate is probably somewhat dearer in Europe



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than it otherwise might have been; and coined silver probablypurchases a larger quantity both of labour and commodities. Theformer of these two effects is a very small loss, the latter a verysmall advantage; both too insignificant to deserve any part of thepublic attention.

The trade to the East Indies, by opening a market to thecommodities 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 ofEuropean commodities, and consequently the real wealth andrevenue of Europe. That it has hitherto increased them so little isprobably owing to the restraints which it everywhere laboursunder.

I thought it necessary, though at the hazard of being tedious, toexamine at full length this popular notion that wealth consists inmoney, or in gold and silver. Money in common language, as Ihave already observed, frequently signifies wealth, and thisambiguity of expression has rendered this popular notion sofamiliar to us that even they who are convinced of its absurdity arevery apt to forget their own principles, and in the course of theirreasonings to take it for granted as a certain and undeniable truth.Some of the best English writers upon commerce set out withobserving that the wealth of a country consists, not in its gold andsilver only, but in its lands, houses, and consumable goods of alldifferent kinds. In the course of their reasonings, however, thelands, houses, and consumable goods seem to slip out of theirmemory, and the strain of their argument frequently supposesthat all wealth consists in gold and silver, and that to multiplythose metals is the great object of national industry and



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commerce.The two principles being established, however, that wealth

consisted in gold and silver, and that those metals could bebrought into a country which had no mines only by the balance oftrade, or by exporting to a greater value than it imported, itnecessarily became the great object of political economy todiminish as much as possible the importation of foreign goods forhome consumption, and to increase as much as possible theexportation of the produce of domestic industry. Its two greatengines for enriching the country, therefore, were restraints uponimportation, and encouragements 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 whatevercountry they were imported.

Secondly, restraints upon the importation of goods of almost allkinds from those particular countries with which the balance oftrade 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 ofcommerce with foreign states, and sometimes by theestablishment of colonies in distant countries.

Drawbacks were given upon two different occasions. When thehome manufactures were subject to any duty or excise, either thewhole or a part of it was frequently drawn back upon theirexportation; and when foreign goods liable to a duty wereimported in order to be exported again, either the whole or a part



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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 kindsas supposed to deserve particular favour.

By advantageous treaties of commerce, particular privilegeswere procured in some foreign state for the goods and merchantsof the country, beyond what were granted to those other countries.

By established establishment of colonies in distant countries,not only particular privileges, but a monopoly was frequentlyprocured for the goods and merchants of the country whichestablished 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 commercialsystem proposes to increase the quantity of gold and silver in anycountry by turning the balance of trade in its favour. I shallconsider each of them in a particular chapter, and without takingmuch further notice of their supposed tendency to bring moneyinto the country, I shall examine chiefly what are likely to be theeffects of each of them upon the annual produce of its industry.According as they tend either to increase or diminish the value ofthis annual produce, they must evidently tend either to increase ordiminish the real wealth and revenue of the country.



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Chapter II

Of Restraints upon the Importation from ForeignCountries of such Goods as can be produced at

Home

y restraining, either by high duties or by absoluteprohibitions, the importation of such goods from foreigncountries as can be produced at home, the monopoly of

the home market is more or less secured to the domestic industryemployed in producing them. Thus the prohibition of importingeither live cattle or salt provisions from foreign countries securesto the graziers of Great Britain the monopoly of the home marketfor butcher’s meat. The high duties upon the importation of corn,which in times of moderate plenty amount to a prohibition, give alike advantage to the growers of that commodity. The prohibitionof the importation of foreign woollens is equally favourable to thewoollen manufacturers. The silk manufacture, though altogetheremployed upon foreign materials, has lately obtained the sameadvantage. The linen manufacture has not yet obtained it, but ismaking great strides towards it. Many other sorts ofmanufacturers have, in the same manner, obtained in GreatBritain, either altogether or very nearly, a monopoly against theircountrymen.

The variety of goods of which the importation into GreatBritain is prohibited, either absolutely, or under certaincircumstances, greatly exceeds what can easily be suspected bythose who are not well acquainted with the laws of the customs.

B



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That this monopoly of the home market frequently gives greatencouragement to that particular species of industry which enjoysit, and frequently turns towards that employment a greater shareof both the labour and stock of the society than would otherwisehave gone to it, cannot be doubted. But whether it tends either toincrease the general industry of the society, or to give it the mostadvantageous direction, is not, perhaps, altogether so evident.

The general industry of the society never can exceed what thecapital of the society can employ. As the number of workmen thatcan be kept in employment by any particular person must bear acertain proportion to his capital, so the number of those that canbe continually employed by all the members of a great societymust bear a certain proportion to the whole capital of that society,and never can exceed that proportion. No regulation of commercecan increase the quantity of industry in any society beyond whatits capital can maintain. It can only divert a part of it into adirection into which it might not otherwise have gone; and it is byno means certain that this artificial direction is likely to be moreadvantageous to the society than that into which it would havegone of its own accord.

Every individual is continually exerting himself to find out themost advantageous employment for whatever capital he cancommand. It is his own advantage, indeed, and not that of thesociety, which he has in view. But the study of his own advantagenaturally, or rather necessarily, leads him to prefer thatemployment which is most advantageous to the society.

First, every individual endeavours to employ his capital as nearhome as he can, and consequently as much as he can in thesupport of domestic industry; provided always that he can thereby



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obtain the ordinary, or not a great deal less than the ordinaryprofits of stock.

Thus, upon equal or nearly equal profits, every wholesalemerchant naturally prefers the home trade to the foreign trade ofconsumption, and the foreign trade of consumption to the carryingtrade. In the home trade his capital is never so long out of his sightas it frequently is in the foreign trade of consumption. He canknow better the character and situation of the persons whom hetrusts, and if he should happen to be deceived, he knows betterthe laws of the country from which he must seek redress. In thecarrying trade, the capital of the merchant is, as it were, dividedbetween two foreign countries, and no part of it is ever necessarilybrought home, or placed under his own immediate view andcommand. The capital which an Amsterdam merchant employs incarrying corn from Königsberg to Lisbon, and fruit and wine fromLisbon to Königsberg, must generally be the one half of it atKönigsberg and the other half at Lisbon. No part of it need evercome to Amsterdam. The natural residence of such a merchantshould either be at Königsberg or Lisbon, and it can only be somevery particular circumstances which can make him prefer theresidence of Amsterdam. The uneasiness, however, which he feelsat being separated so far from his capital generally determineshim to bring part both of the Königsberg goods which he destinesfor the market of Lisbon, and of the Lisbon goods which hedestines for that of Königsberg, to Amsterdam: and though thisnecessarily subjects him to a double charge of loading andunloading, as well as to the payment of some duties and customs,yet for the sake of having some part of his capital always under hisown view and command, he willingly submits to this extraordinary



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charge; and it is in this manner that every country which has anyconsiderable share of the carrying trade becomes always theemporium, or general market, for the goods of all the differentcountries whose trade it carries on. The merchant, in order to savea second loading and unloading, endeavours always to sell in thehome market as much of the goods of all those different countriesas he can, and thus, so far as he can, to convert his carrying tradeinto a foreign trade of consumption. A merchant, in the samemanner, 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 athome as he can. He saves himself the risk and trouble ofexportation, when, so far as he can, he thus converts his foreigntrade of consumption into a home trade. Home is in this mannerthe centre, if I may say so, round which the capitals of theinhabitants of every country are continually circulating, andtowards which they are always tending, though by particularcauses they may sometimes be driven off and repelled from ittowards more distant employments. But a capital employed in thehome trade, it has already been shown, necessarily puts intomotion a greater quantity of domestic industry, and gives revenueand employment to a greater number of the inhabitants of thecountry, than an equal capital employed in the foreign trade ofconsumption: and one employed in the foreign trade ofconsumption has the same advantage over an equal capitalemployed in the carrying trade. Upon equal, or only nearly equalprofits, therefore, every individual naturally inclines to employ hiscapital in the manner in which it is likely to afford the greatestsupport to domestic industry, and to give revenue and



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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 directthat industry that its produce may be of the greatest possiblevalue.

The produce of industry is what it adds to the subject ormaterials upon which it is employed. In proportion as the value ofthis produce is great or small, so will likewise be the profits of theemployer. But it is only for the sake of profit that any man employsa capital in the support of industry; and he will always, therefore,endeavour to employ it in the support of that industry of which theproduce is likely to be of the greatest value, or to exchange for thegreatest quantity either of money or of other goods.

But the annual revenue of every society is always preciselyequal to the exchangeable value of the whole annual produce of itsindustry, or rather is precisely the same thing with thatexchangeable value. As every individual, therefore, endeavours asmuch as he can both to employ his capital in the support ofdomestic industry, and so to direct that industry that its producemay be of the greatest value; every individual necessarily laboursto render the annual revenue of the society as great as he can. Hegenerally, indeed, neither intends to promote the public interest,nor knows how much he is promoting it. By preferring the supportof domestic to that of foreign industry, he intends only his ownsecurity; and by directing that industry in such a manner as itsproduce may be of the greatest value, he intends only his owngain, and he is in this, as in many other cases, led by an invisiblehand to promote an end which was no part of his intention. Nor isit always the worse for the society that it was no part of it. By



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pursuing his own interest he frequently promotes that of thesociety more effectually than when he really intends to promote it.I have never known much good done by those who affected totrade for the public good. It is an affectation, indeed, not verycommon among merchants, and very few words need be employedin dissuading them from it.

What is the species of domestic industry which his capital canemploy, and of which the produce is likely to be of the greatestvalue, 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 inwhat manner they ought to employ their capitals would not onlyload himself with a most unnecessary attention, but assume anauthority which could safely be trusted, not only to no singleperson, but to no council or senate whatever, and which wouldnowhere be so dangerous as in the hands of a man who had follyand presumption enough to fancy himself fit to exercise it.

To give the monopoly of the home market to the produce ofdomestic industry, in any particular art or manufacture, is in somemeasure to direct private people in what manner they ought toemploy their capitals, and must, in almost all cases, be either auseless or a hurtful regulation. If the produce of domestic can bebrought there as cheap as that of foreign industry, the regulationis evidently useless. If it cannot, it must generally be hurtful. It isthe maxim of every prudent master of a family never to attempt tomake at home what it will cost him more to make than to buy. Thetailor does not attempt to make his own shoes, but buys them ofthe shoemaker. The shoemaker does not attempt to make his ownclothes, but employs a tailor. The farmer attempts to make neither



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the one nor the other, but employs those different artificers. All ofthem find it for their interest to employ their whole industry in away in which they have some advantage over their neighbours,and to purchase with a part of its produce, or what is the samething, with the price of a part of it, whatever else they haveoccasion for.

What is prudence in the conduct of every private family canscarce be folly in that of a great kingdom. If a foreign country cansupply us with a commodity cheaper than we ourselves can makeit, better buy it of them with some part of the produce of our ownindustry employed in a way in which we have some advantage.The general industry of the country, being always in proportion tothe capital which employs it, will not thereby be diminished, nomore than that of the above-mentioned artificers; but only left tofind out the way in which it can be employed with the greatestadvantage. It is certainly not employed to the greatest advantagewhen it is thus directed towards an object which it can buycheaper than it can make. The value of its annual produce iscertainly more or less diminished when it is thus turned awayfrom producing commodities evidently of more value than thecommodity which it is directed to produce. According to thesupposition, that commodity could be purchased from foreigncountries cheaper than it can be made at home. It could, therefore,have been purchased with a part only of the commodities, or, whatis the same thing, with a part only of the price of the commodities,which the industry employed by an equal capital would haveproduced at home, had it been left to follow its natural course. Theindustry of the country, therefore, is thus turned away from amore to a less advantageous employment, and the exchangeable



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value of its annual produce, instead of being increased, accordingto the intention of the lawgiver, must necessarily be diminished byevery such regulation.

By means of such regulations, indeed, a particular manufacturemay sometimes be acquired sooner than it could have beenotherwise, and after a certain time may be made at home as cheapor cheaper than in the foreign country. But though the industry ofthe society may be thus carried with advantage into a particularchannel sooner than it could have been otherwise, it will by nomeans follow that the sum total, either of its industry, or of itsrevenue, can ever be augmented by any such regulation. Theindustry of the society can augment only in proportion as itscapital augments, and its capital can augment only in proportionto what can be gradually saved out of its revenue. But theimmediate effect of every such regulation is to diminish itsrevenue, and what diminishes its revenue is certainly not verylikely to augment its capital faster than it would have augmentedof its own accord had both capital and industry been left to findout their natural employments.

Though for want of such regulations the society should neveracquire the proposed manufacture, it would not, upon thataccount, necessarily be the poorer in any one period of itsduration. In every period of its duration its whole capital andindustry might still have been employed, though upon differentobjects, in the manner that was most advantageous at the time. Inevery period its revenue might have been the greatest which itscapital could afford, and both capital and revenue might havebeen augmented with the greatest possible rapidity.

The natural advantages which one country has over another in



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producing particular commodities are sometimes so great that it isacknowledged by all the world to be in vain to struggle with them.

By means of glasses, hotbeds, and hot walls, very good grapescan be raised in Scotland, and very good wine too can be made ofthem at about thirty times the expense for which at least equallygood can be brought from foreign countries. Would it be areasonable law to prohibit the importation of all foreign winesmerely to encourage the making of claret and burgundy inScotland? But if there would be a manifest absurdity in turningtowards any employment thirty times more of the capital andindustry of the country than would be necessary to purchase fromforeign countries an equal quantity of the commodities wanted,there must be an absurdity, though not altogether so glaring, yetexactly of the same kind, in turning towards any such employmenta thirtieth, or even a three-hundredth part more of either.Whether the advantages which one country has over another benatural or acquired is in this respect of no consequence.

As long as the one country has those advantages, and the otherwants them, it will always be more advantageous for the latterrather to buy of the former than to make. It is an acquiredadvantage only, which one artificer has over his neighbour, whoexercises another trade; and yet they both find it moreadvantageous to buy of one another than to make what does notbelong to their particular trades.

Merchants and manufacturers are the people who derive thegreatest advantage from this monopoly of the home market. Theprohibition of the importation of foreign cattle, and of saltprovisions, together with the high duties upon foreign corn, whichin times of moderate plenty amount to a prohibition, are not near



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so advantageous to the graziers and farmers of Great Britain asother regulations of the same kind are to its merchants andmanufacturers. Manufactures, those of the finer kind especially,are more easily transported from one country to another than cornor cattle. It is in the fetching and carrying manufactures,accordingly, that foreign trade is chiefly employed. Inmanufactures, a very small advantage will enable foreigners toundersell our own workmen, even in the home market. It willrequire a very great one to enable them to do so in the rudeproduce of the soil. If the free importation of foreign manufactureswere permitted, several of the home manufactures would probablysuffer, and some of them, perhaps, go to ruin altogether, and aconsiderable part of the stock and industry at present employed inthem would be forced to find out some other employment. But thefreest importation of the rude produce of the soil could have nosuch effect upon the agriculture of the country.

If the importation of foreign cattle, for example, were madeever so free, so few could be imported that the grazing trade ofGreat Britain could be little affected by it. Live cattle are, perhaps,the only commodity of which the transportation is more expensiveby sea than by land. By land they carry themselves to market. Bysea, not only the cattle, but their food and their water too, must becarried at no small expense and inconveniency. The short seabetween Ireland and Great Britain, indeed, renders theimportation of Irish cattle more easy. But though the freeimportation of them, which was lately permitted only for a limitedtime, were rendered perpetual, it could have no considerableeffect upon the interest of the graziers of Great Britain. Thoseparts of Great Britain which border upon the Irish Sea are all



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grazing countries. Irish cattle could never be imported for theiruse, but must be driven through those very extensive countries, atno small expense and inconveniency, before they could arrive attheir proper market. Fat cattle could not be driven so far. Leancattle, therefore, only could be imported, and such importationcould interfere, not with the interest of the feeding or fatteningcountries, to which, by reducing the price of lean cattle, it wouldrather be advantageous, but with that of the breeding countriesonly. The small number of Irish cattle imported since theirimportation was permitted, together with the good price at whichlean cattle still continue to sell, seem to demonstrate that even thebreeding countries of Great Britain are never likely to be muchaffected by the free importation of Irish cattle. The commonpeople of Ireland, indeed, are said to have sometimes opposedwith violence the exportation of their cattle. But if the exportershad found any great advantage in continuing the trade, they couldeasily, when the law was on their side, have conquered thismobbish opposition.

Feeding and fattening countries, besides, must always be highlyimproved, whereas breeding countries are generally uncultivated.The high price of lean cattle, by augmenting the value ofuncultivated land, is like a bounty against improvement. To anycountry which was highly improved throughout, it would be moreadvantageous to import its lean cattle than to breed them. Theprovince of Holland, accordingly, is said to follow this maxim atpresent. The mountains of Scotland, Wales, and Northumberland,indeed, are countries not capable of much improvement, and seemdestined by nature to be the breeding countries of Great Britain.The freest importation of foreign cattle could have no other effect



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than to hinder those breeding countries from taking advantage ofthe increasing population and improvement of the rest of thekingdom, from raising their price to an exorbitant height, andfrom laying a real tax upon all the more improved and cultivatedparts 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 GreatBritain as that of live cattle. Salt provisions are not only a verybulky commodity, but when compared with fresh meat, they are acommodity both of worse quality, and as they cost more labourand expense, of higher price. They could never, therefore, comeinto competition with the fresh meat, though they might with thesalt provisions of the country. They might be used for victuallingships for distant voyages and such like uses, but could never makeany considerable part of the food of the people. The small quantityof salt provisions imported from Ireland since their importationwas rendered free is an experimental proof that our graziers havenothing to apprehend from it. It does not appear that the price ofbutcher’s meat has ever been sensibly affected by it.

Even the free importation of foreign corn could very little affectthe interest of the farmers of Great Britain. Corn is a much morebulky commodity than butcher’s meat. A pound of wheat at apenny is as dear as a pound of butcher’s meat at fourpence. Thesmall quantity of foreign corn imported even in times of thegreatest scarcity may satisfy our farmers that they can havenothing to fear from the freest importation. The average quantityimported, one year with another, amounts only, according to thevery well informed author of the tracts upon the corn trade, totwenty-three thousand seven hundred and twenty-eight quarters



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of all sorts of grain, and does not exceed the five hundred andseventy-first part of the annual consumption. But as the bountyupon corn occasions a greater exportation in years of plenty, so itmust of consequence occasion a greater importation in years ofscarcity than in the actual state of tillage would otherwise takeplace. By means of it the plenty of one year does not compensatethe scarcity of another, and as the average quantity exported isnecessarily augmented by it, so must likewise, in the actual state oftillage, the average quantity imported. If there were no bounty, asless corn would be exported, so it is probable that, one year withanother, less would be imported than at present.

The corn-merchants, the fetchers and carriers of corn betweenGreat Britain and foreign countries would have much lessemployment, and might suffer considerably; but the countrygentlemen and farmers could suffer very little. It is in the cornmerchants accordingly, rather than in the country gentlemen andfarmers, that I have observed the greatest anxiety for the renewaland continuation of the bounty.

Country gentlemen and farmers are, to their great honour, of allpeople, the least subject to the wretched spirit of monopoly. Theundertaker of a great manufactory is sometimes alarmed ifanother work of the same kind is established within twenty milesof him. The Dutch undertaker of the woollen manufacture atAbbeville stipulated that no work of the same kind should beestablished within thirty leagues of that city. Farmers and countrygentlemen, on the contrary, are generally disposed rather topromote than to obstruct the cultivation and improvement of theirneighbours’ farms and estates. They have no secrets such as thoseof the greater part of manufacturers, but are generally rather fond



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of communicating to their neighbours and of extending as far aspossible any new practice which they have found to beadvantageous. Pius Questus, says old Cato, stabilissimusque,minimeque invidiosus; minimeque male cogitantes sunt, qui in eostudio occupati sunt. Country gentlemen and farmers, dispersed indifferent parts of the country, cannot so easily combine asmerchants and manufacturers, who, being collected into towns,and accustomed to that exclusive corporation spirit which prevailsin them, naturally endeavour to obtain against all theircountrymen the same exclusive privilege which they generallypossess against the inhabitants of their respective towns. Theyaccordingly seem to have been the original inventors of thoserestraints upon the importation of foreign goods which secure tothem the monopoly of the home market. It was probably inimitation of them, and to put themselves upon a level with thosewho, they found, were disposed to oppress them, that the countrygentlemen and farmers of Great Britain in so far forgot thegenerosity which is natural to their station as to demand theexclusive privilege of supplying their countrymen with corn andbutcher’s meat. They did not perhaps take time to consider howmuch less their interest could be affected by the freedom of tradethan that of the people whose example they followed.

To prohibit by a perpetual law the importation of foreign cornand cattle is in reality to enact that the population and industry ofthe country shall at no time exceed what the rude produce of itsown soil can maintain.

There seem, however, to be two cases in which it will generallybe advantageous to lay some burden upon foreign for theencouragement of domestic industry.



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The first is, when some particular sort of industry is necessaryfor the defence of the country. The defence of Great Britain, forexample, depends very much upon the number of its sailors andshipping. The Act of Navigation, therefore, very properlyendeavours to give the sailors and shipping of Great Britain themonopoly of the trade of their own country in some cases byabsolute prohibitions and in others by heavy burdens upon theshipping of foreign countries. The following are the principaldispositions of this Act.

First, all ships, of which the owners and three-fourths of themariners are not British subjects, are prohibited, upon pain offorfeiting ship and cargo, from trading to the British settlementsand plantations, or from being employed in the coasting trade ofGreat Britain.

Secondly, a great variety of the most bulky articles ofimportation can be brought into Great Britain only, either in suchships as are above described, or in ships of the country wherethose goods are purchased, and of which the owners, masters, andthree-fourths of the mariners are of that particular country; andwhen imported even in ships of this latter kind, they are subject todouble aliens’ duty. If imported in ships of any other country, thepenalty 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 thecarriers to Great Britain, or from importing to us the goods of anyother European country.

Thirdly, a great variety of the most bulky articles of importationare prohibited from being imported, even in British ships, fromany country but that in which they are produced, under pains of



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forfeiting ship and cargo. This regulation, too, was probablyintended against the Dutch. Holland was then, as now, the greatemporium for all European goods, and by this regulation Britishships were hindered from loading in Holland the goods of anyother European country.

Fourthly, salt fish of all kinds, whale-fins, whale-bone, oil, andblubber, not caught by and cured on board British vessels, whenimported into Great Britain, are subjected to double aliens’ duty.The Dutch, as they are they the principal, were then the onlyfishers in Europe that attempted to supply foreign nations withfish. By this regulation, a very heavy burden was laid upon theirsupplying Great Britain.

When the Act of Navigation was made, though England andHolland were not actually at war, the most violent animositysubsisted between the two nations. It had begun during thegovernment of the Long Parliament, which first framed this act,and it broke out soon after in the Dutch wars during that of theProtector and of Charles the Second. It is not impossible,therefore, that some of the regulations of this famous act may haveproceeded from national animosity. They are as wise, however, asif they had all been dictated by the most deliberate wisdom.National animosity at that particular time aimed at the very sameobject which the most deliberate wisdom would haverecommended, the diminution of the naval power of Holland, theonly naval power which could endanger the security of England.

The Act of Navigation is not favourable to foreign commerce, orto the growth of that opulence which can arise from it. Theinterest of a nation in its commercial relations to foreign nationsis, like that of a merchant with regard to the different people with



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whom he deals, to buy as cheap and to sell as dear as possible. Butit will be most likely to buy cheap, when by the most perfectfreedom of trade it encourages all nations to bring to it the goodswhich it has occasion to purchase; and, for the same reason, it willbe most likely to sell dear, when its markets are thus filled with thegreatest number of buyers. The Act of Navigation, it is true, laysno burden upon foreign ships that come to export the produce ofBritish industry. Even the ancient aliens’ duty, which used to bepaid upon all goods exported as well as imported, has, by severalsubsequent acts, been taken off from the greater part of thearticles of exportation. But if foreigners, either by prohibitions orhigh duties, are hindered from coming to sell, they cannot alwaysafford to come to buy; because coming without a cargo, they mustlose the freight from their own country to Great Britain. Bydiminishing the number of sellers, therefore, we necessarilydiminish that of buyers, and are thus likely not only to buy foreigngoods dearer, but to sell our own cheaper, than if there was a moreperfect freedom of trade. As defence, however it is of much moreimportance than opulence, the Act of Navigation is, perhaps, thewisest of all the commercial regulations of England.

The second case, in which it will generally be advantageous tolay some burden upon foreign for the encouragement of domesticindustry is, when some tax is imposed at home upon the produceof the latter. In this case, it seems reasonable that an equal taxshould be imposed upon the like produce of the former. Thiswould not give the monopoly of the home market to domesticindustry, nor turn towards a particular employment a greatershare of the stock and labour of the country than what wouldnaturally go to it. It would only hinder any part of what would



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naturally go to it from being turned away by the tax into a lessnatural direction, and would leave the competition betweenforeign and domestic industry, after the tax, as nearly as possibleupon the same footing as before it. In Great Britain, when anysuch tax is laid upon the produce of domestic industry, it is usualat the same time, in order to stop the clamorous complaints of ourmerchants and manufacturers that they will be undersold athome, to lay a much heavier duty upon the importation of allforeign goods of the same kind.

This second limitation of the freedom of trade according tosome people should, upon some occasions, be extended muchfarther than to the precise foreign commodities which could comeinto competition with those which had been taxed at home. Whenthe necessaries of life have been taxed any country, it becomesproper, they pretend, to tax not only the like necessaries of lifeimported from other countries, but all sorts of foreign goods whichcan come into competition with anything that is the produce ofdomestic industry. Subsistence, they say, becomes necessarilydearer in consequence of such taxes; and the price of labour mustalways rise with the price of the labourers’ subsistence. Everycommodity, therefore, which is the produce of domestic industry,though not immediately taxed itself, becomes dearer inconsequence of such taxes, because the labour which produces itbecomes so. Such taxes, therefore, are really equivalent, they say,to a tax upon every particular commodity produced at home. Inorder to put domestic upon the same footing with foreign industry,therefore, it becomes necessary, they think, to lay some duty uponevery foreign commodity equal to this enhancement of the price ofthe home commodities with which it can come into competition.



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Whether taxes upon the necessaries of life, such as those inGreat Britain upon soap, salt, leather, candles, etc., necessarilyraise the price of labour, and consequently that of all othercommodities, I shall consider hereafter when I come to treat oftaxes. Supposing, however, in the meantime, that they have thiseffect, and they have it undoubtedly, this general enhancement ofthe price of all commodities, in consequence of that of labour, is acase which differs in the two following respects from that of aparticular commodity of which the price was enhanced by aparticular tax immediately imposed upon it.

First, it might always be known with great exactness how farthe price of such a commodity could be enhanced by such a tax:but how far the general enhancement of the price of labour mightaffect that of every different commodity about which labour wasemployed could never be known with any tolerable exactness. Itwould be impossible, therefore, to proportion with any tolerableexactness the tax upon every foreign to this enhancement of theprice of every home commodity.

Secondly, taxes upon the necessaries of life have nearly thesame effect upon the circumstances of the people as a poor soiland a bad climate. Provisions are thereby rendered dearer in thesame manner as if it required extraordinary labour and expense toraise them. As in the natural scarcity arising from soil and climateit would be absurd to direct the people in what manner they oughtto employ their capitals and industry, so is it likewise in theartificial scarcity arising from such taxes. To be left toaccommodate, as well as they could, their industry to theirsituation, and to find out those employments in which,notwithstanding their unfavourable circumstances, they might



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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 alreadyoverburdened with taxes, and because they already pay too dearfor the necessaries of life, to make them likewise pay too dear forthe greater part of other commodities, is certainly a most absurdway of making amends.

Such taxes, when they have grown up to a certain height, are acurse equal to the barrenness of the earth and the inclemency ofthe heavens; and yet it is in the richest and most industriouscountries that they have been most generally imposed. No othercountries could support so great a disorder. As the strongestbodies only can live and enjoy health under an unwholesomeregimen, so the nations only that in every sort of industry have thegreatest natural and acquired advantages can subsist and prosperunder such taxes. Holland is the country in Europe in which theyabound most, and which from peculiar circumstances continues toprosper, not by means of them, as has been most absurdlysupposed, but in spite of them.

As there are two cases in which it will generally beadvantageous to lay some burden upon foreign for theencouragement of domestic industry, so there are two others inwhich it may sometimes be a matter of deliberation; in the one,how far it is proper to continue the free importation of certainforeign goods; and in the other, how far, or in what manner, it maybe proper to restore that free importation after it has been forsome time interrupted.

The case in which it may sometimes be a matter of deliberationhow far it is proper to continue the free importation of certain



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foreign goods is, when some foreign nation restrains by highduties or prohibitions the importation of some of ourmanufactures into their country. Revenge in this case naturallydictates retaliation, and that we should impose the like duties andprohibitions upon the importation of some or all of theirmanufactures into ours. Nations, accordingly, seldom fail toretaliate in this manner. The French have been particularlyforward to favour their own manufactures by restraining theimportation of such foreign goods as could come into competitionwith them. In this consisted a great part of the policy of Mr.Colbert, who, notwithstanding his great abilities, seems in thiscase to have been imposed upon by the sophistry of merchantsand manufacturers, who are always demanding a monopolyagainst their countrymen. It is at present the opinion of the mostintelligent men in France that his operations of this kind have notbeen beneficial to his country. That minister, by the tariff of 1667,imposed very high duties upon a great number of foreignmanufactures. Upon his refusing to moderate them in favour ofthe Dutch, they in 1671 prohibited the importation of the wines,brandies, and manufactures of France. The war of 1672 seems tohave been in part occasioned by this commercial dispute. Thepeace of Nimeguen put an end to it in 1678 by moderating some ofthose duties in favour of the Dutch, who in consequence took offtheir prohibition. It was about the same time that the French andEnglish began mutually to oppress each other’s industry by thelike duties and prohibitions, of which the French, however, seemto have set the first example. The spirit of hostility which hassubsisted between the two nations ever since has hithertohindered them from being moderated on either side. In 1697 the



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English prohibited the importation of bonelace, the manufactureof Flanders.

The government of that country, at that time under thedominion of Spain, prohibited in return the importation of Englishwoollens. In 1700, the prohibition of importing bonelace intoEngland was taken off upon condition that the importance ofEnglish woollens into Flanders should be put on the same footingas before.

There may be good policy in retaliations of this kind, whenthere is a probability that they will procure the repeal of the highduties or prohibitions complained of. The recovery of a greatforeign market will generally more than compensate the transitoryinconveniency of paying dearer during a short time for some sortsof goods. To judge whether such retaliations are likely to producesuch an effect does not, perhaps, belong so much to the science ofa legislator, whose deliberations ought to be governed by generalprinciples which are always the same, as to the skill of thatinsidious and crafty animal, vulgarly called a statesman orpolitician, whose councils are directed by the momentaryfluctuations of affairs. When there is no probability that any suchrepeal can be procured, it seems a bad method of compensatingthe injury done to certain classes of our people to do anotherinjury ourselves, not only to those classes, but to almost all theother classes of them. When our neighbours prohibit somemanufacture of ours, we generally prohibit, not only the same, forthat alone would seldom affect them considerably, but some othermanufacture of theirs.

This may no doubt give encouragement to some particular classof workmen among ourselves, and by excluding some of their



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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, theyand almost all the other classes of our citizens will thereby beobliged to pay dearer than before for certain goods. Every suchlaw, therefore, imposes a real tax upon the whole country, not infavour of that particular class of workmen who were injured byour neighbours’ prohibition, 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 freeimportation of foreign goods, after it has been for some timeinterrupted, is, when particular manufactures, by means of highduties or prohibitions upon all foreign goods which can come intocompetition with them, have been so far extended as to employ agreat multitude of hands. Humanity may in this case require thatthe freedom of trade should be restored only by slow gradations,and with a good deal of reserve and circumspection. Were thosehigh duties and prohibitions taken away all at once, cheaperforeign goods of the same kind might be poured so fast into thehome market as to deprive all at once many thousands of ourpeople of their ordinary employment and means of subsistence.The disorder which this would occasion might no doubt be veryconsiderable. It would in all probability, however, be much lessthan is commonly imagined, for the two following reasons:—

First, all those manufactures, of which any part is commonlyexported to other European countries without a bounty, could bevery little affected by the freest importation of foreign goods. Suchmanufactures must be sold as cheap abroad as any other foreigngoods of the same quality and kind, and consequently must be sold



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cheaper at home. They would still, therefore, keep possession ofthe home market, and though a capricious man of fashion mightsometimes prefer foreign wares, merely because they wereforeign, to cheaper and better goods of the same kind that weremade at home, this folly could, from the nature of things, extend toso few that it could make no sensible impression upon the generalemployment of the people. But a great part of all the differentbranches of our woollen manufacture, of our tanned leather, andof our hardware, are annually exported to other Europeancountries without any bounty, and these are the manufactureswhich employ the greatest number of hands. The silk, perhaps, isthe manufacture which would suffer the most by this freedom oftrade, and after it the linen, though the latter much less than theformer.

Secondly, though a great number of people should, by thusrestoring the freedom of trade, be thrown all at once out of theirordinary employment and common method of subsistence, itwould by no means follow that they would thereby be deprivedeither of employment or subsistence. By the reduction of the armyand navy at the end of the late war, more than a hundredthousand soldiers and seamen, a number equal to what isemployed in the greatest manufactures, were all at once thrownout of their ordinary employment; but, though they no doubtsuffered some inconveniency, they were not thereby deprived ofall employment and subsistence.

The greater part of the seamen, it is probable, gradually betookthemselves to the merchant-service as they could find occasion,and in the meantime both they and the soldiers were absorbed inthe great mass of the people, and employed in a great variety of



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occupations.Not only no great convulsion, but no sensible disorder arose

from so great a change in the situation of more than a hundredthousand men, all accustomed to the use of arms, and many ofthem to rapine and plunder. The number of vagrants was scarceanywhere sensibly increased by it, even the wages of labour werenot reduced by it in any occupation, so far as I have been able tolearn, except in that of seamen in the merchant service. But if wecompare together the habits of a soldier and of any sort ofmanufacturer, we shall find that those of the latter do not tend somuch to disqualify him from being employed in a new trade, asthose of the former from being employed in any. Themanufacturer has always been accustomed to look for hissubsistence from his labour only: the soldier to expect it from hispay. Application and industry have been familiar to the one;idleness and dissipation to the other. But it is surely much easierto change the direction of industry from one sort of labour toanother than to turn idleness and dissipation to any. To thegreater part of manufactures besides, it has already beenobserved, there are other collateral manufactures of so similar anature that a workman can easily transfer his industry from one ofthem to another. The greater part of such workmen too areoccasionally employed in country labour. The stock whichemployed them in a particular manufacture before will still remainin the country to employ an equal number of people in some otherway. The capital of the country remaining the same, the demandfor labour will likewise be the same, or very nearly the same,though it may be exerted in different places and for differentoccupations. Soldiers and seamen, indeed, when discharged from



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the king’s service, are at liberty to exercise any trade, within anytown or place of Great Britain or Ireland. Let the same naturalliberty of exercising what species of industry they please, berestored to all his Majesty’s subjects, in the same manner as tosoldiers and seamen; that is, break down the exclusive privilegesof corporations, and repeal the Statute of Apprenticeship, bothwhich are real encroachments upon natural liberty, and add tothese the repeal of the Law of Settlements, so that a poorworkman, when thrown out of employment either in one trade orin one place, may seek for it in another trade or in another placewithout the fear either of a prosecution or of a removal, andneither the public nor the individuals will suffer much more fromthe occasional disbanding some particular classes ofmanufacturers than from that of soldiers. Our manufacturers haveno doubt great merit with their country, but they cannot havemore than those who defend it with their blood, nor deserve to betreated with more delicacy.

To expect, indeed, that the freedom of trade should ever beentirely restored in Great Britain is as absurd as to expect that anOceana or Utopia should ever be established in it. Not only theprejudices 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 andunanimity any reduction in the numbers of forces with whichmaster manufacturers set themselves against every law that islikely to increase the number of their rivals in the home market;were the former to animate their soldiers in the same manner asthe latter enflame their workmen to attack with violence andoutrage the proposers of any such regulation, to attempt to reduce



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the army would be as dangerous as it has now become to attemptto diminish in any respect the monopoly which our manufacturershave obtained against us. This monopoly has so much increasedthe number of some particular tribes of them that, like anovergrown standing army, they have become formidable to thegovernment, and upon many occasions intimidate the legislature.The Member of Parliament who supports every proposal forstrengthening this monopoly is sure to acquire not only thereputation of understanding trade, but great popularity andinfluence with an order of men whose numbers and wealth renderthem of great importance.

If he opposes them, on the contrary, and still more if he hasauthority enough to be able to thwart them, neither the mostacknowledged probity, nor the highest rank, nor the greatestpublic services can protect him from the most infamous abuse anddetraction, from personal insults, nor sometimes from real danger,arising from the insolent outrage of furious and disappointedmonopolists.

The undertaker of a great manufacture, who, by the homemarkets being suddenly laid open to the competition of foreigners,should be obliged to abandon his trade, would no doubt suffervery considerably. That part of his capital which had usually beenemployed in purchasing materials and in paying his workmenmight, without much difficulty, perhaps, find anotheremployment. But that part of it which was fixed in workhouses,and in the instruments of trade, could scarce be disposed ofwithout considerable loss. The equitable regard, therefore, to hisinterest requires that changes of this kind should never beintroduced suddenly, but slowly, gradually, and after a very long



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warning. The legislature, were it possible that its deliberationscould be always directed, not by the clamorous importunity ofpartial interests, but by an extensive view of the general good,ought upon this very account, perhaps, to be particularly carefulneither to establish any new monopolies of this kind, nor to extendfurther those which are already established. Every such regulationintroduces some degree of real disorder into the constitution of thestate, which it will be difficult afterwards to cure withoutoccasioning another disorder.

How far it may be proper to impose taxes upon the importationof foreign goods, in order not to prevent their importation but toraise a revenue for government, I shall consider hereafter when Icome to treat of taxes. Taxes imposed with a view to prevent, oreven to diminish importation, are evidently as destructive of therevenue of the customs as of the freedom of trade.



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Chapter III

Of the extraordinary Restraints upon theImportation of Goods of almost all kinds from thoseCountries with which the Balance is supposed to be

disadvantageous

PART 1

Of the Unreasonableness of those Restraints even upon thePrinciples of the Commercial System

o lay extraordinary restraints upon the those particularcountries with which the importation of goods of almost allkinds from balance of trade is supposed to be

disadvantageous, is the second expedient by which thecommercial system proposes to increase the quantity of gold andsilver. Thus in Great Britain, Silesia lawns may be imported forhome consumption upon paying certain duties. But Frenchcambrics and lawns are prohibited to be imported, except into theport of London, there to be warehoused for exportation. Higherduties are imposed upon the wines of France than upon those ofPortugal, or indeed of any other country. By what is called theimpost 1692, a duty of five-and-twenty per cent of the rate or valuewas laid upon all French goods; while the goods of other nationswere, the greater part of them, subjected to much lighter duties,seldom exceeding five per cent. The wine, brandy, salt and vinegarof France were indeed excepted; these commodities being

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subjected to other heavy duties, either by other laws, or byparticular clauses of the same law. In 1696, a second duty oftwenty-five per cent, the first not having been thought a sufficientdiscouragement, was imposed upon all French goods, exceptbrandy; together with a new duty of five-and-twenty pounds uponthe ton of French wine, and another of fifteen pounds upon the tonof French vinegar. French goods have never been omitted in anyof those general subsidies, or duties of five per cent, which havebeen imposed upon all, or the greater part of the goodsenumerated in the book of rates. If we count the one-third andtwo-third subsidies as making a complete subsidy between them,there have been five of these general subsidies; so that before thecommencement of the present war seventy-five per cent may beconsidered as the lowest duty to which the greater part of thegoods of the growth, produce, or manufacture of France wereliable. But upon the greater part of goods, those duties areequivalent to a prohibition. The French in their turn have, Ibelieve, treated our goods and manufactures just as hardly;though I am not so well acquainted with the particular hardshipswhich they have imposed upon them. Those mutual restraintshave put an end to almost all fair commerce between the twonations, and smugglers are now the principal importers, either ofBritish goods into France, or of French goods into Great Britain.The principles which I have been examining in the foregoingchapter took their origin from private interest and the spirit ofmonopoly; those which I am going to examine in this, fromnational prejudice and animosity. They are, accordingly, as mightwell be expected, still more unreasonable. They are so, even uponthe principles of the commercial system.



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First, though it were certain that in the case of a free tradebetween France and England, for example, the balance would bein favour of France, it would by no means follow that such a tradewould be disadvantageous to England, or that the general balanceof its whole trade would thereby be turned more against it. If thewines of France are better and cheaper than those of Portugal, orits linens than those of Germany, it would be more advantageousfor Great Britain to purchase both the wine and the foreign linenwhich it had occasion for of France than of Portugal and Germany.Though the value of the annual importations from France wouldthereby be greatly augmented, the value of the whole annualimportations would be diminished, in proportion as the Frenchgoods of the same quality were cheaper than those of the othertwo countries. This would be the case, even upon the suppositionthat the whole French goods imported were to be consumed inGreat Britain.

But, secondly, a great part of them might be re-exported toother countries, where, being sold with profit, they might bringback a return equal in value, perhaps, to the prime cost of thewhole French goods imported. What has frequently been said ofthe East India trade might possibly be true of the French; thatthough the greater part of East India goods were bought with goldand silver, the re-exportation of a part of them to other countriesbrought back more gold and silver to that which carried on thetrade than the prime cost of the whole amounted to. One of themost important branches of the Dutch trade, at present, consistsin the carriage of French goods to other European countries.Some part even of the French wine drank in Great Britain isclandestinely imported from Holland and Zeeland. If there was



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either a free trade between France and England, or if Frenchgoods could be imported upon paying only the same duties asthose of other European nations, to be drawn back uponexportation, England might have some share of a trade which isfound so advantageous to Holland.

Thirdly, and lastly, there is no certain criterion by which we candetermine on which side what is called the balance between anytwo countries lies, or which of them exports to the greatest value.

National prejudice and animosity, prompted always by theprivate interest of particular traders, are the principles whichgenerally direct our judgment upon all questions concerning it.There are two criterions, however, which have frequently beenappealed to upon such occasions, the custom-house books and thecourse of exchange. The custom-house books, I think, it is nowgenerally acknowledged, are a very uncertain criterion, onaccount of the inaccuracy of the valuation at which the greaterpart of goods are rated in them. The course of exchange is,perhaps, almost equally so.

When the exchange between two places, such as London andParis, is at par, it is said to be a sign that the debts due fromLondon to Paris are compensated by those due from Paris toLondon. On the contrary, when a premium is paid at London for abill upon Paris, it is said to be a sign that the debts due fromLondon to Paris are not compensated by those due from Paris toLondon, but that a balance in money must be sent out from thelatter place; for the risk, trouble, and expense of exporting which,the premium is both demanded and given. But the ordinary stateof debt and credit between those two cities must necessarily beregulated, it is said, by the ordinary course of their dealings with



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one another. When neither of them imports from the other to agreater amount than it exports to that other, the debts and creditsof each may compensate one another. But when one of themimports from the other to a greater value than it exports to thatother, the former necessarily becomes indebted to the latter in agreater sum than the latter becomes indebted to it; the debts andcredits of each do not compensate one another, and money mustbe sent out from that place of which the debts overbalance thecredits. The ordinary course of exchange, therefore, being anindication of the ordinary state of debt and credit between twoplaces, must likewise be an indication of the ordinary course oftheir exports and imports, as these necessarily regulate that state.

But though the ordinary course of exchange should be allowedto be a sufficient indication of the ordinary state of debt and creditbetween any two places, it would not from thence follow that thebalance of trade was in favour of that place which had theordinary state of debt and credit in its favour. The ordinary stateof debt and credit between any two places is not always entirelyregulated by the ordinary course of their dealings with oneanother; but is often influenced by that of the dealings of eitherwith many other places.

If it is usual, for example, for the merchants of England to payfor the goods which they buy of Hamburg, Danzig, Riga, etc., bybills upon Holland, the ordinary state of debt and credit betweenEngland and Holland will not be regulated entirely by theordinary course of the dealings of those two countries with oneanother, but will be influenced by that of the dealings of Englandwith those other places. England may be obliged to send out everyyear money to Holland, though its annual exports to that country



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may exceed very much the annual value of its imports fromthence; and though what is called the balance of trade may be verymuch in favour of England.

In the way, besides, in which the par of exchange has hithertobeen computed, the ordinary course of exchange can afford nosufficient indication that the ordinary state of debt and credit is infavour of that country which seems to have, or which is supposedto have, the ordinary course of exchange in its favour: or, in otherwords, the real exchange may be, and, in fact, often is so verydifferent from the computed one, that from the course of the latterno certain conclusion can, upon many occasions, be drawnconcerning that of the former.

When for a sum of money paid in England, containing,according to the standard of the English mint, a certain number ofounces of pure silver, you receive a bill for a sum of money to bepaid in France, containing, according to the standard of theFrench mint, an equal number of ounces of pure silver, exchangeis said to be at par between England and France. When you paymore, you are supposed to give a premium, and exchange is said tobe against England and in favour of France. When you pay less,you are supposed to get a premium, and exchange is said to beagainst France and in favour of England.

But, first, we cannot always judge of the value of the currentmoney of different countries by the standard of their respectivemints. In some it is more, in others it is less worn, clipt, andotherwise degenerated from that standard. But the value of thecurrent coin of every country, compared with that of any othercountry, is in proportion not to the quantity of pure silver which itought to contain, but to that which it actually does contain. Before



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the reformation of the silver coin in King William’s time, exchangebetween England and Holland, computed in the usual manneraccording to the standard of their respective mints, was five-and-twenty per cent against England. But the value of the current coinof England, as we learn from Mr. Lowndes, was at that time rathermore than five-and-twenty per cent below its standard value. Thereal exchange, therefore, may even at that time have been infavour of England, notwithstanding the computed exchange wasso much against it; a smaller number of ounces of pure silveractually paid in England may have purchased a bill for a greaternumber of ounces of pure silver to be paid in Holland, and theman who was supposed to give may in reality have got thepremium. The French coin was, before the late reformation of theEnglish gold coin, much less worn than the English, and wasperhaps two or three per cent nearer its standard. If the computedexchange with France, therefore, was not more than two or threeper cent against England, the real exchange might have been in itsfavour. Since the reformation of the gold coin, the exchange hasbeen constantly in favour of England, and against France.

Secondly, in some countries, the expense of coinage is defrayedby the government; in others, it is defrayed by the private peoplewho carry their bullion to the mint, and the government evenderives some revenue from the coinage. In England, it is defrayedby the government, and if you carry a pound weight of standardsilver to the mint, you get back sixty-two shillings, containing apound weight of the like standard silver. In France, a duty of eightper cent is deducted for the coinage, which not only defrays theexpense of it, but affords a small revenue to the government. InEngland, as the coinage costs nothing; the current coin can never



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be much more valuable than the quantity of bullion which itactually 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 a certain weight ofpure silver, is more valuable than a sum of English moneycontaining an equal weight of pure silver, and must require morebullion, or other commodities, to purchase it. Though the currentcoin of the two countries, therefore, were equally near thestandards of their respective mints, a sum of English money couldnot well purchase a sum of French money containing an equalnumber of ounces of pure silver, nor consequently a bill uponFrance for such a sum. If for such a bill no more additional moneywas paid than what was sufficient to compensate the expense ofthe French coinage, the real exchange might be at par betweenthe two countries, their debts and credits might mutuallycompensate one another, while the computed exchange wasconsiderably in favour of France. If less than this was paid, thereal exchange might be in favour of England, while the computedwas 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 callbank money; while in others, as at London, Lisbon, Antwerp,Leghorn, etc., they are paid in the common currency of thecountry. What is called bank money is always of more value thanthe same nominal sum of common currency. A thousand guildersin the Bank of Amsterdam, for example, are of more value than athousand guilders of Amsterdam currency. The differencebetween them is called the agio of the bank, which, at Amsterdam,is generally about five per cent. Supposing the current money of



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the two countries equally near to the standard of their respectivemints, and that the one pays foreign bills in this commoncurrency, while the other pays them in bank money, it is evidentthat the computed exchange may be in favour of that which paysin bank money, though the real exchange should be in favour ofthat which pays in current money; for the same reason that thecomputed exchange may be in favour of that which pays in bettermoney, or in money nearer to its own standard, though the realexchange should be in favour of that which pays in worse. Thecomputed 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 calledbank money. It will by no means follow, however, that the realexchange was against it. Since the reformation of the gold coin, ithas been in favour of London even with those places. Thecomputed exchange has generally been in favour of London withLisbon, 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 thiscurrency, therefore, be at any time worn, clipt, or otherwisedegraded below its standard value, the state by a reformation of itscoin can effectually re-establish its currency. But the currency of asmall state, such as Genoa or Hamburg, can seldom consistaltogether in its own coin, but must be made up, in a great



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measure, of the coins of all the neighbouring states with which itsinhabitants have a continual intercourse. Such a state, therefore,by reforming its coin, will not always be able to reform itscurrency. If foreign bills of exchange are paid in this currency, theuncertain value of any sum, of what is in its own nature souncertain, must render the exchange always very much againstsuch a state, its currency being, in all foreign states, necessarilyvalued even below what it is worth.

In order to remedy the inconvenience to which thisdisadvantageous exchange must have subjected their merchants,such small states, when they began to attend to the interest oftrade, have frequently enacted, that foreign bills of exchange of acertain value should be paid not in common currency, but by anorder 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, andNuremberg, seem to have been all originally established with thisview, though some of them may have afterwards been madesubservient to other purposes.

The money of such banks being better than the commoncurrency of the country, necessarily bore an agio, which wasgreater or smaller according as the currency was supposed to bemore or less degraded below the standard of the state. The agio ofthe Bank of Hamburg, for example, which is said to be commonlyabout fourteen per cent is the supposed difference between thegood standard money of the state, and the clipt, worn, anddiminished currency poured into it from all the neighbouring



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states.Before 1609 the great quantity of clipt and worn foreign coin,

which the extensive trade of Amsterdam brought from all parts ofEurope, reduced the value of its currency about nine per centbelow that of good money fresh from the mint. Such money nosooner appeared than it was melted down or carried away, as italways is in such circumstances. The merchants, with plenty ofcurrency, could not always find a sufficient quantity of goodmoney 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 inconveniences, a bank wasestablished in 1609 under the guarantee of the city. This bankreceived both foreign coin, and the light and worn coin of thecountry at its real intrinsic value in the good standard money ofthe country, deducting only so much as was necessary fordefraying the expense of coinage, and the other necessary expenseof management. For the value which remained, after this smalldeduction was made, it gave a credit in its books. This credit wascalled bank money, which, as it represented money exactlyaccording to the standard of the mint, was always of the same realvalue, and intrinsically worth more than current money. It was atthe same time enacted, that all bills drawn upon or negotiated atAmsterdam of the value of six hundred guilders and upwardsshould be paid in bank money, which at once took away alluncertainty in the value of those bills. Every merchant, inconsequence of this regulation, was obliged to keep an accountwith the bank in order to pay his foreign bills of exchange, whichnecessarily occasioned a certain demand for bank money.



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Bank money, over and above its intrinsic superiority tocurrency, and the additional value which this demand necessarilygives it, has likewise some other advantages. It is secure from fire,robbery, and other accidents; the city of Amsterdam is bound forit; it can be paid away by a simple transfer, without the trouble ofcounting, or the risk of transporting it from one place to another.In consequence of those different advantages, it seems from thebeginning to have borne agio, and it is generally believed that allthe money originally deposited in the bank was allowed to remainthere, nobody caring to demand payment of a debt which he couldsell for a premium in the market. By demanding payment of thebank, the owner of a bank credit would lose this premium. As ashilling fresh from the mint will buy no more goods in the marketthan one of our common worn shillings, so the good and truemoney which might be brought from the coffers of the bank intothose of a private person, being mixed and confounded with thecommon currency of the country, would be of no more value thanthat currency from which it could no longer be readilydistinguished. While it remained in the coffers of the bank, itssuperiority was known and ascertained. When it had come intothose of a private person, its superiority could not well beascertained without more trouble than perhaps the difference wasworth. By being brought from the coffers of the bank, besides, itlost all the other advantages of bank money; its security, its easyand safe transferability, its use in paying foreign bills of exchange.Over and above all this, it could not be brought from those coffers,as it will appear by and by, without previously paying for thekeeping.

Those deposits of coin, or those deposits which the bank was



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bound to restore in coin, constituted the original capital of thebank, or the whole value of what was represented by what is calledbank money. At present they are supposed to constitute but a verysmall part of it. In order to facilitate the trade in bullion, the bankhas been for these many years in the practice of giving credit in itsbooks upon deposits of gold and silver bullion. This credit isgenerally about five per cent below the mint price of such bullion.

The bank grants at the same time what is called a recipe orreceipt, entitling the person who makes the deposit, or the bearer,to take out the bullion again at any time within six months, uponre-transferring to the bank a quantity of bank money equal to thatfor which credit had been given in its books when the deposit wasmade, and upon paying one-fourth per cent for the keeping, if thedeposit was in silver; and one-half per cent if it was in gold; but atthe same time declaring that, in default of such payment, andupon the expiration of this term, the deposit should belong to thebank at the price at which it had been received, or for which credithad been given in the transfer books. What is thus paid for thekeeping of the deposit may be considered as a sort of warehouserent; and why this warehouse rent should be so much dearer forgold than for silver, several different reasons have been assigned.The fineness of gold, it has been said, is more difficult to beascertained than that of silver. Frauds are more easily practised,and occasion a greater loss in the more precious metal. Silver,besides, being the standard metal, the state, it has been said,wishes to encourage more the making of deposits of silver thanthose of gold.

Deposits of bullion are most commonly made when the price issomewhat lower than ordinary; and they are taken out again when



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it happens to rise. In Holland the market price of bullion isgenerally above the mint price, for the same reason that it was soin England before the late reformation of the gold coin. Thedifference is said to be commonly from about six to sixteen stiversupon the mark, or eight ounces of silver of eleven parts fine andone part alloy. The bank price, or the credit which the bank givesfor deposits of such silver (when made in foreign coin, of which thefineness is well known and ascertained, such as Mexico dollars), istwenty-two guilders the mark; the mint price is about twenty-threeguilders, and the market price is from twenty-three guilders six totwenty-three guilders sixteen stivers, or from two to three per centabove the mint price.1 The proportions between the bank price,

1 The following are the prices at which the Bank of Amsterdam at present

(September, 1775) receives bullion and coin of different kind:–

SILVER

Mexico dollars Guilders

French crowns B-22 per mark

English silver coin

Mexico dollars new coin 21 10

Ducatoons 3

Rix dollars 2 8

Bar silver containing eleven-twelfths fine silver 21 per mark, and in this

proportion down to 1/4 fine, on which 5 guilders are given.

Fine bars, 93 per mark.



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the mint price, and the market price of gold bullion are nearly thesame. A person can generally sell his receipt for the differencebetween the mint price of bullion and the market price. A receiptfor bullion is almost always worth something, and it very seldomhappens, therefore, that anybody suffers his receipt to expire, orallows his bullion to fall to the bank at the price at which it hadbeen received, either by not taking it out before the end of the sixmonths, or by neglecting to pay the one-fourth or one-half per centin 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 thekeeping of the more precious metal.

The person who by making a deposit of bullion obtains both abank credit and receipt, pays his bills of exchange as they becomedue with his bank credit; and either sells or keeps his receipt

GOLD

Portugal coin

Guineas B-310 per mark

Louis d’ors new

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.



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according as he judges that the price of bullion is likely to rise orto fall. The receipt and the bank credit seldom keep long together,and there is no occasion that they should. The person who has areceipt, and who wants to take out bullion, finds always plenty ofbank credits, or bank money to buy at the ordinary price; and theperson who has bank money, and wants to take out bullion, findsreceipts always in equal abundance.

The owners of bank credits, and the holders of receipts,constitute two different sorts of creditors against the bank. Theholder of a receipt cannot draw out the bullion for which it isgranted, without reassigning to the bank a sum of bank moneyequal to the price at which the bullion had been received. If he hasno bank money of his own, he must purchase it of those who haveit. The owner of bank money cannot draw out bullion withoutproducing to the bank receipts for the quantity which he wants. Ifhe 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 whichthe mint price is five per cent above the bank price. The agio offive per cent therefore, which he commonly pays for it, is paid notfor an imaginary but for a real value. The owner of bank money,when he purchases a receipt, purchases the power of taking out aquantity of bullion of which the market price is commonly fromtwo to three per cent above the mint price. The price which hepays for it, therefore, is paid likewise for a real value. The price ofthe receipt, and the price of the bank money, compound or makeup between them the full value or price of the bullion.

Upon deposits of the coin current in the country, the bankgrants receipts likewise as well as bank credits; but those receipts



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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 threeguilders only, or five per cent below their current value. It grants areceipt likewise entitling the bearer to take out the number ofducatoons deposited at any time within six months, upon payingone-fourth per cent for the keeping. This receipt will frequentlybring no price in the market. Three guilders bank moneygenerally sell in the market for three guilders three stivers, the fullvalue of the ducatoons, if they were taken out of the bank; andbefore they can be taken out, one-fourth per cent must be paid forthe 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 threeper cent such receipts might bring some price in the market, andmight sell for one and three-fourths per cent. But the agio of thebank being now generally about five per cent such receipts arefrequently allowed to expire, or as they express it, to fall to thebank. The receipts which are given for deposits of gold ducats fallto it yet more frequently, because a higher warehouse-rent, orone-half per cent must be paid for the keeping of them before theycan be taken out again.

The five per cent which the bank gains, when deposits either ofcoin or bullion are allowed to fall to it, may be considered as thewarehouse-rent for the perpetual keeping of such deposits.

The sum of bank money for which the receipts are expired mustbe very considerable. It must comprehend the whole originalcapital of the bank, which, it is generally supposed, has beenallowed to remain there from the time it was first deposited,nobody caring either to renew his receipt or to take out his



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deposit, as, for the reasons already assigned, neither the one northe other could be done without loss. But whatever may be theamount of this sum, the proportion which it bears to the wholemass of bank money is supposed to be very small. The Bank ofAmsterdam has for these many years past been the greatwarehouse of Europe for bullion, for which the receipts are veryseldom allowed to expire, or, as they express it, to fall to the bank.far greater part of the bank money, or of the credits upon thebooks of the bank, is supposed to have been created, for thesemany years past, by such deposits which the dealers in bullion arecontinually both making and withdrawing.

No demand can be made upon the bank but by means of arecipe or receipt. The smaller mass of bank money, for which thereceipts are expired, is mixed and confounded with the muchgreater mass for which they are still in force; so that, though theremay be a considerable sum of bank money for which there are noreceipts, there is no specific sum or portion of it which may not atany time be demanded by one. The bank cannot be debtor to twopersons for the same thing; and the owner of bank money who hasno receipt cannot demand payment of the bank till he buys one. Inordinary and quiet times, he can find no difficulty in getting one tobuy at the market price, which generally corresponds with theprice at which he can sell the coin or bullion it entities him to takeout of the bank.

It might be otherwise during a public calamity; an invasion, forexample, such as that of the French in 1672. The owners of bankmoney being then all eager to draw it out of the bank, in order tohave it their own keeping, the demand for receipts might raisetheir price to an exorbitant height. The holders of them might



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form expectations, and, instead of two or three per cent, demandhalf the bank money for which credit had been given upon thedeposits that the receipts had respectively been granted for. Theenemy, informed of the constitution of the bank, might even buythem up, in order to prevent the carrying away of the treasure. Insuch emergencies, the bank, it is supposed, would break throughits ordinary rule of making payment only to the holders ofreceipts. The holders of receipts, who had no bank money, musthave received within two or three per cent of the value of thedeposit for which their respective receipts had been granted. Thebank, therefore, it is said, would in this case make no scruple ofpaying, either with money or bullion, the full value of what theowners of bank money who could get no receipts were credited forin its books; paying at the same time two or three per cent to suchholders of receipts as had no bank money, that being the wholevalue which in this state of things could justly be supposed due tothem.

Even in ordinary and quiet times it is the interest of the holdersof receipts to depress the agio, in order either to buy bank money(and consequently the bullion, which their receipts would thenenable them to take out of the bank) so much cheaper, or to selltheir receipts to those who have bank money, and who want totake out bullion, so much dearer; the price of a receipt beinggenerally equal to the difference between the market price of bankmoney, and that of the coin or bullion for which the receipt hadbeen granted. It is the interest of the owners of bank money, onthe contrary, to raise the agio, in order either to sell their bankmoney so much dearer, or to buy a receipt so much cheaper. Toprevent the stock-jobbing tricks which those opposite interests



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might sometimes occasion, the bank has of late years come to theresolution to sell at all times bank money for currency, at five percent agio, and to buy it in again at four per cent agio. Inconsequence of this resolution, the agio can never either riseabove five or sink below four per cent, and the proportion betweenthe market price of bank and that of current money is kept at alltimes very near to the proportion between their intrinsic values.Before this resolution was taken, the market price of bank moneyused sometimes to rise so high as nine per cent agio, andsometimes to sink so low as par, according as opposite interestshappened to influence the market.

The Bank of Amsterdam professes to lend out no part of what isdeposited with it, but, for every guilder for which it gives credit inits books, to keep in its repositories the value of a guilder either inmoney or bullion. That it keeps in its repositories all the money orbullion for which there are receipts in force, for which it is at alltimes liable to be called upon, and which, in reality, is continuallygoing from it and returning to it again, cannot well be doubted.But whether it does so likewise with regard to that part of itscapital, for which the receipts are long ago expired, for which inordinary and quiet times it cannot be called upon, and which inreality is very likely to remain with it for ever, or as long as theStates of the United Provinces subsist, may perhaps appear moreuncertain. At Amsterdam, however, no point of faith is betterestablished than that for every guilder, circulated as bank money,there is a correspondent guilder in gold or silver to be found in thetreasure of the bank. The city is guarantee that it should be so.The bank is under the direction of the four reigning burgomasterswho are changed every year. Each new set of burgomasters visits



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the treasure, compares it with the books, receives it upon oath,and delivers it over, with the same awful solemnity, to the setwhich succeeds; and in that sober and religious country oaths arenot yet disregarded. A rotation of this kind seems alone a sufficientsecurity against any practices which cannot be avowed.

Amidst all the revolutions which faction has ever occasioned inthe government of Amsterdam, the prevailing party has at no timeaccused their predecessors of infidelity in the administration ofthe bank. No accusation could have affected more deeply thereputation and fortune of the disgraced party, and if such anaccusation could have been supported, we may be assured that itwould have been brought.

In 1672, when the French king was at Utrecht, the Bank ofAmsterdam paid so readily as left no doubt of the fidelity withwhich it had observed its engagements. Some of the pieces whichwere then brought from its repositories appeared to have beenscorched with the fire which happened in the town-house soonafter the bank was established. Those pieces, therefore, must havelain there from that time.

What may be the amount of the treasure in the bank is aquestion which has long employed speculations of the curious.Nothing but conjecture can be offered concerning it. It is generallyreckoned that there are about two thousand people who keepaccounts with the bank, and allowing them to have, one withanother, the value of fifteen hundred pounds sterling lying upontheir respective accounts (a very large allowance), the wholequantity of bank money, and consequently of treasure in the bank,will amount to about three millions sterling, or, at eleven guildersthe pound sterling, thirty-three millions of guilders—a great sum,



638

and sufficient to carry on a very extensive circulation, but vastlybelow the extravagant ideas which some people have formed ofthis treasure.

The city of Amsterdam derives a considerable revenue from thebank. Besides what may be called the warehouse-rent abovementioned, each person, upon first opening an account with thebank, pays a fee of ten guilders; and for every new account threeguilders three stivers; for every transfer two stivers; and if thetransfer is for less than three hundred guilders, six stivers, inorder to discourage the multiplicity of small transactions. Theperson who neglects to balance his account twice in the yearforfeits twenty-five guilders. The person who orders a transfer formore than is upon his account, is obliged to pay three per cent forthe sum overdrawn, and his order is set aside into the bargain.The bank is supposed, too, to make a considerable profit by thesale of the foreign coin or bullion which sometimes falls to it by theexpiring of receipts, and which is always kept till it can be soldwith advantage. It makes a profit likewise by selling bank moneyat five per cent agio, and buying it in at four. These differentemoluments amount to a good deal more than what is necessaryfor paying the salaries of officers, and defraying the expense ofmanagement. What is paid for the keeping of bullion upon receiptsis alone supposed to amount to a neat annual revenue of betweenone hundred and fifty thousand and two hundred thousandguilders. Public utility, however, and not revenue, was the originalobject of this institution. Its object was to relieve the merchantsfrom the inconvenience of a disadvantageous exchange. Therevenue which has arisen from it was unforeseen, and may beconsidered as accidental. But it is now time to return from this



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long digression, into which I have been insensibly led inendeavouring to explain the reasons why the exchange betweenthe countries which pay in what is called bank money, and thosewhich pay in common currency, should generally appear to be infavour of the former and against the latter. The former pay in aspecies of money of which the intrinsic value is always the same,and exactly agreeable to the standard of their respective mints; thelatter is a species of money of which the intrinsic value iscontinually varying, and is almost always more or less below thatstandard.

PART 2

Of the Unreasonableness of those extraordinary Restraintsupon other Principles

n the foregoing part of this chapter I have endeavoured toshow, 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 balanceof trade is supposed to be disadvantageous.

Nothing, however, can be more absurd than this whole doctrineof the balance of trade, upon which, not only these restraints, butalmost all the other regulations of commerce are founded. Whentwo places trade with one another, this doctrine supposes that, ifthe balance be even, neither of them either loses or gains; but if itleans in any degree to one side, that one of them loses and theother gains in proportion to its declension from the exactequilibrium. Both suppositions are false. A trade which is forced

I



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by means of bounties and monopolies may be and commonly isdisadvantageous to the country in whose favour it is meant to beestablished, as I shall endeavour to show hereafter. But that tradewhich, without force or constraint, is naturally and regularlycarried on between any two places is always advantageous, thoughnot always equally so, to both.

By advantage or gain, I understand not the increase of thequantity of gold and silver, but that of the exchangeable value ofthe annual produce of the land and labour of the country, or theincrease of the annual revenue of its inhabitants.

If the balance be even, and if the trade between the two placesconsist altogether in the exchange of their native commodities,they will, upon most occasions, not only both gain, but they willgain equally, or very near equally; each will in this case afford amarket for a part of the surplus produce of the other; each willreplace a capital which had been employed in raising andpreparing for the market this part of the surplus produce of theother, and which had been distributed among, and given revenueand maintenance to a certain number of its inhabitants. Some partof the inhabitants of each, therefore, will indirectly derive theirrevenue and maintenance from the other. As the commoditiesexchanged, too, are supposed to be of equal value, so the twocapitals employed in the trade will, upon most occasions, be equal,or very nearly equal; and both being employed in raising thenative commodities of the two countries, the revenue andmaintenance which their distribution will afford to the inhabitantsof each will be equal, or very nearly equal.

This revenue and maintenance, thus mutually afforded, will begreater or smaller in proportion to the extent of their dealings. If



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these should annually amount to an hundred thousand pounds, forexample, or to a million on each side, each of them would afford anannual revenue in the one case of an hundred thousand pounds, inthe other of a million, to the inhabitants of the other.

If their trade should be of such a nature that one of themexported to the other nothing but native commodities, while thereturns of that other consisted altogether in foreign goods; thebalance, in this case, would still be supposed even, commoditiesbeing paid for with commodities. They would, in this case too,both gain, but they would not gain equally; and the inhabitants ofthe country which exported nothing but native commodities wouldderive the greatest revenue from the trade. If England, forexample, should import from France nothing but the nativecommodities of that country, and, not having such commodities ofits own as were in demand there, should annually repay them bysending thither a large quantity of foreign goods, tobacco, we shallsuppose, and East India goods; this trade, though it would givesome revenue to the inhabitants of both countries, would givemore to those of France than to those of England. The wholeFrench capital annually employed in it would annually bedistributed among the people of France. But that part of theEnglish capital only which was employed in producing the Englishcommodities with which those foreign goods were purchasedwould be annually distributed among the people of England. Thegreater part of it would replace the capitals which had beenemployed in Virginia, Indostan, and China, and which had givenrevenue and maintenance to the of those distant countries. If thecapitals were equal, or nearly equal, therefore this employment ofthe French capital would augment much more the revenue of the



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people of France than that of the English capital would therevenue of the people of England. France would in this case carryon a direct foreign trade of consumption with England; whereasEngland would carry on a round-about trade of the same kindwith France. The different effects of a capital employed in thedirect and of one employed in the round-about foreign trade ofconsumption have already been fully explained.

There is not, probably, between any two countries a tradewhich consists altogether in the exchange either of nativecommodities on both sides, or of native commodities on one sideand of foreign goods on the other. Almost all countries exchangewith one another partly native and partly foreign goods. Thatcountry, however, in whose cargoes there is the greatestproportion of native, and the least of foreign goods, will always bethe principal gainer.

If it was not with tobacco and East India goods, but with goldand silver, that England paid for the commodities annuallyimported from France, the balance, in this case, would besupposed uneven, commodities not being paid for withcommodities, but with gold and silver. The trade, however, would,in this case, as in the foregoing, give some revenue to theinhabitants of both countries, but more to those of France than tothose of England. It would give some revenue to those of England.The capital which had been employed in producing the Englishgoods that purchased this gold and silver, the capital which hadbeen distributed among, and given revenue to, certain inhabitantsof England, would thereby be replaced and enabled to continuethat employment. The whole capital of England would no more bediminished by this exportation of gold and silver than by the



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exportation of an equal value of any other goods. On the contrary,it would in most cases be augmented. No goods are sent abroadbut those for which the demand is supposed to be greater abroadthan at home, and of which the returns consequently, it isexpected, will be of more value at home than the commoditiesexported. If the tobacco which, in England, is worth only ahundred thousand pounds, when sent to France will purchasewine which is, in England, worth a hundred and ten thousand, thisexchange will equally augment the capital of England by tenthousand pounds. If a hundred thousand pounds of English gold,in the same manner, purchase French wine which, in England, isworth a hundred and ten thousand, this exchange will equallyaugment the capital of England by ten thousand pounds. As amerchant who has a hundred and ten thousand pounds worth ofwine in his cellar is a richer man than he who has only a hundredthousand pounds worth of tobacco in his warehouse, so is helikewise a richer man than he who has only a hundred thousandpounds worth of gold in his coffers. He can put into motion agreater quantity of industry, and give revenue, maintenance, andemployment to a greater number of people than either of the othertwo. But the capital of the country is equal to the capitals of all itsdifferent inhabitants, and the quantity of industry which can beannually maintained in it is equal to what all those differentcapitals can maintain. Both the capital of the country, therefore,and the quantity of industry which can be annually maintained init, must generally be augmented by this exchange. It would,indeed, be more advantageous for England that it could purchasethe wines of France with its own hardware and broadcloth thanwith either the tobacco of Virginia or the gold and silver of Brazil



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and Peru. A direct foreign trade of consumption is always moreadvantageous than a roundabout one. But a round-about foreigntrade of consumption, which is carried on with gold and silver,does not seem to be less advantageous than any other equallyround-about one. Neither is a country which has no mines morelikely to be exhausted of gold and silver by this annual exportationof those metals than one which does not grow tobacco by the likeannual exportation of that plant. As a country which haswherewithal to buy tobacco will never be long in want of it, soneither will one be long in want of gold and silver which haswherewithal to purchase those metals.

It is a losing trade, it is said, which a workman carries on withthe alehouse; and the trade which a manufacturing nation wouldnaturally carry on with a wine country may be considered as atrade of the same nature. I answer, that the trade with thealehouse is not necessarily a losing trade. In its own nature it isjust as advantageous as any other, though perhaps somewhatmore liable to be abused. The employment of a brewer, and eventhat of a retailer of fermented liquors, are as necessary divisions oflabour as any other. It will generally be more advantageous for aworkman to buy of the brewer the quantity he has occasion forthan to brew it himself, and if he is a poor workman, it willgenerally be more advantageous for him to buy it by little and littleof the retailer than a large quantity of the brewer. He may nodoubt buy too much of either, as he may of any other dealers in hisneighbourhood, of the butcher, if he is a glutton, or of the draper,if he affects to be a beau among his companions. It isadvantageous to the great body of workmen, notwithstanding, thatall these trades should be free, though this freedom may be abused



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in all of them, and is more likely to be so, perhaps, in some than inothers. Though individuals, besides, may sometimes ruin theirfortunes by an excessive consumption of fermented liquors, thereseems to be no risk that a nation should do so. Though in everycountry there are many people who spend upon such liquors morethan they can afford, there are always many more who spend less.It deserves to be remarked too, that, if we consult experience, thecheapness of wine seems to be a cause, not of drunkenness, but ofsobriety. The inhabitants of the wine countries are in general thesoberest people in Europe; witness the Spaniards, the Italians, andthe 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 bybeing profuse of a liquor which is as cheap as small beer. On thecontrary, in the countries which, either from excessive heat orcold, produce no grapes, and where wine consequently is dear anda rarity, drunkenness is a common vice, as among the northernnations, and all those who live between the tropics, the negroes,for example, on the coast of Guinea. When a French regimentcomes from some of the northern provinces of France, where wineis somewhat dear, to be quartered in the southern, where it is verycheap, the soldiers, I have frequently heard it observed are at firstdebauched by the cheapness and novelty of good wine; but after afew months’ residence, the greater part of them become as soberas the rest of the inhabitants. Were the duties upon foreign wines,and the excises upon malt, beer, and ale to be taken away all atonce, it might, in the same manner, occasion in Great Britain apretty general and temporary drunkenness among the middlingand inferior ranks of people, which would probably be soon



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followed by a permanent and almost universal sobriety. At presentdrunkenness is by no means the vice of people of fashion, or ofthose who can easily afford the most expensive liquors. Agentleman drunk with ale has scarce ever been seen among us.The restraints upon the wine trade in Great Britain, besides, donot so much seem calculated to hinder the people from going, if Imay say so, to the alehouse, as from going where they can buy thebest 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, andshould therefore be encouraged in preference to them. As theygive us their custom, it is pretended, we should give them ours.The sneaking arts of underling tradesmen are thus erected intopolitical maxims for the conduct of a great empire: for it is themost underling tradesmen only who make it a rule to employchiefly their own customers. A great trader purchases his goodsalways where they are cheapest and best, without regard to anylittle interest of this kind.

By such maxims as these, however, nations have been taughtthat their interest consisted in beggaring all their neighbours.Each nation has been made to look with an invidious eye upon theprosperity of all the nations with which it trades, and to considertheir gain as its own loss. Commerce, which ought naturally to be,among nations, as among individuals, a bond of union andfriendship, has become the most fertile source of discord andanimosity. The capricious ambition of kings and ministers has not,during the present and the preceding century, been more fatal tothe repose of Europe than the impertinent jealousy of merchantsand manufacturers. The violence and injustice of the rulers of



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mankind is an ancient evil, for which, I am afraid, the nature ofhuman affairs can scarce admit of a remedy. But the meanrapacity, the monopolizing spirit of merchants and manufacturers,who neither are, nor ought to be, the rulers of mankind, though itcannot perhaps be corrected may very easily be prevented fromdisturbing the tranquillity of anybody but themselves.

That it was the spirit of monopoly which originally bothinvented and propagated this doctrine cannot be doubted; andthey who first taught it were by no means such fools as they whobelieved it. In every country it always is and must be the interestof the great body of the people to buy whatever they want of thosewho sell it cheapest. The proposition is so very manifest that itseems ridiculous to take any pains to prove it; nor could it everhave been called in question had not the interested sophistry ofmerchants and manufacturers confounded the common sense ofmankind.

Their interest is, in this respect, directly opposite to that of thegreat body of the people. As it is the interest of the freemen of acorporation to hinder the rest of the inhabitants from employingany workmen but themselves, so it is the interest of the merchantsand manufacturers of every country to secure to themselves themonopoly of the home market. Hence in Great Britain, and inmost other European countries, the extraordinary duties uponalmost all goods imported by alien merchants. Hence the highduties and prohibitions upon all those foreign manufactures whichcan come into competition with our own. Hence, too, theextraordinary restraints upon the importation of almost all sorts ofgoods from those countries with which the balance of trade issupposed to be disadvantageous; that is, from those against whom



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national animosity happens to be most violently inflamed.The wealth of a neighbouring nation, however, though

dangerous in war and politics, is certainly advantageous in trade.In a state of hostility it may enable our enemies to maintain fleetsand armies superior to our own; but in a state of peace andcommerce it must likewise enable them to exchange with us to agreater value, and to afford a better market, either for theimmediate produce of our own industry, or for whatever ispurchased with that produce. As a rich man is likely to be a bettercustomer to the industrious people in his neighbourhood than apoor, so is likewise a rich nation. A rich man, indeed, who ishimself a manufacturer, is a very dangerous neighbour to all thosewho deal in the same way. All the rest of the neighbourhood,however, by far the greatest number, profit by the good marketwhich his expense affords them. They even profit by hisunderselling the poorer workmen who deal in the same way withhim. The manufacturers of a rich nation, in the same manner, mayno doubt be very dangerous rivals to those of their neighbours.This very competition, however, is advantageous to the great bodyof the people, who profit greatly besides by the good market whichthe great expense of such a nation affords them in every otherway. Private people who want to make a fortune never think ofretiring to the remote and poor provinces of the country, butresort either to the capital, or to some of the great commercialtowns. They know that where little wealth circulates there is littleto be got, but that where a great deal is in motion, some share of itmay fall to them.

The same maxims which would in this manner direct thecommon sense of one, or ten, or twenty individuals, should



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regulate the judgment of one, or ten, or twenty millions, andshould make a whole nation regard the riches of its neighbours asa probable cause and occasion for itself to acquire riches. A nationthat would enrich itself by foreign trade is certainly most likely todo so when its neighbours are all rich, industrious, andcommercial nations. A great nation surrounded on all sides bywandering savages and poor barbarians might, no doubt, acquireriches by the cultivation of its own lands, and by its own interiorcommerce, but not by foreign trade. It seems to have been in thismanner that the ancient Egyptians and the modern Chineseacquired their great wealth. The ancient Egyptians, it is said,neglected foreign commerce, and the modern Chinese, it is known,bold it in the utmost contempt, and scarce deign to afford it thedecent protection of the laws. The modern maxims of foreigncommerce, by aiming at the impoverishment of all our neighbours,so far as they are capable of producing their intended effect, tendto render that very commerce insignificant and contemptible.

It is in consequence of these maxims that the commercebetween France and England has in both countries been subjectedto so many discouragements and restraints. If those two countries,however, were to consider their real interest, without eithermercantile jealousy or national animosity, the commerce of Francemight be more advantageous to Great Britain than that of anyother country, and for the same reason that of Great Britain toFrance. France is the nearest neighbour to Great Britain. In thetrade between the southern coast of England and the northernand north-western coasts of France, the returns might beexpected, in the same manner as in the inland trade, four, five, orsix times in the year. The capital, therefore, employed in this trade



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could in each of the two countries keep in motion four, five, or sixtimes the quantity of industry, and afford employment andsubsistence to four, five, or six times the number of people, whichan equal capital could do in the greater part of the other branchesof foreign trade. Between the parts of France and Great Britainmost remote from one another, the returns might be expected, atleast, once in the year, and even this trade would so far be at leastequally advantageous as the greater part of the other branches ofour foreign European trade. It would be, at least, three times moreadvantageous than the boasted trade with our North Americancolonies, in which the returns were seldom made in less than threeyears, frequently not in less than four or five years.

France, besides, is supposed to contain twenty-four millions ofinhabitants. Our North American colonies were never supposed tocontain more than three millions; and France is a much richercountry than North America; though, on account of the moreunequal distribution of riches, there is much more poverty andbeggary in the one country than in the other. France, therefore,could afford a market at least eight times more extensive, and, onaccount of the superior frequency of the returns, four-and-twentytimes more advantageous than that which our North Americancolonies ever afforded. The trade of Great Britain would be just asadvantageous to France, and, in proportion to the wealth,population, and proximity of the respective countries, would havethe same superiority over that which France carries on with herown colonies. Such is the very great difference between that trade,which the wisdom of both nations has thought proper todiscourage, and that which it has favoured the most.

But the very same circumstances which would have rendered



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an open and free commerce between the two countries soadvantageous to both, have occasioned the principal obstructionsto that commerce. Being neighbours, they are necessarilyenemies, and the wealth and power of each becomes, upon thataccount, more formidable to the other; and what would increasethe advantage of national friendship serves only to inflame theviolence of national animosity. They are both rich and industriousnations; and the merchants and manufacturers of each dread thecompetition of the skill and activity of those of the other.Mercantile jealousy is excited, and both inflames, and is itselfinflamed, by the violence of national animosity; and the traders ofboth countries have announced, with all the passionate confidenceof interested falsehood, the certain ruin of each, in consequence ofthat unfavourable balance of trade, which, they pretend, would bethe infallible effect of an unrestrained commerce with the other.

There is no commercial country in Europe of which theapproaching ruin has not frequently been foretold by thepretended doctors of this system from an unfavourable balance oftrade. After all the anxiety, however, which they have excitedabout this, after all the vain attempts of almost all trading nationsto turn that balance in their own favour and against theirneighbours, it does not appear that any one nation in Europe hasbeen in any respect impoverished by this cause. Every town andcountry, on the contrary, in proportion as they have opened theirports to all nations, instead of being ruined by this free trade, asthe 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 somerespects deserve the name of free ports, there is no country which



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does so. Holland, perhaps, approaches the nearest to thischaracter of any though still very remote from it; and Holland, it isacknowledged, not only derives its whole wealth, but a great partof its necessary subsistence, from foreign trade.

There is another balance, indeed, which has already beenexplained, 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. Thisis the balance of the annual produce and consumption. If theexchangeable value of the annual produce, it has already beenobserved, exceeds that of the annual consumption, the capital ofthe society must annually increase in proportion to this excess.The society in this case lives within its revenue, and what isannually saved out of its revenue is naturally added to its capital,and employed so as to increase still further the annual produce. Ifthe exchangeable value of the annual produce, on the contrary, failshort of the annual consumption, the capital of the society mustannually decay in proportion to this deficiency. The expense of thesociety in this case exceeds its revenue, and necessarilyencroaches upon its capital. Its capital, therefore, must necessarilydecay, and together with it the exchangeable value of the annualproduce of its industry.

This balance of produce and consumption is entirely differentfrom what is called the balance of trade. It might take place in anation which had no foreign trade, but which was entirelyseparated from all the world. It may take place in the whole globeof the earth, of which the wealth, population, and improvementmay be either gradually increasing or gradually decaying.

The balance of produce and consumption may be constantly in



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favour of a nation, though what is called the balance of trade begenerally against it. A nation may import to a greater value than itexports for half a century, perhaps, together; the gold and silverwhich comes into it during an this time may be all immediatelysent out of it; its circulating coin may gradually decay, differentsorts of paper money being substituted in its place, and even thedebts, too, which it contracts in the principal nations with whom itdeals, may be gradually increasing; and yet its real wealth, theexchangeable value of the annual produce of its lands and labour,may, during the same period, have been increasing in a muchgreater proportion. The state of our North American colonies, andof the trade which they carried on with Great Britain, before thecommencement of the present disturbances,* may serve as a proofthat this is by no means an impossible supposition.

*This paragraph was written in the year 1775.



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Chapter IV

Of Drawbacks

erchants and manufacturers are not contented with themonopoly of the home market, but desire likewise themost extensive foreign sale for their goods. Their

country has no jurisdiction in foreign nations, and therefore canseldom procure them any monopoly there. They are generallyobliged, therefore, to content themselves with petitioning forcertain encouragements to exportation.

Of these encouragements what are called Drawbacks seem tobe the most reasonable. To allow the merchant to draw back uponexportation, either the whole or a part of whatever excise or inlandduty is imposed upon domestic industry, can never occasion theexportation of a greater quantity of goods than what would havebeen exported had no duty been imposed. Such encouragementsdo not tend to turn towards any particular employment a greatershare of the capital of the country than what would go to thatemployment of its own accord, but only to hinder the duty fromdriving away any part of that share to other employments. Theytend not to overturn that balance which naturally establishes itselfamong all the various employments of the society; but to hinder itfrom being overturned by the duty. They tend not to destroy, butto preserve what it is in most cases advantageous to preserve, thenatural 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

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generally amount to by much the largest part of the duty uponimportation. By the second of the rules annexed to the Act ofParliament which imposed what is now called the Old Subsidy,every merchant, whether English or alien, was allowed to drawback half that duty upon exportation; the English merchant,provided the exportation took place within twelve months; thealien, provided it took place within nine months. Wines, currants,and wrought silks were the only goods which did not fall withinthis rule, having other and more advantageous allowances. Theduties imposed by this Act of Parliament were at that time theonly duties upon the importation of foreign goods. The termwithin which this and all other drawbacks could be claimed wasafterwards (by the 7th George I, c. 21, sect. 10) extended to threeyears.

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 ofexceptions, and the doctrine of drawbacks has become a much lesssimple matter than it was at their first institution.

Upon the exportation of some foreign goods, of which it wasexpected that the importation would greatly exceed what wasnecessary for the home consumption, the whole duties are drawnback, without retaining even half the Old Subsidy. Before therevolt of our North American colonies, we had the monopoly of thetobacco of Maryland and Virginia. We imported about ninety-sixthousand hogsheads, and the home consumption was notsupposed to exceed fourteen thousand. To facilitate the greatexportation which was necessary, in order to rid us of the rest, thewhole duties were drawn back, provided the exportation took



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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 areexported within a year, therefore, all the duties upon importationare drawn back, and if exported within three years all the duties,except half the Old Subsidy, which still continues to be retainedupon the exportation of the greater part of goods. Though theimportation of sugar exceeds, a good deal, what is necessary forthe home consumption, the excess is inconsiderable in comparisonof what it used to be in tobacco.

Some goods, the particular objects of the jealousy of our ownmanufacturers, are prohibited to be imported for homeconsumption. They may, however, upon paying certain duties, beimported and warehoused for exportation. But upon suchexportation, no part of these duties are drawn back. Ourmanufacturers are unwilling, it seems, that even this restrictedimportation should be encouraged, and are afraid lest some part ofthese goods should be stolen out of the warehouse, and thus comeinto competition with their own. It is under these regulations onlythat 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, andchoose rather to forego a profit to ourselves than to suffer those,whom we consider as our enemies, to make any profit by ourmeans. Not only half the Old Subsidy, but the second twenty-fiveper cent, is retained upon the exportation of all French goods.

By the fourth of the rules annexed to the Old Subsidy, thedrawback allowed upon the exportation of all wines amounted to agreat deal more than half the duties which were, at that time, paid



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upon their importation; and it seems, at that time, to have beenthe object of the legislature to give somewhat more than ordinaryencouragement to the carrying trade in wine. Several of the otherduties too, which were imposed either at the same time, orsubsequent to the Old Subsidy—what is called the additional duty,the New Subsidy, the One-third and Two-thirds Subsidies, theimpost 1692, the coinage on wine—were allowed to be whollydrawn back upon exportation. All those duties, however, exceptthe additional duty and impost 1692, being paid down in readymoney, upon importation, the interest of so large a sumoccasioned an expense, which made it unreasonable to expect anyprofitable carrying trade in this article. Only a part, therefore, ofthe duty called the impost on wine, and no part of the twenty-fivepounds the ton upon French wines, or of the duties imposed in1745, in 1763, and in 1778, were allowed to be drawn back uponexportation. The two imposts of five per cent, imposed in 1779 and1781, upon all the former duties of customs, being allowed to bewholly drawn back upon the exportation of all other goods, werelikewise allowed to be drawn back upon that of wine. The last dutythat has been particularly imposed upon wine, that of 1780, isallowed to be wholly drawn back, an indulgence which, when somany heavy duties are retained, most probably could neveroccasion the exportation of a single ton of wine. These rules takeplace with regard to all places of lawful exportation, except theBritish colonies in America.

The 15th Charles II, c. 7, called An Act for the Encouragementof Trade, had given Great Britain the monopoly of supplying thecolonies with all the commodities of the growth or manufacture ofEurope; and consequently with wines. In a country of so extensive



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a coast as our North American and West Indian colonies, whereour authority was always so very slender, and where theinhabitants were allowed to carry out, in their own ships, theirnon-enumerated commodities, at first to all parts of Europe, andafterwards to all parts of Europe south of Cape Finisterre, it is notvery probable that this monopoly could ever be much respected;and they probably, at all times, found means of bringing backsome cargo from the countries to which they were allowed to carryout one. They seem, however, to have found some difficulty inimporting European wines from the places of their growth, andthey could not well import them from Great Britain where theywere loaded with many heavy duties, of which a considerable partwas not drawn back upon exportation. Madeira wine, not being aEuropean commodity, could be imported directly into Americaand the West Indies, countries which, in all their non-enumeratedcommodities, enjoyed a free trade to the island of Madeira. Thesecircumstances had probably introduced that general taste forMadeira wine, which our officers found established in all ourcolonies 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 theconclusion of that war, in 1763 (by the 4th George III, c. 15, sect.12), all the duties, except £3 10s., were allowed to be drawn backupon the exportation to the colonies of all wines, except Frenchwines, to the commerce and consumption of which nationalprejudice would allow no sort of encouragement. The periodbetween the granting of this indulgence and the revolt of ourNorth American colonies was probably too short to admit of anyconsiderable change in the customs of those countries.



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The same act, which, in the drawback upon all wines, exceptFrench wines, thus favoured the colonies so much more thanother countries; in those upon the greater part of othercommodities favoured them much less. Upon the exportation ofthe greater part of commodities to other countries, half the oldsubsidy was drawn back. But this law enacted that no part of thatduty should be drawn back upon the exportation to the colonies ofany commodities, of the growth or manufacture either of Europeor the East Indies, except wines, white calicoes, and muslins.

Drawbacks were, perhaps, originally granted for theencouragement of the carrying trade, which, as the freight of theships is frequently paid by foreigners in money, was supposed tobe peculiarly fitted for bringing gold and silver into the country.But though the carrying trade certainly deserves no peculiarencouragement, though the motive of the institution was perhapsabundantly foolish, the institution itself seems reasonable enough.

Such drawbacks cannot force into this trade a greater share ofthe capital of the country than what would have gone to it of itsown accord had there been no duties upon importation. They onlyprevent its being excluded altogether by those duties. Thecarrying trade, though it deserves no preference, ought not to beprecluded, but to be left free like all other trades. It is a necessaryresource for those capitals which cannot find employment eitherin the agriculture or in the manufactures of the country, either inits home trade or in its foreign trade of consumption.

The revenue of the customs, instead of suffering, profits fromsuch drawbacks by that part of the duty which is retained. If thewhole duties had been retained, the foreign goods upon whichthey are paid could seldom have been exported, nor consequently



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imported, for want of a market. The duties, therefore, of which apart is retained would never have been paid.

These reasons seem sufficiently to justify drawbacks, and wouldjustify them, though the whole duties, whether upon the produceof domestic industry, or upon foreign goods, were always drawnback 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 anddistribution of labour, which is always more or less disturbed bysuch duties, would be more nearly re-established by such aregulation.

These reasons, however, will justify drawbacks only uponexporting goods to those countries which are altogether foreignand independent, not to those in which our merchants andmanufacturers enjoy a monopoly. A drawback, for example, uponthe exportation of European goods to our American colonies willnot always occasion a greater exportation than what would havetaken place without it. By means of the monopoly which ourmerchants and manufacturers enjoy there, the same quantitymight frequently, perhaps, be sent thither, though the wholeduties were retained. The drawback, therefore, may frequently bepure loss to the revenue of excise and customs, without alteringthe state of the trade, or rendering it in any respect moreextensive. How far such drawbacks can be justified, as a properencouragement to the industry of our colonies, or how far it isadvantageous to the mother country, that they should beexempted from taxes which are paid by all the rest of their fellowsubjects, will appear hereafter when I come to treat the colonies.

Drawbacks, however, it must always be understood, are useful



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only in those cases in which the goods for the exportation of whichthey are given are really exported to some foreign country; andnot clandestinely re-imported into our own. That some drawbacks,particularly those upon tobacco, have frequently been abused inthis manner, and have given occasion to many frauds equallyhurtful both to the revenue and to the fair trader, is well known.



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Chapter V

Of Bounties

ounties upon exportation are, in Great Britain, frequentlypetitioned for, and sometimes granted to the produce ofparticular branches of domestic industry. By means of

them our merchants and manufacturers, it is pretended, will beenabled to sell their goods as cheap, or cheaper than their rivals inthe foreign market. A greater quantity, it is said, will thus beexported, and the balance of trade consequently turned more infavour of our own country. We cannot give our workmen amonopoly in the foreign as we have done in the home market. Wecannot force foreigners to buy their goods as we have done ourown countrymen. The next best expedient, it has been thought,therefore, is to pay them for buying. It is in this manner that themercantile system proposes to enrich the whole country, and toput money into all our pockets by means of the balance of trade.

Bounties, it is allowed, ought to be given to those branches oftrade only which cannot be carried on without them. But everybranch of trade in which the merchant can sell his goods for aprice which replaces to him, with the ordinary profits of stock, thewhole capital employed in preparing and sending them to market,can be carried on without a bounty. Every such branch isevidently upon a level with all the other branches of trade whichare carried on without bounties, and cannot therefore require onemore than they. Those trades only require bounties in which themerchant is obliged to sell his goods for a price which does not

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replace to him his capital, together with the ordinary profit; or inwhich he is obliged to sell them for less than it really costs him tosend them to market. The bounty is given in order to make up thisloss, and to encourage him to continue, or perhaps to begin, atrade of which the expense is supposed to be greater than thereturns, of which every operation eats up a part of the capitalemployed in it, and which is of such a nature that, if all othertrades resembled it, there would soon be no capital left in thecountry.

The trades, it is to be observed, which are carried on by meansof bounties, are the only ones which can be carried on betweentwo nations for any considerable time together, in such a manneras that one of them shall always and regularly lose, or sell its goodsfor less than it really costs to send them to market. But if thebounty did not repay to the merchant what he would otherwiselose upon the price of his goods, his own interest would soonoblige him to employ his stock in another way, or to find out atrade in which the price of the goods would replace to him, withthe ordinary profit, the capital employment in sending them tomarket. The effect of bounties, like that of all the other expedientsof the mercantile system, can only be to force the trade of acountry into a channel much less advantageous than that in whichit would naturally run of its own accord.

The ingenious and well-informed author of the tracts upon thecorn trade has shown very clearly that, since the bounty upon theexportation of corn was first established, the price of the cornexported, valued moderately enough, has exceeded that of thecorn imported, valued very high, by a much greater sum than theamount of the whole bounties which have been paid during that



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period. This, he imagines, upon the true principles of themercantile system, is a clear proof that this forced corn trade isbeneficial to the nation; the value of the exportation exceedingthat of the importation by a much greater sum than the wholeextraordinary expense which the public has been at in order to getit exported. He does not consider that this extraordinary expense,or the bounty, is the smallest part of the expense which theexportation of corn really costs the society. The capital which thefarmer employed in raising it must likewise be taken into theaccount. Unless the price of the corn when sold in the foreignmarkets replaces, not only the bounty, but this capital, togetherwith the ordinary profits of stock, the society is a loser by thedifference, or the national stock is so much diminished. But thevery reason for which it has been thought necessary to grant abounty is the supposed insufficiency of the price to do this.

The average price of corn, it has been said, has fallenconsiderably since the establishment of the bounty. That theaverage price of corn began to fall somewhat towards the end ofthe last century, and has continued to do so during the course ofthe sixty-four first years of the present, I have alreadyendeavoured to show. But this event, supposing it to be as real as Ibelieve it to be, must have happened in spite of the bounty, andcannot possibly have happened in consequence of it. It hashappened in France, as well as in England, though in France therewas not only no bounty, but, till 1764, the exportation of corn wassubjected to a general prohibition. This gradual fall in the averageprice of grain, it is probable, therefore, is ultimately owing neitherto the one regulation nor to the other. but to that gradual andinsensible rise in the real value of silver, which, in the first book in



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this discourse, I have endeavoured to show has taken place in thegeneral market of Europe during the course of the presentcentury. It seems to be altogether impossible that the bounty couldever contribute to lower the price of grain.

In years of plenty, it has already been observed, the bounty, byoccasioning an extraordinary exportation, necessarily keeps upthe price of corn in the home market above what it wouldnaturally fall to. To do so was the avowed purpose of theinstitution. In years of scarcity, though the bounty is frequentlysuspended, yet the great exportation which it occasions in years ofplenty must frequently hinder more or less the plenty of one yearfrom relieving the scarcity of another. Both in years of plenty andin years of scarcity, therefore, the bounty necessarily tends to raisethe money price of corn somewhat higher than it otherwise wouldbe in the home market.

That, in the actual state of tillage, the bounty must necessarilyhave this tendency will not, I apprehend, be disputed by anyreasonable person. But it has been thought by many people that ittends to encourage tillage, and that in two different ways; first, byopening a more extensive foreign market to the corn of the farmer,it tends, they imagine, to increase the demand for, andconsequently the production of that commodity; and secondly, bysecuring to him a better price than he could otherwise expect inthe actual state of tillage, it tends, they suppose, to encouragetillage.

This double encouragement must, they imagine, in a longperiod of years, occasion such an increase in the production ofcorn as may lower its price in the home market much more thanthe bounty can raise it, in the actual state which tillage may, at the



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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, bealtogether at the expense of the home market; as every bushel ofcorn which is exported by means of the bounty, and which wouldnot have been exported without the bounty, would have remainedin the home market to increase the consumption and to lower theprice of that commodity. The corn bounty, it is to be observed, aswell as every other bounty upon exportation, imposes twodifferent taxes upon the people; first, the tax which they areobliged to contribute in order to pay the bounty; and secondly, thetax which arises from the advanced price of the commodity in thehome market, and which, as the whole body of the people arepurchasers of corn, must, in this particular commodity, be paid bythe whole body of the people. In this particular commodity,therefore, this second tax is by much the heavier of the two. Let ussuppose that, taking one year with another, the bounty of fiveshillings upon the exportation of the quarter of wheat raises theprice of that commodity in the home market only sixpence thebushel, or four shillings the quarter, higher than it otherwisewould have been in the actual state of the crop. Even upon thisvery moderate supposition, the great body of the people, over andabove contributing the tax which pays the bounty of five shillingsupon every quarter of wheat exported, must pay another of fourshillings upon every quarter which they themselves consume. But,according to the very well informed author of the tracts upon thecorn trade, the average proportion of the corn exported to thatconsumed at home is not more than that of one to thirty-one. Forevery five shillings, therefore, which they contribute to the



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payment of the first tax, they must contribute six pounds fourshillings to the payment of the second.

So very heavy a tax upon the first necessary of life must eitherreduce the subsistence of the labouring poor, or it must occasionsome augmentation in their pecuniary wages proportionable tothat in the pecuniary price of their subsistence. So far as itoperates in the one way, it must reduce the ability of the labouringpoor to educate and bring up their children, and must, so far, tendto restrain the population of the country. So far as it operates inthe other, it must reduce the ability of the employers of the poor toemploy so great a number as they otherwise might do, and must,so far, tend to restrain the industry of the country. Theextraordinary exportation of corn, therefore, occasioned by thebounty, 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, itsfinal tendency is to stunt and restrain the gradual extension of thehome 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 hasbeen thought, by rendering that commodity more profitable to thefarmer, must necessarily encourage its production.

I answer, that this might be the case if the effect of the bountywas to raise the real price of corn, or to enable the farmer, with anequal quantity of it, to maintain a greater number of labourers inthe same manner, whether liberal, moderate, or scanty, that otherlabourers are commonly maintained in his neighbourhood. Butneither the bounty, it is evident, nor any other human institutioncan have any such effect. It is not the real, but the nominal price of



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corn, which can in any considerable degree be affected by thebounty. And though the tax which that institution imposes uponthe whole body of the people may be very burdensome to thosewho 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 realvalue of corn as to degrade the real value of silver, or to make anequal quantity of it exchange for a smaller quantity, not only ofcorn, but of all other home-made commodities: for the moneyprice of corn regulates that of all other home-made commodities.

It regulates the money price of labour, which must always besuch as to enable the labourer to purchase a quantity of cornsufficient to maintain him and his family either in the liberal,moderate, or scanty manner in which the advancing, stationary, ordeclining circumstances of the society oblige his employers tomaintain him.

It regulates the money price of all the other parts of the rudeproduce of land, which, in every period of improvement, mustbear a certain proportion to that of corn, though this proportion isdifferent in different periods. It regulates, for example, the moneyprice of grass and hay, of butcher’s meat, of horses, and themaintenance of horses, of land carriage consequently, or of thegreater part of the inland commerce of the country.

By regulating the money price of all the other parts of the rudeproduce of land, it regulates that of the materials of almost allmanufactures. By regulating the money price of labour, itregulates that of manufacturing art and industry. And byregulating both, it regulates that of the complete manufacture.The money price of labour, and of everything that is the produceeither of land or labour, must necessarily either rise or fall in



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proportion to the money price of corn.Though in consequence of the bounty, therefore, the farmer

should be enabled to sell his corn for four shillings a bushelinstead of three-and-sixpence, and to pay his landlord a moneyrent proportionable to this rise in the money price of his produce,yet if, in consequence of this rise in the price of corn, four shillingswill purchase no more home-made goods of any other kind thanthree-and-sixpence would have done before, neither thecircumstances of the farmer nor those of the landlord will be muchmended by this change. The farmer will not be able to cultivatemuch better: the landlord will not be able to live much better. Inthe purchase of foreign commodities this enhancement in theprice of corn may give them some little advantage. In that ofhome-made commodities it can give them none at all. And almostthe whole expense of the farmer, and the far greater part even ofthat of the landlord, is in home-made commodities.

That degradation in the value of silver which is the effect of thefertility of the mines, and which operates equally, or very nearequally, through the greater part of the commercial world, is amatter of very little consequence to any particular country. Theconsequent rise of all money prices, though it does not make thosewho receive them really richer, does make them really poorer. Aservice of plate becomes really cheaper, and everything elseremains precisely of the same real value as before.

But that degradation in the value of silver which, being theeffect either of the peculiar situation or of the political institutionsof a particular country, takes place only in that country, is a matterof very great consequence, which, far from tending to makeanybody really richer, tends to make everybody really poorer. The



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rise in the money price of all commodities, which is in this casepeculiar to that country, tends to discourage more or less everysort of industry which is carried on within it, and to enable foreignnations, by furnishing almost all sorts of goods for a smallerquantity of silver than its own workmen can afford to do, toundersell them, not only in the foreign, but even in the homemarket.

It is the peculiar situation of Spain and Portugal as proprietorsof the mines to be the distributors of gold and silver to all the othercountries of Europe. Those metals ought naturally, therefore, to besomewhat cheaper in Spain and Portugal than in any other part ofEurope. The difference, however, should be no more than theamount of the freight and insurance; and, on account of the greatvalue and small bulk of those metals, their freight is no greatmatter, and their insurance is the same as that of any other goodsof equal value. Spain and Portugal, therefore, could suffer verylittle from their peculiar situation, if they did not aggravate itsdisadvantages by their political institutions.

Spain by taxing, and Portugal by prohibiting the exportation ofgold and silver, load that exportation with the expense ofsmuggling, and raise the value of those metals in other countriesso much more above what it is in their own by the whole amountof this expense. When you dam up a stream of water, as soon asthe dam is full as much water must run over the dam-head as ifthere was no dam at all. The prohibition of exportation cannotdetain a greater quantity of gold and silver in Spain and Portugalthan what they can afford to employ, than what the annualproduce of their land and labour will allow them to employ, incoin, plate, gilding, and other ornaments of gold and silver. When



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they have got this quantity the dam is full, and the whole streamwhich flows in afterwards must run over.

The annual exportation of gold and silver from Spain andPortugal accordingly is, by all accounts, notwithstanding theserestraints, very near equal to the whole annual importation. As thewater, however, must always be deeper behind the dam-head thanbefore it, so the quantity of gold and silver which these restraintsdetain in Spain and Portugal must, in proportion to the annualproduce of their land and labour, be greater than what is to befound in other countries. The higher and stronger the dam-head,the greater must be the difference in the depth of water behindand before it. The higher the tax, the higher the penalties withwhich the prohibition is guarded, the more vigilant and severe thepolice which looks after the execution of the law, the greater mustbe the difference in the proportion of gold and silver to the annualproduce of the land and labour of Spain and Portugal, and to thatof other countries. It is said accordingly to be very considerable,and that you frequently find there a profusion of plate in houseswhere there is nothing else which would, in other countries, bethought suitable or correspondent to this sort of magnificence.The cheapness of gold and silver, or what is the same thing, thedearness of all commodities, which is the necessary effect of thisredundancy of the precious metals, discourages both theagriculture and manufactures of Spain and Portugal, and enablesforeign nations to supply them with many sorts of rude, and withalmost all sorts of manufactured produce, for a smaller quantity ofgold and silver than what they themselves can either raise or makethem for at home. The tax and prohibition operate in two differentways. They not only lower very much the value of the precious



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metals in Spain and Portugal, but by detaining there a certainquantity of those metals which would otherwise flow over othercountries, they keep up their value in those other countriessomewhat above what it otherwise would be, and thereby givethose countries a double advantage in their commerce with Spainand Portugal. Open the flood-gates, and there will presently beless water above, and more below, the dam-head, and it will sooncome to a level in both places. Remove the tax and the prohibition,and as the quantity of gold and silver will diminish considerably inSpain and Portugal, so it will increase somewhat in othercountries, and the value of those metals, their proportion to theannual produce of land and labour, will soon come to a level, orvery near to a level, in all. The loss which Spain and Portugalcould sustain by this exportation of their gold and silver would bealtogether nominal and imaginary. The nominal value of theirgoods, and of the annual produce of their land and labour, wouldfall, and would be expressed or represented by a smaller quantityof silver than before; but their real value would be the same asbefore, and would be sufficient to maintain, command, andemploy, the same quantity of labour. As the nominal value of theirgoods would fall, the real value of what remained of their gold andsilver would rise, and a smaller quantity of those metals wouldanswer all the same purposes of commerce and circulation whichhad employed a greater quantity before. The gold and silver whichwould go abroad would not go abroad for nothing, but would bringback an equal value of goods of some kind or another.

Those goods, too, would not be all matters of mere luxury andexpense, to be consumed by idle people who produce nothing inreturn for their consumption. As the real wealth and revenue of



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idle people would not be augmented by this extraordinaryexportation of gold and silver, so neither would their consumptionbe much augmented by it. Those goods would, probably, thegreater part of them, and certainly some part of them, consist inmaterials, tools, and provisions, for the employment andmaintenance of industrious people, who would reproduce, with aprofit, the full value of their consumption. A part of the dead stockof the society would thus be turned into active stock, and wouldput into motion a greater quantity of industry than had beenemployed before. The annual produce of their land and labourwould immediately be augmented a little, and in a few yearswould, probably, be augmented a great deal; their industry beingthus relieved from one of the most oppressive burdens which it atpresent labours under.

The bounty upon the exportation of corn necessarily operatesexactly in the same way as this absurd policy of Spain andPortugal.

Whatever be the actual state of tillage, it renders our cornsomewhat dearer in the home market than it otherwise would bein that state, and somewhat cheaper in the foreign; and as theaverage money price of corn regulates more or less that of allother commodities, it lowers the value of silver considerably in theone, 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 theyotherwise could do, but sometimes to eat it cheaper than even ourown people can do upon the same occasions, as we are assured byan excellent authority, that of Sir Matthew Decker. It hinders ourown workmen from furnishing their goods for so small a quantityof silver as they otherwise might do; and enables the Dutch to



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furnish theirs for a smaller. It tends to render our manufacturessomewhat dearer in every market, and theirs somewhat cheaperthan they otherwise would be, and consequently to give theirindustry a double advantage over our own.

The bounty, as it raises in the home market not so much thereal as the nominal price of our corn, as it augments, not thequantity of labour which a certain quantity of corn can maintainand employ but only the quantity of silver which it will exchangefor, it discourages our manufactures, without rendering anyconsiderable service either to our farmers or country gentlemen. Itputs, indeed, a little more money into the pockets of both, and itwill perhaps be somewhat difficult to persuade the greater part ofthem 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 kindswhich 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 wholecommonwealth to whom the bounty either was or could beessentially serviceable. These were the corn merchants, theexporters and importers of corn. In years of plenty the bountynecessarily occasioned a greater exportation than would otherwisehave taken place; and by hindering the plenty of one year fromrelieving the scarcity of another, it occasioned in years of scarcitya greater importation than would otherwise have been necessary.It increased the business of the corn merchant in both; and inyears of scarcity, it not only enabled him to import a greaterquantity, but to sell it for a better price, and consequently with agreater profit than he could otherwise have made, if the plenty of



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one year had not been more or less hindered from relieving thescarcity of another. It is in this set of men, accordingly, that I haveobserved the greatest zeal for the continuance or renewal of thebounty.

Our country gentlemen, when they imposed the high dutiesupon the importation of foreign corn, which in times of moderateplenty amount to a prohibition, and when they established thebounty, seem to have imitated the conduct of our manufacturers.By the one institution, they secured to themselves the monopoly ofthe home market, and by the other they endeavoured to preventthat market from ever being overstocked with their commodity.By both they endeavoured to raise its real value, in the samemanner as our manufacturers had, by the like institutions, raisedthe real value of many different sorts of manufactured goods. Theydid not perhaps attend to the great and essential difference whichnature has established between corn and almost every other sortof goods. When, either by the monopoly of the home market, or bya bounty upon exportation, you enable our woollen or linenmanufacturers to sell their goods for somewhat a better price thanthey otherwise could get for them, you raise, not only the nominal,but the real price of those goods. You render them equivalent to agreater quantity of labour and subsistence, you increase not onlythe nominal, but the real profit, the real wealth and revenue ofthose manufacturers, and you enable them either to live betterthemselves, or to employ a greater quantity of labour in thoseparticular manufactures. You really encourage thosemanufactures, and direct towards them a greater quantity of theindustry of the country than what would probably go to them of itsown accord.



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But when by the like institutions you raise the nominal ormoney-price of corn, you do not raise its real value. You do notincrease the real wealth, the real revenue either of our farmers orcountry gentlemen. You do not encourage the growth of cornbecause you do not enable them to maintain and employ morelabourers in raising it. The nature of things has stamped uponcorn a real value which cannot be altered by merely altering itsmoney price. No bounty upon exportation, no monopoly of thehome market, can raise that value. The freest competition cannotlower it. Through the world in general that value is equal to thequantity of labour which it can maintain, and in every particularplace it is equal to the quantity of labour which it can maintain inthe way, whether liberal, moderate, or scanty, in which labour iscommonly maintained in that place. Woollen or linen cloth are notthe regulating commodities by which the real value of all othercommodities must be finally measured and determined; corn is.The real value of every other commodity is finally measured anddetermined by the proportion which its average money price bearsto the average money price of corn. The real value of corn does notvary with those variations in its average money price, whichsometimes occur from one century to another. It is the real valueof silver which varies with them.

Bounties upon the exportation of any home-made commodityare liable, first to that general objection which may be made to allthe different expedients of the mercantile system; the objection offorcing some part of the industry of the country into a channel lessadvantageous than that in which it would run of its own accord:and, secondly, to the particular objection of forcing it, not only intoa channel that is less advantageous, but into one that is actually



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disadvantageous; the trade which cannot be carried on but bymeans of a bounty being necessarily a losing trade. The bountyupon the exportation of corn is liable to this further objection, thatit can in no respect promote the raising of that particularcommodity of which it was meant to encourage the production.When our country gentlemen, therefore, demanded theestablishment of the bounty, though they acted in imitation of ourmerchants and manufacturers, they did not act with that completecomprehension of their own interest which commonly directs theconduct of those two other orders of people. They loaded thepublic revenue with a very considerable expense; they imposed avery heavy tax upon the whole body of the people; but they didnot, in any sensible degree, increase the real value of their owncommodity; and by lowering somewhat the real value of silver,they discouraged in some degree, the general industry of thecountry, and, instead of advancing, retarded more or less theimprovement of their own lands, which necessarily depends uponthe general industry of the country.

To encourage the production of any commodity, a bounty uponproduction, one should imagine, would have a more directoperation than one upon exportation. It would, besides, imposeonly one tax upon the people, that which they must contribute inorder to pay the bounty. Instead of raising, it would tend to lowerthe price of the commodity in the home market; and thereby,instead of imposing a second tax upon the people, it might, atleast, in part, repay them for what they had contributed to thefirst. Bounties upon production, however, have been very rarelygranted. The prejudices established by the commercial systemhave taught us to believe that national wealth arises more



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immediately from exportation than from production. It has beenmore favoured accordingly, as the more immediate means ofbringing money into the country. Bounties upon production, it hasbeen said too, have been found by experience more liable to fraudsthan those upon exportation. How far this is true, I know not. Thatbounties upon exportation have been abused to many fraudulentpurposes is very well known. But it is not the interest ofmerchants and manufacturers, the great inventors of all theseexpedients, that the home market should be overstocked withtheir goods, an event which a bounty upon production mightsometimes occasion. A bounty upon exportation, by enabling themto send abroad the surplus part, and to keep up the price of whatremains in the home market, effectually prevents this. Of all theexpedients of the mercantile system, accordingly, it is the one ofwhich they are the fondest. I have known the differentundertakers of some particular works agree privately amongthemselves to give a bounty out of their own pockets upon theexportation of a certain proportion of the goods which they dealtin. This expedient succeeded so well that it more than doubled theprice of their goods in the home market, notwithstanding a veryconsiderable increase in the produce. The operation of the bountyupon corn must have been wonderfully different if it has loweredthe money price of that commodity.

Something like a bounty upon production, however, has beengranted upon some particular occasions. The tonnage bountiesgiven to the white-herring and whale fisheries may, perhaps, beconsidered as somewhat of this nature. They tend directly, it maybe supposed, to render the goods cheaper in the home marketthan they otherwise would be. In other respects their effects, it



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must be acknowledged, are the same as those of bounties uponexportation. By means of them a part of the capital of the countryis employed in bringing goods to market, of which the price doesnot repay the cost together with the ordinary profits of stock.

But though the tonnage bounties of those fisheries do notcontribute to the opulence of the nation, it may perhaps bethought that they contribute to its defence by augmenting thenumber of its sailors and shipping. This, it may be alleged, maysometimes be done by means of such bounties at a much smallerexpense than by keeping up a great standing navy, if I may usesuch an expression, in the same way as a standing army.

Notwithstanding these favourable allegations, however, thefollowing considerations dispose me to believe that, in granting atleast one of these bounties, the legislature has been very grosslyimposed 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 herringbuss fishery has been at thirty shillings the ton. During theseeleven years the whole number of barrels caught by the herringbuss fishery of Scotland amounted to 378,347. The herrings caughtand cured at sea are called sea-sticks. In order to render themwhat are called merchantable herrings, it is necessary to repackthem with an additional quantity of salt; and in this case, it isreckoned that three barrels of sea-sticks are usually repacked intotwo barrels of merchantable herrings. The number of barrels ofmerchantable herrings, therefore, caught during these elevenyears will amount only, according to this account, to 252,2311/3.During these eleven years the tonnage bounties paid amounted to



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£155,463 11s. or to 8s. 21/4d. upon every barrel of sea-sticks, and to12s. 33/4d. upon every barrel of merchantable herrings.

The salt with which these herrings are cured is sometimesScotch and sometimes foreign salt, both which are delivered freeof all excise duty to the fish-curers. The excise duty upon Scotchsalt is at present 1s. 6d., that upon foreign salt 10s. the bushel. Abarrel of herrings is supposed to require about one bushel andone-fourth of a bushel foreign salt. Two bushels are the supposedaverage 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 dutyupon a bushel of salt, the quantity which, at a low estimation, hadbeen supposed necessary for curing a barrel of herrings. InScotland, foreign salt is very little used for any other purpose butthe 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 than168,226, at fifty-six pounds the bushel only. It would appear,therefore, that it is principally foreign salt that is used in thefisheries. Upon every barrel of herrings exported there is, besides,a bounty of 2s. 8d., and more than two-thirds of the buss caughtherrings are exported. Put all these things together and you willfind that, during these eleven years, every barrel of buss caughtherrings, cured with Scotch salt when exported, has costgovernment £1 7s. 5 3/4d.; and when entered for home consumption14s. 33/4d.; and that every barrel cured with foreign salt, whenexported, has cost government £1 7s. 53/4d.; and when entered for



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home consumption £1. 3s. 93/4d. The price of a barrel of goodmerchantable herrings runs from seventeen and eighteen to fourand five and twenty shillings, about a guinea at an average.1

Secondly, the bounty to the white-herring fishery is a tonnagebounty; and is proportioned to the burden of the ship, not to herdiligence or success in the fishery; and it has, I am afraid, been toocommon for vessels to fit out for the sole purpose of catching, notthe fish, but the bounty. In the year 1759, when the bounty was atfifty shillings the ton, the whole buss fishery of Scotland broughtin only four barrels of sea-sticks. In that year each barrel of sea-sticks cost government in bounties alone £113 15s.; each barrel ofmerchantable herrings £159 7s. 6d.

Thirdly, the mode of fishing for which this tonnage bounty inthe white-herring fishery has been given (by busses or deckedvessels from twenty to eighty tons burthen), seems not so welladapted to the situation of Scotland as to that of Holland, from thepractice of which country it appears to have been borrowed.Holland lies at a great distance from the seas to which herrings areknown principally to resort, and can, therefore, carry on thatfishery only in decked vessels, which can carry water andprovisions sufficient for a voyage to a distant sea. But the Hebridesor western islands, the islands of Shetland, and the northern andnorthwestern coasts of Scotland, the countries in whoseneighbourhood the herring fishery is principally carried on, areeverywhere intersected by arms of the sea, which run up aconsiderable way into the land, and which, in the language of thecountry, are called sea-lochs. It is to these sea-lochs that the

1See the accounts at the end of the volume [appendix].



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herrings principally resort during the seasons in which they visitthose seas; for the visits of this and, I am assured, of many othersorts of fish are not quite regular and constant. A boat fishery,therefore, seems to be the mode of fishing best adapted to thepeculiar situation of Scotland, the fishers carrying the herrings onshore, as fast as they are taken, to be either cured or consumedfresh. But the great encouragement which a bounty of thirtyshillings the ton gives to the buss fishery is necessarily adiscouragement to the boat fishery, which, having no such bounty,cannot bring its cured fish to market upon the same terms as thebuss fishery. The boat fishery, accordingly, which before theestablishment of the buss bounty was very considerable, and issaid have employed a number of seamen not inferior to what thebuss fishery employs at present, is now gone almost entirely todecay. Of the former extent, however, of this now ruined andabandoned fishery, I must acknowledge that I cannot pretend tospeak with much precision. As no bounty was paid upon the outfitof the boat fishery, no account was taken of it by the officers of thecustoms or salt duties.

Fourthly, in many parts of Scotland, during certain seasons ofthe year, herrings make no inconsiderable part of the food of thepeople. A bounty, which tended to lower their price in the homemarket, might contribute a good deal to the relief of a greatnumber of our fellow-subjects, whose circumstances are by nomeans affluent. But the herring buss bounty contributes to nosuch good purpose. It has ruined the boat fishery, which is, by far,the best adapted for the supply of the home market, and theadditional bounty of 2s. 8d. the barrel upon exportation carries thegreater part, more than two-thirds, of the produce of the buss



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fishery abroad.Between thirty and forty years ago, before the establishment of

the buss bounty, fifteen shillings the barrel, I have been assured,was the common price of white herrings. Between ten and fifteenyears ago, before the boat fishery was entirely ruined, the price issaid to have run from seventeen to twenty shillings the barrel. Forthese last five years, it has, at an average, been at twenty-fiveshillings the barrel. This high price, however, may have beenowing to the real scarcity of the herrings upon the coast ofScotland. I must observe, too, that the cask or barrel, which isusually sold with the herrings, and of which the price is includedin all the foregoing prices, has, since the commencement of theAmerican war, risen to about double its former price, or fromabout three shillings to about six shillings. I must likewise observethat the accounts I have received of the prices of former timeshave been by no means quite uniform and consistent; and an oldman of great accuracy and experience has assured me that, morethan fifty years ago, a guinea was the usual price of a barrel ofgood merchantable herrings; and this, I imagine, may still belooked upon as the average price. All accounts, however, I think,agree that the price has not been lowered in the home market inconsequence of the buss bounty.

When the undertakers of fisheries, after such liberal bountieshave been bestowed upon them, continue to sell their commodityat the same, or even at a higher price than they were accustomedto do before, it might be expected that their profits should be verygreat; and it is not improbable that those of some individuals mayhave been so. In general, however, I have every reason to believethey have been quite otherwise. The usual effect of such bounties



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is to encourage rash undertakers to adventure in a business whichthey do not understand, and what they lose by their ownnegligence and ignorance more than compensates all that they cangain by the utmost liberality of government. In 1750, by the sameact, which first gave the bounty of thirty shillings the ton for theencouragement of the white-herring fishery (the 23rd George II, c.24), a joint-stock company was erected, with a capital of fivehundred thousand pounds, to which the subscribers (over andabove all other encouragements, the tonnage bounty just nowmentioned, the exportation bounty of two shillings and eightpencethe barrel, the delivery of both British and foreign salt duty free)were, during the space of fourteen years, for every hundredpounds which they subscribed and paid in to the stock of thesociety, entitled to three pounds a year, to be paid by the receiver-general of the customs in equal half-yearly payments. Besides thisgreat company, the residence of whose governor and directors wasto be in London, it was declared lawful to erect different fishing-chambers in all the different outports of the kingdom, provided asum not less than ten thousand pounds was subscribed into thecapital of each, to be managed at its own risk, and for its ownprofit and loss. The same annuity, and the same encouragementsof all kinds, were given to the trade of those inferior chambers asto that of the great company. The subscription of the greatcompany was soon filled up, and several different fishing-chambers were erected in the different outports of the kingdom.In spite of all these encouragements, almost all those differentcompanies, both great and small, lost either the whole, or thegreater part of their capitals; scarce a vestige now remains of anyof them, and the white-herring fishery is now entirely, or almost



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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 dependupon our neighbours for the supply; and if such manufacturecould not otherwise be supported at home, it might not beunreasonable that all the other branches of industry should betaxed in order to support it. The bounties upon the exportation ofBritish-made sailcloth and British-made gunpowder may,perhaps, both be vindicated upon this principle.

But though it can very seldom be reasonable to tax the industryof the great body of the people in order to support that of someparticular class of manufacturers, yet in the wantonness of greatprosperity, when the public enjoys a greater revenue than itknows well what to do with, to give such bounties to favouritemanufactures may, perhaps, be as natural as to incur any otheridle expense. In public as well as in private expenses, great wealthmay, perhaps, frequently be admitted as an apology for great folly.But there must surely be something more than ordinary absurdityin continuing such profusion in times of general difficulty anddistress.

What is called a bounty is sometimes no more than a drawback,and consequently is not liable to the same objections as what isproperly a bounty. The bounty, for example, upon refined sugarexported may be considered as a drawback of the duties upon thebrown and muscovado sugars from which it is made. The bountyupon wrought silk exported, a drawback of the duties upon rawand 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



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drawbacks which are given upon goods exported in the same formin which they are imported.

When that form has been so altered by manufacture of any kindas to come under a new denomination, they are called bounties.

Premiums given by the public to artists and manufacturers whoexcel in their particular occupations are not liable to the sameobjections as bounties. By encouraging extraordinary dexterityand ingenuity, they serve to keep up the emulation of theworkmen actually employed in those respective occupations, andare not considerable enough to turn towards any one of them agreater share of the capital of the country than what would go to itof its own accord.

Their tendency is not to overturn the natural balance ofemployments, but to render the work which is done in each asperfect and complete as possible. The expense of premiums,besides, is very trifling; that of bounties very great. The bountyupon corn alone has sometimes cost the public in one year morethan three hundred thousand pounds.

DIGRESSION CONCERNING THE CORN TRADE AND CORNLAWS

I cannot conclude this chapter concerning bounties withoutobserving that the praises which have been bestowed upon thelaw 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 natureof the corn trade, and of the principal British laws which relate toit, will sufficiently demonstrate the truth of this assertion. Thegreat importance of this subject must justify the length of the



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digression.The trade of the corn merchant is composed of four different

branches, which, though they may sometimes be all carried on bythe same person, are in their own nature four separate anddistinct 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 foreignconsumption; and, fourthly, that of the merchant carrier, or of theimporter of corn in order to export it again.

I. The interest of the inland dealer, and that of the great body ofthe people, how opposite soever they may at first sight appear, are,even in years of the greatest scarcity, exactly the same. It is hisinterest to raise the price of his corn as high as the real scarcity ofthe season requires, and it can never be his interest to raise ithigher. By raising the price he discourages the consumption, andputs everybody more or less, but particularly the inferior ranks ofpeople, upon thrift and good management. If, by raising it toohigh, he discourages the consumption so much that the supply ofthe 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, heruns the hazard, not only of losing a considerable part of his cornby natural causes, but of being obliged to sell what remains of itfor much less than what he might have had for it several monthsbefore. If by not raising the price high enough he discourages theconsumption so little that the supply of the season is likely to fallshort of the consumption of the season, he not only loses a part ofthe profit which he might otherwise have made, but he exposesthe people to suffer before the end of the season, instead of thehardships of a dearth, the dreadful horrors of a famine. It is the



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interest of the people that their daily, weekly, and monthlyconsumption should be proportioned as exactly as possible to thesupply of the season. The interest of the inland corn dealer is thesame. By supplying them, as nearly as he can judge, in thisproportion, he is likely to sell all his corn for the highest price, andwith the greatest profit; and his knowledge of the state of the crop,and of his daily, weekly, and monthly sales, enable him to judge,with more or less accuracy, how far they really are supplied in thismanner. Without intending the interest of the people, he isnecessarily led, by a regard to his own interest, to treat them, evenin years of scarcity, pretty much in the same manner as theprudent master of a vessel is sometimes obliged to treat his crew.

When he foresees that provisions are likely to run short, he putsthem upon short allowance. Though from excess of caution heshould sometimes do this without any real necessity, yet all theinconveniences which his crew can thereby suffer areinconsiderable in comparison of the danger, misery, and ruin towhich they might sometimes be exposed by a less providentconduct. Though from excess of avarice, in the same manner, theinland corn merchant should sometimes raise the price of his cornsomewhat higher than the scarcity of the season requires, yet allthe inconveniences which the people can suffer from this conduct,which effectually secures them from a famine in the end of theseason, are inconsiderable in comparison of what they might havebeen exposed to by a more liberal way of dealing in the beginningof it. The corn merchant himself is likely to suffer the most by thisexcess of avarice; not only from the indignation which it generallyexcites against him, but, though he should escape the effects ofthis indignation, from the quantity of corn which it necessarily



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leaves upon his hands in the end of the season, and which, if thenext season happens to prove favourable, he must always sell for amuch lower price than he might otherwise have had.

Were it possible, indeed, for one great company of merchants topossess themselves of the whole crop of an extensive country, itmight, perhaps, be their interest to deal with it as the Dutch aresaid to do with the spiceries of the Moluccas, to destroy or throwaway a considerable part of it in order to keep up the price of therest. But it is scarce possible, even by the violence of law, toestablish such an extensive monopoly with regard to corn; and,wherever the law leaves the trade free, it is of all commodities theleast liable to be engrossed or monopolized by the force of a fewlarge capitals, which buy up the greater part of it. Not only itsvalue far exceeds what the capitals of a few private men arecapable of purchasing, but, supposing they were capable ofpurchasing it, the manner in which it is produced renders thispurchase practicable. As in every civilised country it is thecommodity of which the annual consumption is the greatest, so agreater quantity of industry is annually employed in producingcorn than in producing any other commodity. When it first comesfrom the ground, too, it is necessarily divided among a greaternumber of owners than any other commodity; and these ownerscan never be collected into one place like a number ofindependent manufacturers, but are necessarily scattered throughall the different corners of the country. These first owners eitherimmediately supply the consumers in their own neighbourhood, orthey supply other inland dealers who supply those consumers. Theinland dealers in corn, therefore, including both the farmer andthe baker, are necessarily more numerous than the dealers in any



690

other commodity, and their dispersed situation renders italtogether impossible for them to enter into any generalcombination. If in a year of scarcity, therefore, any of them shouldfind that he had a good deal more corn upon hand than, at thecurrent price, he could hope to dispose of before the end of theseason, he would never think of keeping up this price to his ownloss, and to the sole benefit of his rivals and competitors, butwould immediately lower it, in order to get rid of his corn beforethe new crop began to come in. The same motives, the sameinterests, which would thus regulate the conduct of any onedealer, would regulate that of every other, and oblige them all ingeneral to sell their corn at the price which, according to the bestof their judgment, was most suitable to the scarcity or plenty of theseason.

Whoever examines with attention the history of the dearths andfamines which have afflicted any part of Europe, during either thecourse of the present or that of the two preceding centuries, ofseveral of which we have pretty exact accounts, will find, I believe,that a dearth never has arisen from any combination among theinland dealers in corn, nor from any other cause but a realscarcity, occasioned sometimes perhaps, and in some particularplaces, by the waste of war, but in by far the greatest number ofcases by the fault of the seasons; and that a famine has neverarisen from any other cause but the violence of governmentattempting, by improper means, to remedy the inconveniences ofa dearth.

In an extensive corn country, between all the different parts ofwhich there is a free commerce and communication, the scarcityoccasioned by the most unfavourable seasons can never be so



691

great as to produce a famine; and the scantiest crop, if managedwith frugality and economy, will maintain through the year thesame number of people that are commonly fed on a more affluentmanner by one of moderate plenty. The seasons mostunfavourable to the crop are those of excessive drought orexcessive rain. But as corn grows equally upon high and low lands,upon grounds that are disposed to be too wet, and upon those thatare disposed to be too dry, either the drought or the rain which ishurtful to one part of the country is favourable to another; andthough both in the wet and in the dry season the crop is a gooddeal less than in one more properly tempered, yet in both what islost in one part of the country is in some measure compensated bywhat is gained in the other. In rice countries, where the crop notonly requires a very moist soil, but where in a certain period of itsgrowing it must be laid under water, the effects of a drought aremuch more dismal. Even in such countries, however, the droughtis, perhaps, scarce ever so universal as necessarily to occasion afamine, if the government would allow a free trade. The drought inBengal, a few years ago, might probably have occasioned a verygreat dearth. Some improper regulations, some injudiciousrestraints imposed by the servants of the East India Companyupon the rice trade, contributed, perhaps, to turn that dearth intoa famine.

When the government, in order to remedy the inconveniencesof a dearth, orders all the dealers to sell their corn at what itsupposes a reasonable price, it either hinders them from bringingit to market, which may sometimes produce a famine even in thebeginning of the season; or if they bring it thither, it enables thepeople, and thereby encourages them to consume it so fast as must



692

necessarily produce a famine before the end of the season. Theunlimited, unrestrained freedom of the corn trade, as it is the onlyeffectual preventative of the miseries of a famine, so it is the bestpalliative of the inconveniences of a dearth; for the inconveniencesof a real scarcity cannot be remedied, they can only be palliated.No trade deserves more the full protection of the law, and no traderequires it so much, because no trade is so much exposed topopular odium.

In years of scarcity the inferior ranks of people impute theirdistress to the avarice of the corn merchant, who becomes theobject of their hatred and indignation. Instead of making profitupon such occasions, therefore, he is often in danger of beingutterly ruined, and of having his magazines plundered anddestroyed by their violence. It is in years of scarcity, however,when prices are high, that the corn merchant expects to make hisprincipal profit. He is generally in contract with some farmers tofurnish him for a certain number of years with a certain quantityof corn at a certain price. This contract price is settled accordingto what is supposed to be the moderate and reasonable, that is, theordinary or average price, which before the late years of scarcitywas commonly about eight-and-twenty shillings for the quarter ofwheat, and for that of other grain in proportion. In years ofscarcity, therefore, the corn merchant buys a great part of his cornfor the ordinary price, and sells it for a much higher. That thisextraordinary profit, however, is no more than sufficient to put histrade upon a fair level with other trades, and to compensate themany losses which he sustains upon other occasions, both fromthe perishable nature of the commodity itself, and from thefrequent and unforeseen fluctuations of its price, seems evident



693

enough, from this single circumstance, that great fortunes are asseldom made in this as in any other trade. The popular odium,however, which attends it in years of scarcity, the only years inwhich it can be very profitable, renders people of character andfortune averse to enter into it. It is abandoned to an inferior set ofdealers; and millers, bakers, mealmen, and meal factors, togetherwith a number of wretched hucksters, are almost the only middlepeople that, in the home market, come between the grower andthe consumer.

The ancient policy of Europe, instead of discountenancing thispopular odium against a trade so beneficial to the public, seems,on the contrary, to have authorized and encouraged it.

By the 5th and 6th of Edward VI, c. 14, it was enacted thatwhoever should buy any corn or grain with intent to sell it again,should be reputed an unlawful engrosser, and should, for the firstfault, suffer two months’ imprisonment, and forfeit the value of thecorn; for the second, suffer six months’ imprisonment, and forfeitdouble the value; and for the third, be set in the pillory, sufferimprisonment during the king’s pleasure, and forfeit all his goodsand chattels. The ancient policy of most other parts of Europe wasno better than that of England.

Our ancestors seem to have imagined that the people wouldbuy their corn cheaper of the farmer than of the corn merchant,who, they were afraid, would require, over and above the pricewhich he paid to the farmer, an exorbitant profit to himself. Theyendeavoured, therefore, to annihilate his trade altogether. Theyeven endeavoured to hinder as much as possible any middle manof any kind from coming in between the grower and the consumer;and this was the meaning of the many restraints which they



694

imposed upon the trade of those whom they called kidders orcarriers of corn, a trade which nobody was allowed to exercisewithout a licence ascertaining his qualifications as a man ofprobity and fair dealing. The authority of three justices of thepeace was, by the statute of Edward VI, necessary in order togrant this licence. But even this restraint was afterwards thoughtinsufficient, and by a statute of Elizabeth the privilege of grantingit was confined to the quarter-sessions.

The ancient policy of Europe endeavoured in this manner toregulate agriculture, the great trade of the country, by maximsquite different from those which it established with regard tomanufactures, the great trade of the towns. By leaving the farmerno other customers but either the consumers or their immediatefactors, the kidders and carriers of corn, it endeavoured to forcehim to exercise the trade, not only of a farmer, but of a cornmerchant or corn retailer. On the contrary, it in many casesprohibited the manufacturer from exercising the trade of ashopkeeper, or from selling his own goods by retail. It meant bythe one law to promote the general interest of the country, or torender corn cheap, without, perhaps, its being well understoodhow this was to be done. By the other it meant to promote that of aparticular order of men, the shopkeepers, who would be so muchundersold by the manufacturer, it was supposed, that their tradewould be ruined if he was allowed to retail at all.

The manufacturer, however, though he had been allowed tokeep a shop, and to sell his own goods by retail, could not haveundersold the common shopkeeper. Whatever part of his capitalhe might have placed in his shop, he must have withdrawn it fromhis manufacture. In order to carry on his business on a level with



695

that of other people, as he must have had the profit of amanufacturer on the one part, so he must have had that of ashopkeeper upon the other. Let us suppose, for example, that inthe particular town where he lived, ten per cent was the ordinaryprofit both of manufacturing and shopkeeping stock; he must inthis case have charged upon every piece of his own goods whichhe sold in his shop, a profit of twenty per cent. When he carriedthem from his workhouse to his shop, he must have valued themat the price for which he could have sold them to a dealer orshopkeeper, who would have bought them by wholesale. If hevalued them lower, he lost a part of the profit of his manufacturingcapital. When again he sold them from his shop, unless he got thesame price at which a shopkeeper would have sold them, he lost apart of the profit of his shopkeeping capital. Though he mightappear, therefore, to make a double profit upon the same piece ofgoods, yet as these goods made successively a part of two distinctcapitals, he made but a single profit upon the whole capitalemployed about them; and if he made less than his profit, he was aloser, or did not employ his whole capital with the same advantageas the greater part of his neighbours.

What the manufacturer was prohibited to do, the farmer was insome measure enjoined to do; to divide his capital between twodifferent employments; to keep one part of it in his granaries andstack yard, for supplying the occasional demands of the market;and to employ the other in the cultivation of his land. But as hecould not afford to employ the latter for less than the ordinaryprofits of farming stock, so he could as little afford to employ theformer for less than the ordinary profits of mercantile stock.Whether the stock which really carried on the business of the corn



696

merchant belonged to the person who was called a farmer, or tothe person who was called a corn merchant, an equal profit was inboth cases requisite in order to indemnify its owner for employingit in this manner; in order to put his business upon a level withother trades, and in order to hinder him from having an interest tochange it as soon as possible for some other. The farmer,therefore, who was thus forced to exercise the trade of a cornmerchant, could not afford to sell his corn cheaper than any othercorn merchant would have been obliged to do in the case of a freecompetition.

The dealer who can employ his whole stock in one singlebranch of business has an advantage of the same kind with theworkman who can employ his whole labour in one singleoperation. As the latter acquires a dexterity which enables him,with the same two hands, to perform a much greater quantity ofwork; so the former acquires so easy and ready a method oftransacting his business, of buying and disposing of his goods, thatwith the same capital he can transact a much greater quantity ofbusiness. As the one can commonly afford his work a good dealcheaper, so the other can commonly afford his goods somewhatcheaper than if his stock and attention were both employed abouta greater variety of objects. The greater part of manufacturerscould not afford to retail their own goods so cheap as a vigilantand active shopkeeper, whose sole business it was to buy them atwholesale and to retail them again. The greater part of farmerscould still less afford to retail their own corn, to supply theinhabitants of a town, at perhaps four or five miles distance fromthe greater part of them, so cheap as a vigilant and active cornmerchant, whose sole business it was to purchase corn by



697

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 theemployment of stock to go on faster than it might otherwise havedone. The law which obliged the farmer to exercise the trade of acorn merchant endeavoured to hinder it from going on so fast.Both laws were evident violations of natural liberty, and thereforeunjust; and they were both, too, as impolitic as they were unjust.

It is the interest of every society that things of this kind shouldnever either be forced or obstructed. The man who employs eitherhis labour or his stock in a greater variety of ways than hissituation renders necessary can never hurt his neighbour byunderselling him. He may hurt himself, and he generally does so.Jack of all trades will never be rich, says the proverb. But the lawought always to trust people with the care of their own interest, asin their local situations they must generally be able to judge betterof it than the legislator can do. The law, however, which obligedthe farmer to exercise the trade of a corn merchant was by far themost pernicious of the two.

It obstructed not only that division in the employment of stockwhich is so advantageous to every society, but it obstructedlikewise the improvement and cultivation of the land. By obligingthe farmer to carry on two trades instead of one, it forced him todivide his capital into two parts, of which one only could beemployed in cultivation. But if he had been at liberty to sell hiswhole crop to a corn merchant as fast as he could thresh it out, hiswhole capital might have returned immediately to the land, andhave been employed in buying more cattle, and hiring moreservants, in order to improve and cultivate it better. But by being



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obliged to sell his corn by retail, he was obliged to keep a greatpart of his capital in his granaries and stack yard through the year,and could not, therefore, cultivate so well as with the same capitalhe might otherwise have done. This law, therefore, necessarilyobstructed the improvement of the land, and, instead of tending torender corn cheaper, must have tended to render it scarcer, andtherefore dearer, than it would otherwise have been.

After the business of the farmer, that of the corn merchant is inreality the trade which, if properly protected and encouraged,would contribute the most to the raising of corn. It would supportthe trade of the farmer in the same manner as the trade of thewholesale dealer supports that of the manufacturer.

The wholesale dealer, by affording a ready market to themanufacturer, by taking his goods off his hand as fast as he canmake their price to him before he has made them, enables him tokeep his whole capital, and sometimes even more than his wholecapital, constantly employed in manufacturing, and consequentlyto manufacture a much greater quantity of goods than if he wasobliged to dispose of them himself to the immediate consumers, oreven to the retailers. As the capital of the wholesale merchant, too,is generally sufficient to replace that of many manufacturers, thisintercourse between him and them interests the owner of a largecapital to support the owners of a great number of small ones, andto assist them in those losses and misfortunes which mightotherwise prove ruinous to them.

An intercourse of the same kind universally establishedbetween the farmers and the corn merchants would be attendedwith effects equally beneficial to the farmers. They would beenabled to keep their whole capitals, and even more than their



699

whole capitals, constantly employed in cultivation. In case of anyof those accidents, to which no trade is more liable than theirs,they would find in their ordinary customer, the wealthy cornmerchant, a person who had both an interest to support them, andthe ability to do it, and they would not, as at present, be entirelydependent upon the forbearance of their landlord, or the mercy ofhis steward. Were it possible, as perhaps it is not, to establish thisintercourse universally, and all at once, were it possible to turn allat once the whole farming stock of the kingdom to its properbusiness, the cultivation of land, withdrawing it from every otheremployment into which any part of it may be at present diverted,and were it possible, in order to support and assist upon occasionthe operations of this great stock, to provide all at once anotherstock almost equally great, it is not perhaps very easy to imaginehow great, how extensive, and how sudden would be theimprovement which this change of circumstances would aloneproduce upon the whole face of the country.

The statute of Edward VI, therefore, by prohibiting as much aspossible any middle man from coming between the grower and theconsumer, endeavoured to annihilate a trade, of which the freeexercise is not only the best palliative of the inconveniences of adearth but the best preventative of that calamity: after the trade ofthe farmer, no trade contributing so much to the growing of cornas that of the corn merchant.

The rigour of this law was afterwards softened by severalsubsequent statutes, which successively permitted the engrossingof corn when the price of wheat should not exceed twenty, twenty-four, thirty-two, and forty shillings the quarter. At last, by the 15thof Charles II, c. 7, the engrossing or buying of corn in order to sell



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it again, as long as the price of wheat did not exceed forty-eightshillings the quarter, and that of other grain in proportion, wasdeclared lawful to all persons not being forestallers, that is, notselling again in the same market within three months. All thefreedom which the trade of the inland corn dealer has ever yetenjoyed was bestowed upon it by this statute. The statute of the12th of the present king,* which repeals almost all the otherancient laws against engrossers and forestallers, does not repealthe restrictions of this particular statute, which therefore stillcontinue in force.

This statute, however, authorizes in some measure two veryabsurd popular prejudices.

First, it supposes that when the price of wheat has risen so highas forty-eight shillings the quarter, and that of other grains inproportion, corn is likely to be so engrossed as to hurt the people.

But from what has been already said, it seems evident enoughthat corn can at no price be so engrossed by the inland dealers asto hurt the people: and forty-eight shillings the quarter, besides,though it may be considered as a very high price, yet in years ofscarcity it is a price which frequently takes place immediatelyafter harvest, when scarce any part of the new crop can be sold off,and when it is impossible even for ignorance to suppose that anypart of it can be so engrossed as to hurt the people.

Secondly, it supposes that there is a certain price at which cornis likely to be forestalled, that is, bought up in order to be soldagain 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

*George III.



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market or in a particular market, in order to sell it again soon afterin the same market, it must be because he judges that the marketcannot be so liberally supplied through the whole season as uponthat particular occasion, and that the price, therefore, must soonrise. If he judges wrong in this, and if the price does not rise, henot only loses the whole profit of the stock which he employs inthis manner, but a part of the stock itself, by the expense and losswhich necessarily attend the storing and keeping of corn. He hurtshimself, therefore, much more essentially than he can hurt eventhe particular people whom he may hinder from supplyingthemselves upon that particular market day, because they mayafterwards supply themselves just as cheap upon any other marketday. If he judges right, instead of hurting the great body of thepeople, he renders them a most important service. By makingthem feel the inconveniencies of a dearth somewhat earlier thanthey otherwise might do, he prevents their feeling themafterwards so severely as they certainly would do, if the cheapnessof price encouraged them to consume faster than suited the realscarcity of the season. When the scarcity is real, the best thing thatcan be done for the people is to divide the inconveniencies of it asequally as possible through all the different months, and weeks,and days of the year. The interest of the corn merchant makes himstudy to do this as exactly as he can: and as no other person canhave either the same interest, or the same knowledge, or the sameabilities to do it so exactly as he, this most important operation ofcommerce ought to be trusted entirely to him; or, in other words,the corn trade, so far at least as concerns the supply of the homemarket, ought to be left perfectly free.

The popular fear of engrossing and forestalling may be



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compared to the popular terrors and suspicions of witchcraft. Theunfortunate wretches accused of this latter crime were not moreinnocent of the misfortunes imputed to them than those who havebeen accused of the former. The law which put an end to allprosecutions against witchcraft, which put it out of any man’spower to gratify his own malice by accusing his neighbour of thatimaginary crime, seems effectually to have put an end to thosefears and suspicions by taking away the great cause whichencouraged and supported them. The law which should restoreentire freedom to the inland trade of corn would probably prove aseffectual to put an end to the popular fears of engrossing andforestalling.

The 15th of Charles II, c. 7, however, with all its imperfections,has perhaps contributed more both to the plentiful supply of thehome market, and to the increase of tillage, than any other law inthe statute book. It is from this law that the inland corn trade hasderived all the liberty and protection which it has ever yetenjoyed; and both the supply of the home market, and the interestof tillage, are much more effectually promoted by the inland thaneither by the importation or exportation trade.

The proportion of the average quantity of all sorts of grainimported into Great Britain to that of all sorts of grain consumed,it has been computed by the author of the tracts upon the corntrade, does not exceed that of one to five hundred and seventy. Forsupplying the home market, therefore, the importance of theinland trade must be to that of the importation trade as fivehundred and seventy to one.

The average quantity of all sorts of grain exported from GreatBritain does not, according to the same author, exceed the one-



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and-thirtieth part of the annual produce. For the encouragementof tillage, therefore, by providing a market for the home produce,the importance of the inland trade must be to that of theexportation.

I have no great faith in political arithmetic, and I mean not towarrant the exactness of either of these computations. I mentionthem only in order to show of how much less consequence, in theopinion of the most judicious and experienced persons, the foreigntrade of corn is than the home trade. The great cheapness of cornin the years immediately preceding the establishment of thebounty may perhaps, with reason, be ascribed in some measure tothe operation of this statute of Charles II, which had been enactedabout five-and-twenty years before, and which had therefore fulltime to produce its effect.

A very few words will sufficiently explain all that I have to sayconcerning the other three branches of the corn trade.

II. The trade of the merchant importer of foreign corn for homeconsumption evidently contributes to the immediate supply of thehome market, and must so far be immediately beneficial to thegreat body of the people. It tends, indeed, to lower somewhat theaverage money price of corn, but not to diminish its real value, orthe quantity of labour which it is capable of maintaining. Ifimportation was at all times free, our farmers and countrygentlemen would, probably, one year with another, get less moneyfor their corn than they do at present, when importation is at mosttimes in effect prohibited; but the money which they got would beof more value, would buy more goods of all other kinds, and wouldemploy more labour. Their real wealth, their real revenue,therefore, would be the same as at present, though it might be



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expressed by a smaller quantity of silver; and they would neitherbe disabled nor discouraged from cultivating corn as much as theydo at present. On the contrary, as the rise in the real value ofsilver, in consequence of lowering the money price of corn, lowerssomewhat the money price of all other commodities, it gives theindustry of the country, where it takes place, some advantage in allforeign markets, and thereby tends to encourage and increase thatindustry. But the extent of the home market for corn must be inproportion to the general industry of the country where it grows,or to the number of those who produce something else, andtherefore have something else, or what comes to the same thing,the price of something else, to give in exchange for corn. But inevery country the home market, as it is the nearest and mostconvenient, so is it likewise the greatest and most importantmarket 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 22nd of Charles II, c. 13, the importation of wheat,whenever the price in the home market did not exceed fifty-threeshillings and fourpence the quarter, was subjected to a duty ofsixteen shillings the quarter, and to a duty of eight shillingswhenever the price did not exceed four pounds. The former ofthese two prices has, for more than a century past, taken placeonly in times of very great scarcity; and the latter has, so far as Iknow, not taken place at all. Yet, till wheat had risen above thislatter price, it was by this statute subjected to a very high duty;and, tin it had risen above the former, to a duty which amountedto a prohibition. The importation of other sorts of grain was



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restrained at rates, and by duties, in proportion to the value of thegrain, almost equally high.1 Subsequent laws still furtherincreased those duties.

The distress which, in years of scarcity, the strict execution ofthose laws might have brought upon the people, would probablyhave been very great. But, upon such occasions, its execution wasgenerally suspended by temporary statutes, which permitted, for alimited time, the importation of foreign corn. The necessity ofthese temporary statutes sufficiently demonstrates theimpropriety of this general one.

These restraints upon importation, though prior to the

1Before 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 91/2d.

Pease to 40s. 16s. 10d. after 93/4d.

Rye to 36s. 19s. 10d. till 40s. 16s. 8d. then 12d.

Wheat to 44s. 21s. 9d. till 53s. 4d. 17s. then 8s.

till 4 l. and after that about 1s. 4d.

Buckwheat to 32s. per qr. to pay 16s.

These different duties were imposed, partly by the 92nd 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.



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establishment of the bounty, were dictated by the same spirit, bythe same principles, which afterwards enacted that regulation.How hurtful soever in themselves, these or some other restraintsupon importation became necessary in consequence of thatregulation. If, when wheat was either below forty-eight shillingsthe quarter, or not much above it, foreign corn could have beenimported either duty free, or upon paying only a small duty, itmight have been exported again, with the benefit of the bounty, tothe great loss of the public revenue, and to the entire perversion ofthe institution, of which the object was to extend the market forthe home growth, not that for the growth of foreign countries.

III. The trade of the merchant exporter of corn for foreignconsumption certainly does not contribute directly to the plentifulsupply of the home market. It does so, however, indirectly. Fromwhatever source this supply may be usually drawn, whether fromhome growth or from foreign importation, unless more corn iseither usually grown, or usually imported into the country, thanwhat is usually consumed in it, the supply of the home market cannever be very plentiful. But unless the surplus can in all ordinarycases be exported, the growers will be careful never to grow more,and the importers never to import more, than what the bareconsumption of the home market requires. That market will veryseldom be overstocked; but it will generally be understocked, thepeople whose business it is to supply it being generally afraid lesttheir goods should be left upon their hands. The prohibition ofexportation limits the improvement and cultivation of the countryto what the supply of its own inhabitants requires. The freedom ofexportation enables it to extend cultivation for the supply offoreign nations.



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By the 12th of Charles II, c. 4, the exportation of corn waspermitted whenever the price of wheat did not exceed fortyshillings the quarter, and that of other grain in proportion. By the15th of the same prince, this liberty was extended till the price ofwheat exceeded forty-eight shillings the quarter; and by the 22nd,to all higher prices. A poundage, indeed, was to be paid to the kingupon such exportation. But all grain was rated so low in the bookof rates that this poundage amounted only upon wheat to ashilling, upon oats to fourpence, and upon all other grain tosixpence the quarter. By the 1st of William and Mary, the actwhich established the bounty, this small duty was virtually takenoff whenever the price of wheat did not exceed, forty-eightshillings 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, notonly encouraged by a bounty, but rendered much more free thanthat of the inland dealer. By the last of these statutes, corn couldbe engrossed at any price for exportation, but it could not beengrossed for inland sale except when the price did not exceedforty-eight shillings the quarter. The interest of the inland dealer,however, it has already been shown, can never be opposite to thatof the great body of the people. That of the merchant exportermay, and in fact sometimes is. If, while his own country laboursunder a dearth, a neighbouring country should be afflicted with afamine, it might be his interest to carry corn to the latter countryin such quantities as might very much aggravate the calamities ofthe dearth. The plentiful supply of the home market was not thedirect object of those statutes; but, under the pretence ofencouraging agriculture, to raise the money price of corn as high



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as possible, and thereby to occasion, as much as possible, aconstant dearth in the home market. By the discouragement ofimportation, the supply of that market, even in times of greatscarcity, was confined to the home growth; and by theencouragement of exportation, when the price was so high asforty-eight shillings the quarter, that market was not, even intimes of considerable scarcity, allowed to enjoy the whole of thatgrowth. The temporary laws, prohibiting for a limited time theexportation of corn, and taking off for a limited time the dutiesupon its importation, expedients to which Great Britain has beenobliged so frequently to have recourse, sufficiently demonstratethe impropriety of her general system. Had that system been good,she would not so frequently have been reduced to the necessity ofdeparting from it.

Were all nations to follow the liberal system of free exportationand free importation, the different states into which a greatcontinent was divided would so far resemble the differentprovinces of a great empire. As among the different provinces of agreat empire the freedom of the inland trade appears, both fromreason and experience, not only the best palliative of a dearth, butthe most effectual preventative of a famine; so would the freedomof the exportation and importation trade be among the differentstates into which a great continent was divided. The larger thecontinent, the easier the communication through all the differentparts of it, both by land and by water, the less would any oneparticular part of it ever be exposed to either of these calamities,the scarcity of any one country being more likely to be relieved bythe plenty of some other. But very few countries have entirelyadopted this liberal system. The freedom of the corn trade is



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almost everywhere more or less restrained, and, in manycountries, is confined by such absurd regulations as frequentlyaggravate the unavoidable misfortune of a dearth into the dreadfulcalamity of a famine. The demand of such countries for corn mayfrequently become so great and so urgent that a small state intheir neighbourhood, which happened at the same time to belabouring under some degree of dearth, could not venture tosupply them without exposing itself to the like dreadful calamity.The very bad policy of one country may thus render it in somemeasure dangerous and imprudent to establish what wouldotherwise be the best policy in another. The unlimited freedom ofexportation, however, would be much less dangerous in greatstates, in which the growth being much greater, the supply couldseldom be much affected by any quantity of corn that was likely tobe exported. In a Swiss canton, or in some of the little states ofItaly, it may perhaps sometimes be necessary to restrain theexportation of corn. In such great countries as France or Englandit scarce ever can. To hinder, besides, the farmer from sending hisgoods at all times to the best market is evidently to sacrifice theordinary laws of justice to an idea of public utility, to a sort ofreasons of state; an act of legislative authority which ought to beexercised only, which can be pardoned only in cases of the mosturgent necessity. The price at which the exportation of corn isprohibited, if it is ever to be prohibited, ought always to be a veryhigh price.

The laws concerning corn may everywhere be compared to thelaws concerning religion. The people feel themselves so muchinterested in what relates either of their subsistence in this life, orto their happiness in a life to come, that government must yield to



710

their prejudices, and, in order to preserve the public tranquillity,establish that system which they approve of. It is upon thisaccount, perhaps, that we so seldom find a reasonable systemestablished with regard to either of those two capital objects.

IV. The trade of the merchant carrier, or of the importer offoreign corn in order to export it again, contributes to the plentifulsupply of the home market. It is not indeed the direct purpose ofhis trade to sell his corn there. But he will generally be willing todo so, and even for a good deal less money than he might expect ina foreign market; because he saves in this manner the expense ofloading and unloading, of freight and insurance. The inhabitantsof the country which, by means of the carrying trade, becomes themagazine and storehouse for the supply of other countries canvery seldom be in want themselves. Though the carrying trademight thus contribute to reduce the average money price of cornin the home market, it would not thereby lower its real value. Itwould 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 theimportation of foreign corn, of the greater part of which there wasno drawback; and upon extraordinary occasions, when a scarcitymade 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 upon alloccasions.

That system of laws, therefore, which is connected with theestablishment of the bounty, seems to deserve no part of the praisewhich has been bestowed upon it. The improvement andprosperity of Great Britain, which has been so often ascribed to



711

those laws, may very easily be accounted for by other causes. Thatsecurity which the laws in Great Britain give to every man that heshall enjoy the fruits of his own labour is alone sufficient to makeany country flourish, notwithstanding these and twenty otherabsurd regulations of commerce; and this security was perfectedby the revolution much about the same time that the bounty wasestablished. The natural effort of every individual to better hisown condition, when suffered to exert itself with freedom andsecurity is so powerful a principle that it is alone, and without anyassistance, not only capable of carrying on the society to wealthand prosperity, but of surmounting a hundred impertinentobstructions with which the folly of human laws too oftenincumbers its operations; though the effect of these obstructions isalways more or less either to encroach upon its freedom, or todiminish its security. In Great Britain industry is perfectly secure;and though it is far from being perfectly free, it is as free or freerthan in any other part of Europe.

Though the period of the greatest prosperity and improvementof Great Britain has been posterior to that system of laws which isconnected with the bounty, we must not upon that account imputeit 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 bountyhas exactly the same tendency with the police of Spain andPortugal, to lower somewhat the value of the precious metals inthe country where it takes place, yet Great Britain is certainly oneof the richest countries in Europe, while Spain and Portugal areperhaps among the most beggarly. This difference of situation,however, may easily be accounted for from two different causes.



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First, the tax of Spain, the prohibition in Portugal of exportinggold and silver, and the vigilant police which watches over theexecution of those laws, must, in two very poor countries, whichbetween them import annually upwards of six millions sterling,operate not only more directly but much more forcibly in reducingthe value of those metals there than the corn laws can do in GreatBritain. And, secondly, this bad policy is not in those countriescounterbalanced by the general liberty and security of the people.Industry is there neither free nor secure, and the civil andecclesiastical governments of both Spain and Portugal are such aswould alone be sufficient to perpetuate their present state ofpoverty, even though their regulations of commerce were as wiseas the greater part of them are absurd and foolish.

The 13th of the present king, c. 43, seems to have established anew system with regard to the corn laws in many respects betterthan the ancient one, but in one or two respects perhaps not quiteso good.

By this statute the high duties upon importations for homeconsumption are taken off so soon as the price of middling wheatrises to forty-eight shillings the quarter; that of middling rye,pease or beans, to thirty-two shillings; that of barley to twenty-fourshillings; and that of oats to sixteen shillings; and instead of thema small duty is imposed of only sixpence upon the quarter ofwheat, and upon that of other grain in proportion. With regard toall these different sorts of grain, but particularly with regard towheat, the home market is thus opened to foreign supplies atprices considerably lower than before.

By the same statute the old bounty of five shillings upon theexportation of wheat ceases so soon as the price rises to forty-four



713

shillings the quarter, instead of forty-eight, the price at which itceased before; that of two shillings and sixpence upon theexportation of barley ceases so soon as the price rises to twenty-two shillings, instead of twenty-four, the price at which it ceasedbefore; that of two shillings and sixpence upon the exportation ofoatmeal ceases so soon as the price rises to fourteen shillings,instead of fifteen, the price at which it ceased before. The bountyupon rye is reduced from three shillings and sixpence to threeshillings, and it ceases so soon as the price rises to twenty-eightshillings instead of thirty-two, the price at which it ceased before.If bounties are as improper as I have endeavoured to prove themto be, the sooner they cease, and the lower they are, so much thebetter.

The same statute permits, at the lowest prices, the importationof corn, in order to be exported again duty free, provided it is inthe meantime lodged in a warehouse under the joint locks of theking and the importer. This liberty, indeed, extends to no morethan twenty-five of the different ports of Great Britain. They are,however, the principal ones, and there may not, perhaps, bewarehouses proper for this purpose in the greater part of theothers.

So far this law seems evidently an improvement upon theancient system.

But by the same law a bounty of two shillings the quarter isgiven for the exportation of oats whenever the price does notexceed fourteen shillings. No bounty had ever been given beforefor the exportation of this grain, no more than for that of pease orbeans.

By the same law, too, the exportation of wheat is prohibited so



714

soon as the price rises to forty-four shillings the quarter; that ofrye so soon as it rises to twenty-eight shillings; that of barley sosoon as it rises to twenty-two shillings; and that of oats so soon asthey rise to fourteen shillings. Those several prices seem all ofthem a good deal too low, and there seems to be an impropriety,besides, in prohibiting exportation altogether at those preciseprices at which that bounty, which was given in order to force it, iswithdrawn. The bounty ought certainly either to have beenwithdrawn at a much lower price, or exportation ought to havebeen allowed at a much higher.

So far, therefore, this law seems to be inferior to the ancientsystem. With all its imperfections, however, we may perhaps say ofit what was said of the laws of Solon, that, though not the best initself, it is the best which the interests, prejudices, and temper ofthe times would admit of. It may perhaps in due time prepare theway for a better.



715

Chapter VI

Of Treaties of Commerce

hen a nation binds itself by treaty either to permit theentry of certain goods from one foreign country which itprohibits from all others, or to exempt the goods of one

country from duties to which it subjects those of all others, thecountry, or at least the merchants and manufacturers of thecountry, whose commerce is so favoured, must necessarily derivegreat advantage from the treaty.

Those merchants and manufacturers enjoy a sort of monopolyin the country which is so indulgent to them. That countrybecomes a market both more extensive and more advantageousfor their goods: more extensive, because the goods of other nationsbeing either excluded or subjected to heavier duties, it takes off agreater quantity of theirs: more advantageous, because themerchants of the favoured country, enjoying a sort of monopolythere, will often sell their goods for a better price than if exposedto the free competition of all other nations.

Such treaties, however, though they may be advantageous tothe merchants and manufacturers of the favoured, are necessarilydisadvantageous to those of the favouring country. A monopoly isthus granted against them to a foreign nation; and they mustfrequently buy the foreign goods they have occasion for dearerthan if the free competition of other nations was admitted. Thatpart of its own produce with which such a nation purchasesforeign goods must consequently be sold cheaper, because when

W



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two things are exchanged for one another, the cheapness of theone is a necessary consequence, or rather the same thing with thedearness of the other. The exchangeable value of its annualproduce, 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 willnot probably sell them for less than they cost; nor, as in the case ofbounties, for a price which will not replace the capital employed inbringing them to market, together with the ordinary profits ofstock. The trade could not go on long if it did. Even the favouringcountry, therefore, may still gain by the trade, though less than ifthere was a free competition.

Some treaties of commerce, however, have been supposedadvantageous upon principles very different from these; and acommercial country has sometimes granted a monopoly of thiskind against itself to certain goods of a foreign nation, because itexpected that in the whole commerce between them, it wouldannually sell more than it would buy, and that a balance in goldand silver would be annually returned to it. It is upon thisprinciple that the treaty of commerce between England andPortugal, concluded in 1703 by Mr. Methuen, has been so muchcommended. 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, intoPortugal, the woollen cloths, and the rest of the woollen



717

manufactures of the British, as was accustomed, till they wereprohibited 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, forever hereafter, to admit the wines of the growth of Portugal intoBritain; so that at no time, whether there shall be peace or warbetween the kingdoms of Britain and France, anything more shallbe demanded for these wines by the name of custom or duty, or bywhatsoever other title, directly or indirectly, whether they shall beimported into Great Britain in pipes or hogsheads, or other casks,than what shall be demanded for the like quantity or measure ofFrench wine, deducting or abating a third part of the custom orduty. But if at any time this deduction or abatement of customs,which is to be made as aforesaid, shall in any manner beattempted and prejudiced, it shall be just and lawful for his sacredroyal majesty of Portugal, again to prohibit the woollen cloths, andthe 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 ratifythis treaty; and within the space of two months the ratificationsshall be exchanged.

By this treaty the crown of Portugal becomes bound to admit

*Queen Anne.



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the English woollens upon the same footing as before theprohibition; that is, not to raise the duties which had been paidbefore that time. But it does not become bound to admit themupon any better terms than those of any other nation, of France orHolland for example.

The crown of Great Britain, on the contrary, becomes bound toadmit the wines of Portugal upon paying only two-thirds of theduty which is paid for those of France, the wines most likely tocome into competition with them. So far this treaty, therefore, isevidently advantageous to Portugal, and disadvantageous to GreatBritain.

It has been celebrated, however, as a masterpiece of thecommercial policy of England. Portugal receives annually from theBrazils a greater quantity of gold than can be employed in itsdomestic commerce, whether in the shape of coin or of plate. Thesurplus is too valuable to be allowed to lie idle and locked up incoffers, and as it can find no advantageous market at home, itmust, notwithstanding any prohibition, be sent abroad, andexchanged for something for which there is a more advantageousmarket at home. A large share of it comes annually to England, inreturn either for English goods, or for those of other Europeannations that receive their returns through England. Mr. Barettiwas informed that the weekly packet-boat from Lisbon brings, oneweek with another, more than fifty thousand pounds in gold toEngland. The sum had probably been exaggerated. It wouldamount to more than two millions six hundred thousand pounds ayear, which is more than the Brazils are supposed to afford.

Our merchants were some years ago out of humour with thecrown of Portugal. Some privileges which had been granted them,



719

not by treaty, but by the free grace of that crown, at the solicitationindeed, it is probable, and in return for much greater favours,defence and protection, from the crown of Great Britain had beeneither infringed or revoked. The people, therefore, usually mostinterested in celebrating the Portugal trade were then ratherdisposed to represent it as less advantageous than it hadcommonly been imagined. The far greater part, almost the whole,they pretended, of this annual importation of gold, was not onaccount of Great Britain, but of other European nations; the fruitsand wines of Portugal annually imported into Great Britain nearlycompensating the value of the British goods sent thither.

Let us suppose, however, that the whole was on account ofGreat Britain, and that it amounted to a still greater sum than Mr.Baretti seems to imagine; this trade would not, upon that account,be more advantageous than any other in which, for the same valuesent out, we received an equal value of consumable goods inreturn.

It is but a very small part of this importation which, it can besupposed, is employed as an annual addition either to the plate orto the coin of the kingdom. The rest must all be sent abroad andexchanged for consumable goods of some kind or other. But ifthose consumable goods were purchased directly with the produceof English industry, it would be more for the advantage of Englandthan first to purchase with that produce the gold of Portugal, andafterwards to purchase with that gold those consumable goods. Adirect foreign trade of consumption is always more advantageousthan a round-about one; and to bring the same value of foreigngoods to the home market, requires a much smaller capital in theone way than in the other. If a smaller share of its industry,



720

therefore, had been employed in producing goods fit for thePortugal market, and a greater in producing those fit for the othermarkets, where those consumable goods for which there is ademand in Great Britain are to be had, it would have been morefor the advantage of England. To procure both the gold, which itwants for its own use, and the consumable goods, would, in thisway, employ a much smaller capital than at present. There wouldbe a spare capital, therefore, to be employed for other purposes, inexciting an additional quantity of industry, and in raising a greaterannual produce.

Though Britain were entirely excluded from the Portugal trade,it could find very little difficulty in procuring all the annualsupplies of gold which it wants, either for the purposes of plate, orof coin, or of foreign trade. Gold, like every other commodity, isalways somewhere or another to be got for its value by those whohave that value to give for it. The annual surplus of gold inPortugal, besides, would still be sent abroad, and though notcarried away by Great Britain, would be carried away by someother nation, which would be glad to sell it again for its price, inthe same manner as Great Britain does at present. In buying goldof Portugal, indeed, we buy it at the first hand; whereas, in buyingit of any other nation, except Spain, we should buy it at thesecond, and might pay somewhat dearer. This difference,however, would surely be too insignificant to deserve the publicattention.

Almost all our gold, it is said, comes from Portugal. With othernations the balance of trade is either against us, or not much inour favour. But we should remember that the more gold weimport from one country, the less we must necessarily import from



721

all others.The effectual demand for gold, like that for every other

commodity, is in every country limited to a certain quantity. Ifnine-tenths of this quantity are imported from one country, thereremains a tenth only to be imported from all others. The moregold besides that is annually imported from some particularcountries, over and above what is requisite for plate and for coin,the more must necessarily be exported to some others; and themore that most insignificant object of modern policy, the balanceof trade, appears to be in our favour with some particularcountries, the more it must necessarily appear to be against uswith many others.

It was upon this silly notion, however, that England could notsubsist without the Portugal trade, that, towards the end of thelate war, France and Spain, without pretending either offence orprovocation, required the King of Portugal to exclude all Britishships from his ports, and for the security of this exclusion, toreceive into them French or Spanish garrisons. Had the king ofPortugal submitted to those ignominious terms which his brother-in-law the king of Spain proposed to him, Britain would have beenfreed from a much greater inconveniency than the loss of thePortugal trade, the burden of supporting a very weak ally, sounprovided of everything for his own defence that the wholepower 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 aconsiderable embarrassment to the merchants at that timeengaged in it, who might not, perhaps, have found out, for a yearor two, any other equally advantageous method of employing their



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capitals; and in this would probably have consisted all theinconveniency which England could have suffered from thisnotable piece of commercial policy.

The great annual importation of gold and silver is neither forthe purpose of plate nor of coin, but of foreign trade. A round-about foreign trade of consumption can be carried on moreadvantageously by means of these metals than of almost any othergoods. As they are the universal instruments of commerce, theyare more readily received in return for all commodities than anyother goods; and on account of their small bulk and great value, itcosts less to transport them backward and forward from one placeto another than almost any other sort of merchandise, and theylose less of their value by being so transported. Of all thecommodities, therefore, which are bought in one foreign country,for no other purpose but to be sold or exchanged again for someother goods in another, there are none so convenient as gold andsilver. In facilitating all the different round-about foreign trades ofconsumption which are carried on in Great Britain consists theprincipal advantage of the Portugal trade; and though it is not acapital 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, couldrequire but a very small annual importation of gold and silver,seems evident enough; and though we had no direct trade withPortugal, this small quantity could always, somewhere or another,be very easily got.

Though the goldsmith’s trade be very considerable in GreatBritain, the far greater part of the new plate which they annuallysell is made from other old plate melted down; so that the addition



723

annually made to the whole plate of the kingdom cannot be verygreat, 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, forten years together, before the late reformation of the gold coin, toupwards of eight hundred thousand pounds a year in gold, was anannual addition to the money before current in the kingdom. In acountry where the expense of the coinage is defrayed by thegovernment, the value of the coin, even when it contains its fullstandard weight of gold and silver, can never be much greaterthan that of an equal quantity of those metals uncoined; because itrequires only the trouble of going to the mint, and the delayperhaps of a few weeks, to procure for any quantity of uncoinedgold and silver an equal quantity of those metals in coin. But, inevery country, the greater part of the current coin is almost alwaysmore or less worn, or otherwise degenerated from its standard. InGreat Britain it was, before the late reformation, a good deal so,the gold being more than two per cent and the silver more thaneight per cent below its standard weight. But if forty-four guineasand a half, containing their full standard weight, a pound weight ofgold, could purchase very little more than a pound weight could ofuncoined gold, forty-four guineas and a half wanting a part of theirweight could not purchase a pound weight, and something was tobe added in order to make up the deficiency. The current price ofgold bullion at market, therefore, instead of being the same withthe mint price, or £46 14s. 6d., was then about £47 14s. andsometimes 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



724

than any other ordinary guineas, because when they came into thecoffers of the merchant, being confounded with other money, theycould not afterwards be distinguished without more trouble thanthe difference was worth. Like other guineas they were worth nomore than £46 14s. 6d. If thrown into the melting pot, however,they produced, without any sensible loss, a pound weight ofstandard gold, which could be sold at any time for between £4714s. and £48 either of gold or silver, as fit for all the purposes ofcoin as that which had been melted down. There was an evidentprofit, therefore, in melting down new coined money, and it wasdone so instantaneously, that no precaution of government couldprevent it.

The operations of the mint were, upon this account, somewhatlike the web of Penelope; the work that was done in the day wasundone in the night. The mint was employed, not so much inmaking daily additions to the coin, as in replacing the very bestpart of it which was daily melted down.

Were the private people, who carry their gold and silver to themint, to pay themselves for the coinage, it would add to the valueof those metals in the same manner as the fashion does to that ofplate. Coined gold and silver would be more valuable thanuncoined. The seignorage, if it was not exorbitant, would add tothe bullion the whole value of the duty; because, the governmenthaving everywhere the exclusive privilege of coining, no coin cancome to market cheaper than they think proper to afford it. If theduty was exorbitant indeed, that is, if it was very much above thereal value of the labour and expense requisite for coinage, falsecoiners, both at home and abroad, might be encouraged, by thegreat difference between the value of bullion and that of coin, to



725

pour in so great a quantity of counterfeit money as might reducethe value of the government money. In France, however, thoughthe seignorage is eight per cent, no sensible inconveniency of thiskind is found to arise from it. The dangers to which a false coineris everywhere exposed, if he lives in the country of which hecounterfeits the coin, and to which his agents or correspondentsare exposed if he lives in a foreign country, are by far too great tobe incurred for the sake of a profit of six or seven per cent.

The seignorage in France raises the value of the coin higherthan in proportion to the quantity of pure gold which it contains.Thus by the edict of January 1726, the1 mint price of fine gold oftwenty-four carats was fixed at seven hundred and forty livresnine sous and one denier one-eleventh, the mark of eight Parisounces.

The gold coin of France, making an allowance for the remedy ofthe mint, contains twenty-one carats and three-fourths of finegold, and two carats one fourth of alloy. The mark of standardgold, therefore, is worth no more than about six hundred andseventy-one livres ten deniers. But in France this mark ofstandard gold is coined into thirty Louis d’ors of twenty-four livreseach, 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 tendeniers, and seven hundred and twenty livres; or by forty-eightlivres nineteen sous and two deniers.

1See Dictionnaire des Monnoies, vol. ii, article seigneurage, p. 489, par M.

Abot de Bazinghen, Conseiller-Comissaire en la Cour des Monnoies à

Paris.



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A seignorage will, in many cases, take away altogether, and will,in all cases, diminish the profit of melting down the new coin. Thisprofit always arises from the difference between the quantity ofbullion which the common currency ought to contain, and thatwhich it actually does contain. If this difference is less than theseignorage, there will be loss instead of profit. If it is equal to theseignorage, there will neither be profit nor loss. If it is greater thanthe seignorage, there will indeed be some profit, but less than ifthere was no seignorage. If, before the late reformation of the goldcoin, for example, there had been a seignorage of five per centupon the coinage, there would have been a loss of three per centupon the melting down of the gold coin. If the seignorage had beentwo per cent there would have been neither profit nor loss. If theseignorage had been one per cent there would have been a profit,but of one per cent only instead of two per cent. Wherever moneyis received by tale, therefore, and not by weight, a seignorage isthe most effectual preventative of the melting down of the coin,and, for the same reason, of its exportation. It is the best andheaviest pieces that are commonly either melted down orexported; because it is upon such that the largest profits are made.

The law for encouragement of the coinage, by rendering it duty-free, was first enacted during the reign of Charles II for a limitedtime; and afterwards continued, by different prolongations, till1769, when it was rendered perpetual. The Bank of England, inorder to replenish their coffers with money, are frequently obligedto carry bullion to the mint; and it was more for their interest, theyprobably imagined, that the coinage should be at the expense ofthe government than at their own. It was probably out ofcomplaisance to this great company that the government agreed to



727

render this law perpetual. Should the custom of weighing gold,however, come to be disused, as it is very likely to be on account ofits inconveniency; should the gold coin of England come to bereceived by tale, as it was before the late recoinage, this greatcompany may, perhaps, find that they have upon this, as uponsome other occasions, mistaken their own interest not a little.

Before the late recoinage, when the gold currency of Englandwas two per cent below its standard weight, as there was noseignorage, it was two per cent below the value of that quantity ofstandard gold bullion which it ought to have contained. When thisgreat company, therefore, bought gold bullion in order to have itcoined, they were obliged to pay for it two per cent more than itwas worth after coinage. But if there had been a seignorage of twoper cent upon the coinage, the common gold currency, though twoper cent below its standard weight, would notwithstanding havebeen equal in value to the quantity of standard gold which it oughtto have contained; the value of the fashion compensating in thiscase the diminution of the weight. They would indeed have hadthe seignorage to pay, which being two per cent, their loss uponthe whole transaction would have been two per cent exactly thesame, but no greater than it actually was.

If the seignorage had been five per cent, and the gold currencyonly two per cent below its standard weight, the bank would inthis 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 payupon the coinage, their loss upon the whole transaction would, inthe same manner, have been exactly two per cent.

If the seignorage had been only one per cent and the goldcurrency two per cent below its standard weight, the bank would



728

in this case have lost only one per cent upon the price of thebullion; but as they would likewise have had a seignorage of oneper cent to pay, their loss upon the whole transaction would havebeen exactly two per cent in the same manner as in all other cases.

If there was a reasonable seignorage, while at the same time thecoin contained its full standard weight, as it has done very nearlysince the last recoinage, whatever the bank might lose by theseignorage, they would gain upon the price of the bullion; andwhatever they might gain upon the price of the bullion, they wouldlose by the seignorage. They would neither lose nor gain,therefore, upon the whole transaction, and they would in this, asin all the foregoing cases, be exactly in the same situation as ifthere was no seignorage.

When the tax upon a commodity is so moderate as not toencourage smuggling, the merchant who deals in it, though headvances, does not properly pay the tax, as he gets it back in theprice of the commodity. The tax is finally paid by the lastpurchaser or consumer. But money is a commodity with regard towhich every man is a merchant. Nobody buys it but in order to sellit again; and with regard to it there is in ordinary cases no lastpurchaser or consumer.

When the tax upon coinage, therefore, is so moderate as not toencourage false coining, though everybody advances the tax,nobody finally pays it; because everybody gets it back in theadvanced value of the coin.

A moderate seignorage, therefore, would not in any caseaugment the expense of the bank, or of any other private personswho carry their bullion to the mint in order to be coined, and thewant of a moderate seignorage does not in any case diminish it.



729

Whether there is or is not a seignorage, if the currency contains itsfull standard weight, the coinage costs nothing to anybody, and ifit is short of that weight, the coinage must always cost thedifference between the quantity of bullion which ought to becontained in it, and that which actually is contained in it.

The government, therefore, when it defrays the expense ofcoinage, not only incurs some small expense, but loses some smallrevenue which it might get by a proper duty; and neither the banknor any other private persons are in the smallest degree benefitedby this useless piece of public generosity.

The directors of the bank, however, would probably beunwilling to agree to the imposition of a seignorage upon theauthority of a speculation which promises them no gain, but onlypretends to insure them from any loss. In the present state of thegold coin, and as long as it continues to be received by weight,they certainly would gain nothing by such a change. But if thecustom of weighing the gold coin should ever go into misuse, as itis very likely to do, and if the gold coin should ever fall into thesame state of degradation in which it was before the laterecoinage, the gain, or more properly the savings of the bank, inconsequence of the imposition of a seignorage, would probably bevery considerable. The Bank of England is the only companywhich sends any considerable quantity of bullion to the mint, andthe burden of the annual coinage falls entirely, or almost entirely,upon it. If this annual coinage had nothing to do but to repair theunavoidable losses and necessary wear and tear of the coin, itcould seldom exceed fifty thousand or at most a hundred thousandpounds. But when the coin is degraded below its standard weight,the annual coinage must, besides this, fill up the large vacuities



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which exportation and the melting pot are continually making inthe current coin. It was upon this account that during the ten ortwelve years immediately preceding the late reformation of thegold coin, the annual coinage amounted at an average to morethan eight hundred and fifty thousand pounds. But if there hadbeen a seignorage of four or five per cent upon the gold coin, itwould probably, even in the state in which things then were, haveput an effectual stop to the business both of exportation and of themelting pot. The bank, instead of losing every year about two anda half per cent upon the bullion which was to be coined into morethan eight hundred and fifty thousand pounds, or incurring anannual loss of more than twenty-one thousand two hundred andfifty pounds, would not probably have incurred the tenth part ofthat loss.

The revenue allotted by Parliament for defraying the expenseof the coinage is but fourteen thousand pounds a year, and the realexpense which it costs the government, or the fees of the officersof the mint, do not upon ordinary occasions, I am assured, exceedthe half of that sum. The saving of so very small a sum, or even thegaining of another which could not well be much larger, areobjects too inconsiderable, it may be thought, to deserve theserious attention of government. But the saving of eighteen ortwenty thousand pounds a year in case of an event which is notimprobable, which has frequently happened before, and which isvery likely to happen again, is surely an object which well deservesthe serious attention even of so great a company as the Bank ofEngland.

Some of the foregoing reasonings and observations mightperhaps have been more properly placed in those chapters of the



731

first book which treat of the origin and use of money, and of thedifference between the real and the nominal price of commodities.But as the law for the encouragement of coinage derives its originfrom those vulgar prejudices which have been introduced by themercantile system, I judged it more proper to reserve them for thischapter. Nothing could be more agreeable to the spirit of thatsystem than a sort of bounty upon the production of money, thevery thing which, it supposes, constitutes the wealth of everynation. It is one of its many admirable expedients for enriching thecountry.



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Chapter VII

Of Colonies

PART 1

Of the Motives for establishing new Colonies

he interest which occasioned the first settlement of thedifferent European colonies in America and the WestIndies was not altogether so plain and distinct as that

which directed the establishment of those of ancient Greece andRome.

All the different states of ancient Greece possessed, each ofthem, but a very small territory, and when the people in any one ofthem multiplied beyond what that territory could easily maintain,a part of them were sent in quest of a new habitation in someremote and distant part of the world; the war-like neighbours whosurrounded them on all sides, rendering it difficult for any of themto enlarge very much its territory at home. The colonies of theDorians resorted chiefly to Italy and Sicily, which, in the timespreceding the foundation of Rome, were inhabited by barbarousand uncivilised nations: those of the Ionians and Æolians, the twoother great tribes of the Greeks, to Asia Minor and the islands ofthe Aegean Sea, of which the inhabitants seem at that time to havebeen pretty much in the same state as those of Sicily and Italy.The mother city, though she considered the colony as a child, at alltimes entitled to great favour and assistance, and owing in return

T



733

much gratitude and respect, yet considered it as an emancipatedchild over whom she pretended to claim no direct authority orjurisdiction. The colony settled its own form of government,enacted its own laws, elected its own magistrates, and made peaceor war with its neighbours as an independent state, which had nooccasion to wait for the approbation or consent of the mother city.Nothing can be more plain and distinct than the interest whichdirected every such establishment.

Rome, like most of the other ancient republics, was originallyfounded upon an Agrarian law which divided the public territoryin a certain proportion among the different citizens who composedthe state. The course of human affairs by marriage, by succession,and by alienation, necessarily deranged this original division, andfrequently threw the lands, which had been allotted for themaintenance of many different families, into the possession of asingle person. To remedy this disorder, for such it was supposed tobe, a law was made restricting the quantity of land which anycitizen could possess to five hundred jugera, about three hundredand fifty English acres. This law, however, though we read of itshaving been executed upon one or two occasions, was eitherneglected or evaded, and the inequality of fortunes went oncontinually increasing. The greater part of the citizens had noland, and without it the manners and customs of those timesrendered it difficult for a freeman to maintain his independency.In the present time, though a poor man has no land of his own, ifhe has a little stock he may either farm the lands of another, or hemay carry on some little retail trade; and if he has no stock, hemay find employment either as a country labourer or as anartificer. But among the ancient Romans the lands of the rich were



734

all cultivated by slaves, who wrought under an overseer who waslikewise a slave; so that a poor freeman had little chance of beingemployed either as a farmer or as a labourer. All trades andmanufactures too, even the retail trade, were carried on by theslaves of the rich for the benefit of their masters, whose wealth,authority, and protection made it difficult for a poor freeman tomaintain the competition against them. The citizens, therefore,who had no land, had scarce any other means of subsistence butthe bounties of the candidates at the annual elections. Thetribunes, when they had a mind to animate the people against therich and the great, put them in mind of the ancient division oflands, and represented that law which restricted this sort ofprivate property as the fundamental law of the republic. Thepeople became clamorous to get land, and the rich and the great,we may believe, were perfectly determined not to give them anypart of theirs. To satisfy them in some measure therefore, theyfrequently proposed to send out a new colony. But conqueringRome was, even upon such occasions, under no necessity ofturning out her citizens to seek their fortune, if one may say so,through the wide world, without knowing where they were tosettle. She assigned them lands generally in the conqueredprovinces of Italy, where, being within the dominions of therepublic, they could never form an independent state; but were atbest but a sort of corporation, which, though it had the power ofenacting bye-laws for its own government, was at all times subjectto the correction, jurisdiction, and legislative authority of themother city. The sending out a colony of this kind not only gavesome satisfaction to the people, but often established a sort ofgarrison, too, in a newly conquered province, of which the



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obedience might otherwise have been doubtful. A Roman colonytherefore, whether we consider the nature of the establishmentitself or the motives for making it, was altogether different from aGreek one. The words accordingly, which in the original languagesdenote those different establishments, have very differentmeanings.

The Latin word (Colonia) signifies simply a plantation. TheGreek word αποικια, on the contrary, signifies a separation ofdwelling, a departure from home, a going out of the house. But,though the Roman colonies were in many respects different fromthe Greek ones, the interest which prompted to establish themwas equally plain and distinct. Both institutions derived theirorigin either from irresistible necessity, or from clear and evidentutility.

The establishment of the European colonies in America and theWest Indies arose from no necessity: and though the utility whichhas resulted from them has been very great, it is not altogether soclear and evident. It was not understood at their firstestablishment, and was not the motive either of that establishmentor of the discoveries which gave occasion to it, and the nature,extent, and limits of that utility are not, perhaps, well understoodat this day.

The Venetians, during the fourteenth and fifteenth centuries,carried on a very advantageous commerce in spiceries, and otherEast India goods, which they distributed among the other nationsof Europe. They purchased them chiefly in Egypt, at that timeunder the dominion of the Mamelukes, the enemies of the Turks,of whom the Venetians were the enemies; and this union ofinterest, assisted by the money of Venice, formed such a



736

connection 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 ofthe fifteenth century, to find out by sea a way to the countries fromwhich the Moors brought them ivory and gold dust across thedesert. They discovered the Madeiras, the Canaries, the Azores,the Cape de Verde Islands, the coast of Guinea, that of Loango,Congo, Angola, and Benguela, and, finally, the Cape of GoodHope. They had long wished to share in the profitable traffic of theVenetians, and this last discovery opened to them a probableprospect of doing so. In 1497, Vasco de Gama sailed from the portof Lisbon with a fleet of four ships, and after a navigation of elevenmonths arrived upon the coast of Indostan, and thus completed acourse of discoveries which had been pursued with greatsteadiness, and with very little interruption, for nearly a centurytogether.

Some years before this, while the expectations of Europe werein suspense about the projects of the Portuguese, of which thesuccess appeared yet to be doubtful, a Genoese pilot formed theyet more daring project of sailing to the East Indies by the West.The situation of those countries was at that time very imperfectlyknown in Europe. The few European travellers who had beenthere had magnified the distance, perhaps through simplicity andignorance, what was really very great appearing almost infinite tothose who could not measure it; or, perhaps, in order to increasesomewhat more the marvellous of their own adventures in visitingregions so immensely remote from Europe. The longer the waywas by the East, Columbus very justly concluded, the shorter itwould be by the West. He proposed, therefore, to take that way, as



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both the shortest and the surest, and he had the good fortune toconvince Isabella of Castile of the probability of his project. Hesailed from the port of Palos in August 1492, nearly five yearsbefore the expedition of Vasco de Gama set out from Portugal,and, after a voyage of between two and three months, discoveredfirst some of the small Bahamas or Lucayan islands, andafterwards the great island of St. Domingo.

But the countries which Columbus discovered, either in this orin any of his subsequent voyages, had no resemblance to thosewhich 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 heever visited, nothing but a country quite covered with wood,uncultivated, and inhabited only by some tribes of naked andmiserable savages. He was not very willing, however, to believethat they were not the same with some of the countries describedby Marco Polo, the first European who had visited, or at least hadleft behind him, any description of China or the East Indies; and avery slight resemblance, such as that which he found between thename of Cibao, a mountain in St. Domingo, and that of Cipangomentioned by Marco Polo, was frequently sufficient to make himreturn to this favourite prepossession, though contrary to theclearest evidence. In his letters to Ferdinand and Isabella hecalled the countries which he had discovered the Indies. Heentertained no doubt but that they were the extremity of thosewhich had been described by Marco Polo, and that they were notvery distant from the Ganges, or from the countries which hadbeen conquered by Alexander. Even when at last convinced thatthey were different, he still flattered himself that those rich



738

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 theIndies has stuck to those unfortunate countries ever since; andwhen it was at last clearly discovered that the new were altogetherdifferent from the old Indies, the former were called the West, incontradistinction to the latter, which were called the East Indies.

It was of importance to Columbus, however, that the countrieswhich he had discovered, whatever they were, should berepresented to the court of Spain as of very great consequence;and, in what constitutes the real riches of every country, theanimal and vegetable productions of the soil, there was at thattime nothing which could well justify such a representation ofthem.

The Cori, something between a rat and a rabbit, and supposedby Mr. Buffon to be the same with the Aperea of Brazil, was thelargest viviparous quadruped in St. Domingo. This species seemsnever to have been very numerous, and the dogs and cats of theSpaniards 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 landafforded.

The vegetable food of the inhabitants, though from their wantof industry not very abundant, was not altogether so scanty. Itconsisted in Indian corn, yams, potatoes, bananas, etc., plantswhich were then altogether unknown in Europe, and which havenever since been very much esteemed in it, or supposed to yield a



739

sustenance equal to what is drawn from the common sorts of grainand pulse, which have been cultivated in this part of the worldtime out of mind.

The cotton plant, indeed, afforded the material of a veryimportant manufacture, and was at that time to Europeansundoubtedly the most valuable of all the vegetable productions ofthose islands. But though in the end of the fifteenth century themuslins and other cotton goods of the East Indies were muchesteemed in every part of Europe, the cotton manufacture itselfwas not cultivated in any part of it. Even this production,therefore, could not at that time appear in the eyes of Europeansto be of very great consequence.

Finding nothing either in the animals or vegetables of thenewly discovered countries which could justify a veryadvantageous representation of them, Columbus turned his viewtowards their minerals; and in the richness of the productions ofthis third kingdom, he flattered himself he had found a fullcompensation for the insignificancy of those of the other two. Thelittle bits of gold with which the inhabitants ornamented theirdress, and which, he was informed, they frequently found in therivulets and torrents that fell from the mountains, were sufficientto satisfy him that those mountains abounded with the richest goldmines. St. Domingo, therefore, was represented as a countryabounding with gold, and, upon that account, (according to theprejudices not only of the present time, but of those times) aninexhaustible source of real wealth to the crown and kingdom ofSpain. When Columbus, upon his return from his first voyage, wasintroduced with a sort of triumphal honours to the sovereigns ofCastile and Arragon, the principal productions of the countries



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which he had discovered were carried in solemn procession beforehim. The only valuable part of them consisted in some little fillets,bracelets, and other ornaments of gold, and in some bales ofcotton. The rest were mere objects of vulgar wonder and curiosity;some reeds of an extraordinary size, some birds of a very beautifulplumage, 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 thenovelty of the show.

In consequence of the representations of Columbus, the councilof Castile determined to take possession of countries of which theinhabitants were plainly incapable of defending themselves. Thepious purpose of converting them to Christianity sanctified theinjustice of the project. But the hope of finding treasures of goldthere was the sole motive which prompted him to undertake it;and to give this motive the greater weight, it was proposed byColumbus that the half of all the gold and silver that should befound there should belong to the crown. This proposal wasapproved of by the council.

As long as the whole or the far greater part of the gold, whichthe first adventurers imported into Europe, was got by so veryeasy a method as the plundering of the defenceless natives, it wasnot perhaps very difficult to pay even this heavy tax. But when thenatives were once fairly stripped 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 tofind more it had become necessary to dig for it in the mines, therewas no longer any possibility of paying this tax. The rigorousexaction of it, accordingly, first occasioned, it is said, the total



741

abandoning of the mines of St. Domingo, which have never beenwrought since. It was soon reduced therefore to a third; then to afifth; afterwards to a tenth; and at last to a twentieth part of thegross produce of the gold mines. The tax upon silver continued fora long time to be a fifth of the gross produce. It was reduced to atenth only in the course of the present century. But the firstadventurers do not appear to have been much interested aboutsilver. Nothing less precious than gold seemed worthy of theirattention.

All the other enterprises of the Spaniards in the new world,subsequent to those of Columbus, seem to have been prompted bythe same motive. It was the sacred thirst of gold that carriedOieda, Nicuessa, and Vasco Nugnes de Balboa, to the Isthmus ofDarien, that carried Cortez to Mexico, and Almagro and Pizzarroto Chili and Peru. When those adventurers arrived upon anyunknown coast, their first inquiry was always if there was any goldto be found there; and according to the information which theyreceived concerning this particular, they determined either to quitthe country or to settle in it.

Of all those expensive and uncertain projects, however, whichbring bankruptcy upon the greater part of the people who engagein them, there is none perhaps more ruinous than the search afternew silver and gold mines. It is perhaps the most disadvantageouslottery in the world, or the one in which the gain of those whodraw the prizes bears the least proportion to the loss of those whodraw the blanks: for though the prizes are few and the blanksmany, the common price of a ticket is the whole fortune of a veryrich man.

Projects of mining, instead of replacing the capital employed in



742

them, together with the ordinary profits of stock, commonlyabsorb both capital and profit. They are the projects, therefore, towhich of all others a prudent lawgiver, who desired to increase thecapital of his nation, would least choose to give any extraordinaryencouragement, or to turn towards them a greater share of thatcapital than that would go to them of its own accord. Such inreality is the absurd confidence which almost all men have in theirown good fortune that, wherever there is the least probability ofsuccess, too great a share of it is apt to go to them of its ownaccord.

But though the judgment of sober reason and experienceconcerning such projects has always been extremelyunfavourable, that of human avidity has commonly been quiteotherwise. The same passion which has suggested to so manypeople the absurd idea of the philosopher’s stone, has suggested toothers the equally absurd one of immense rich mines of gold andsilver. They did not consider that the value of those metals has, inall ages and nations, arisen chiefly from their scarcity, and thattheir scarcity has arisen from the very small quantities of themwhich nature has anywhere deposited in one place, from the hardand intractable substances with which she has almost everywheresurrounded those small quantities, and consequently from thelabour and expense which are everywhere necessary in order topenetrate to and get at them. They flattered themselves that veinsof those metals might in many places be found as large and asabundant as those which are commonly found of lead, or copper,or tin, or iron. The dream of Sir Walter Raleigh concerning thegolden city and country of Eldorado, may satisfy us that even wisemen are not always exempt from such strange delusions. More



743

than a hundred years after the death of that great man, the JesuitGumila was still convinced of the reality of that wonderful country,and expressed with great warmth, and I dare to say with greatsincerity, how happy he should be to carry the light of the gospelto a people who could so well reward the pious labours of theirmissionary.

In the countries first discovered by the Spaniards, no gold orsilver mines are at present known which are supposed to be worththe working. The quantities of those metals which the firstadventurers are said to have found there had probably been verymuch magnified, as well as the fertility of the mines which werewrought immediately after the first discovery. What thoseadventurers were reported to have found, however, was sufficientto inflame the avidity of all their countrymen. Every Spaniard whosailed to America expected to find an Eldorado. Fortune, too, didupon this what she has done upon very few other occasions. Sherealized in some measure the extravagant hopes of her votaries,and in the discovery and conquest of Mexico and Peru (of whichthe one happened about thirty, the other about forty years afterthe first expedition of Columbus), she presented them withsomething not very unlike that profusion of the precious metalswhich they sought for.

A project of commerce to the East Indies, therefore, gaveoccasion to the first discovery of the West. A project of conquestgave occasion to all the establishments of the Spaniards in thosenewly discovered countries. The motive which excited them to thisconquest was a project of gold and silver mines; and a course ofaccidents, which no human wisdom could foresee, rendered thisproject much more successful than the undertakers had any



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reasonable grounds for expecting.The first adventurers of all the other nations of Europe who

attempted to make settlements in America were animated by thelike chimerical views; but they were not equally successful. It wasmore than a hundred years after the first settlement of the Brazilsbefore any silver, gold, or diamond mines were discovered there.In the English, French, Dutch, and Danish colonies, none haveever yet been discovered; at least none that are at presentsupposed to be worth the working. The first English settlers inNorth America, however, offered a fifth of all the gold and silverwhich should be found there to the king, as a motive for grantingthem their patents. In the patents to Sir Walter Raleigh, to theLondon and Plymouth Companies, to the Council of Plymouth,etc., this fifth was accordingly reserved to the crown. To theexpectation of finding gold and silver mines, those first settlers,too, joined that of discovering a northwest passage to the EastIndies. They have hitherto been disappointed in both.

PART 2

Causes of Prosperity of New Colonies

The colony of a civilised nation which takes possession either of awaste country, or of one so thinly inhabited that the natives easilygive place to the new settlers, advances more rapidly to wealthand greatness than any other human society.

The colonists carry out with them a knowledge of agricultureand of other useful arts superior to what can grow up of its ownaccord in the course of many centuries among savage and



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barbarous nations.They carry out with them, too, the habit of subordination, some

notion of the regular government which takes place in their owncountry, of the system of laws which support it, and of a regularadministration of justice; and they naturally establish somethingof the same kind in the new settlement. But among savage andbarbarous nations, the natural progress of law and government isstill slower than the natural progress of arts, after law andgovernment have been go far established as is necessary for theirprotection. Every colonist gets more land than he can possiblycultivate. He has no rent, and scarce any taxes to pay. No landlordshares with him in its produce, and the share of the sovereign iscommonly but a trifle. He has every motive to render as great aspossible a produce, which is thus to be almost entirely his own.But his land is commonly so extensive that, with all his ownindustry, and with all the industry of other people whom he canget to employ, he can seldom make it produce the tenth part ofwhat it is capable of producing. He is eager, therefore, to collectlabourers from all quarters, and to reward them with the mostliberal wages. But those liberal wages, joined to the plenty andcheapness of land, soon make those labourers leave him, in orderto become landlords themselves, and to reward, with equalliberality, other labourers, who soon leave them for the samereason that they left their first master. The liberal reward oflabour encourages marriage. The children, during the tenderyears of infancy, are well fed and properly taken care of, and whenthey are grown up, the value of their labour greatly overpays theirmaintenance. When arrived at maturity, the high price of labour,and the low price of land, enable them to establish themselves in



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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 newcolonies the interest of the two superior orders obliges them totreat the inferior one with more generosity and humanity; at leastwhere that inferior one is not in a state of slavery. Waste lands ofthe greatest natural fertility are to be had for a trifle. The increaseof revenue which the proprietor, who is always the undertaker,expects from their improvement, constitutes his profit which inthese circumstances is commonly very great. But this great profitcannot be made without employing the labour of other people inclearing and cultivating the land; and the disproportion betweenthe great extent of the land and the small number of the people,which commonly takes place in new colonies, makes it difficult forhim to get this labour. He does not, therefore, dispute aboutwages, but is willing to employ labour at any price. The highwages of labour encourage population. The cheapness and plentyof good land encourage improvement, and enable the proprietor topay those high wages. In those wages consists almost the wholeprice of the land; and though they are high considered as thewages of labour, they are low considered as the price of what is sovery valuable. What encourages the progress of population andimprovement encourages that of real wealth and greatness.

The progress of many of the ancient Greek colonies towardswealth and greatness seems accordingly to have been very rapid.In the course of a century or two, several of them appear to haverivalled, and even to have surpassed their mother cities. Syracuseand Agrigentum in Sicily, Tarentum and Locri in Italy, Ephesusand Miletus in Lesser Asia, appear by all accounts to have been at



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least equal to any of the cities of ancient Greece. Though posteriorin their establishment, yet all the arts of refinement, philosophy,poetry, and eloquence seem to have been cultivated as early, andto have been improved as highly in them as in any part of themother 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 anItalian colony. All those colonies had established themselves incountries inhabited by savage and barbarous nations, who easilygave place to the new settlers. They had plenty of good land, andas they were altogether independent of the mother city, they wereat liberty to manage their own affairs in the way that they judgedwas 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 ofmany ages, and after the fall of the mother city, grown up to beconsiderable states. But the progress of no one of them seems everto have been very rapid. They were all established in conqueredprovinces, which in most cases had been fully inhabited before.The quantity of land assigned to each colonist was seldom veryconsiderable, and as the colony was not independent, they werenot always at liberty to manage their own affairs in the way theyjudged was most suitable to their own interest.

In the plenty of good land, the European colonies established inAmerica and the West Indies resemble, and even greatly surpass,those of ancient Greece. In their dependency upon the motherstate, they resemble those of ancient Rome; but their greatdistance from Europe has in all of them alleviated more or less theeffects of this dependency. Their situation has placed them less in



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the view and less in the power of their mother country. Inpursuing their interest their own way, their conduct has, uponmany occasions, been overlooked, either because not known ornot understood in Europe; and upon some occasions it has beenfairly suffered and submitted to, because their distance renderedit difficult to restrain it.

Even the violent and arbitrary government of Spain has, uponmany occasions, been obliged to recall or soften the orders whichhad been given for the government of her colonies for fear of ageneral insurrection. The progress of all the European colonies inwealth, population, and improvement, has accordingly been verygreat.

The crown of Spain, by its share of the gold and silver, derivedsome revenue from its colonies from the moment of their firstestablishment. It was a revenue, too, of a nature to excite inhuman avidity the most extravagant expectations of still greaterriches. The Spanish colonies, therefore, from the moment of theirfirst establishment, attracted very much the attention of theirmother country, while those of the other European nations werefor a long time in a great measure neglected. The former did not,perhaps, thrive the better in consequence of this attention; nor thelatter the worse in consequence of this neglect. In proportion tothe extent of the country which they in some measure possess, theSpanish colonies are considered as less populous and thrivingthan those of almost any other European nation. The progresseven of the Spanish colonies, however, in population andimprovement, has certainly been very rapid and very great. Thecity of Lima, founded since the conquest, is represented by Ulloaas containing fifty thousand inhabitants near thirty years ago.



749

Quito, which had been but a miserable hamlet of Indians, isrepresented by the same author as in his time equally populous.Gemelli Carreri, a pretended traveller, it is said, indeed, but whoseems everywhere to have written upon extremely goodinformation, represents the city of Mexico as containing a hundredthousand inhabitants; a number which, in spite of all theexaggerations of the Spanish writers, is, probably, more than fivetimes greater than what it contained in the time of Montezuma.These numbers exceed greatly those of Boston, New York, andPhiladelphia, the three greatest cities of the English colonies.

Before the conquest of the Spaniards there were no cattle fit fordraught either in Mexico or Peru. The llama was their only beastof burden, and its strength seems to have been a good deal inferiorto 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. Theircommerce was carried on by barter. A sort of wooden spade wastheir principal instrument of agriculture. Sharp stones servedthem for knives and hatchets to cut with; fish bones and the hardsinews of certain animals served them for needles to sew with; andthese seem to have been their principal instruments of trade. Inthis state of things, it seems impossible that either of thoseempires could have been so much improved or so well cultivatedas at present, when they are plentifully furnished with all sorts ofEuropean cattle, and when the use of iron, of the plough, and ofmany of the arts of Europe, has been introduced among them. Butthe populousness of every country must be in proportion to thedegree of its improvement and cultivation.

In spite of the cruel destruction of the natives which followed



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the conquest, these two great empires are, probably, morepopulous now than they ever were before: and the people aresurely very different; for we must acknowledge, I apprehend, thatthe Spanish creoles are in many respects superior to the ancientIndians.

After the settlements of the Spaniards, that of the Portuguese inBrazil is the oldest of any European nation in America. But as fora long time after the first discovery neither gold nor silver mineswere found in it, and as it afforded, upon that account, little or norevenue to the crown, it was for a long time in a great measureneglected; and during this state of neglect it grew up to be a greatand powerful colony. While Portugal was under the dominion ofSpain, Brazil was attacked by the Dutch, who got possession ofseven of the fourteen provinces into which it is divided. Theyexpected soon to conquer the other seven, when Portugalrecovered its independency by the elevation of the family ofBraganza to the throne. The Dutch then, as enemies to theSpaniards, became friends to the Portuguese, who were likewisethe enemies of the Spaniards. They agreed, therefore, to leave thatpart of Brazil, which they had not conquered, to the King ofPortugal, who agreed to leave that part which they had conqueredto them, as a matter not worth disputing about with such goodallies. But the Dutch government soon began to oppress thePortuguese colonists, who, instead of amusing themselves withcomplaints, took arms against their new masters, and by their ownvalour and resolution, with the connivance, indeed, but withoutany avowed assistance from the mother country, drove them out ofBrazil.

The Dutch, therefore, finding it impossible to keep any part of



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the country to themselves, were contented that it should beentirely restored to the crown of Portugal. In this colony there aresaid to be more than six hundred thousand people, eitherPortuguese or descended from Portuguese, creoles, mulattoes,and a mixed race between Portuguese and Brazilians. No onecolony in America is supposed to contain so great a number ofpeople of European extraction.

Towards the end of the fifteenth, and during the greater part ofthe sixteenth century, Spain and Portugal were the two greatnaval powers upon the ocean; for though the commerce of Veniceextended to every part of Europe, its fleets had scarce ever sailedbeyond the Mediterranean. The Spaniards, in virtue of the firstdiscovery, claimed all America as their own; and though theycould not hinder so great a naval power as that of Portugal fromsettling in Brazil, such was, at that time, the terror of their name,that the greater part of the other nations of Europe were afraid toestablish themselves in any other part of that great continent. TheFrench, who attempted to settle in Florida, were all murdered bythe Spaniards. But the declension of the naval power of this latternation, in consequence of the defeat or miscarriage of what theycalled their Invincible Armada, which happened towards the endof the sixteenth century, put it out of their power to obstruct anylonger the settlements of the other European nations. In thecourse of the seventeenth century, therefore, the English, French,Dutch, Danes, and Swedes, all the great nations who had any portsupon the ocean, attempted to make some settlements in the newworld.

The Swedes established themselves in New Jersey; and thenumber of Swedish families still to be found there sufficiently



752

demonstrates that this colony was very likely to prosper had itbeen protected by the mother country. But being neglected bySweden, it was soon swallowed up by the Dutch colony of NewYork, which again, in 1674, fell under the dominion of the English.

The small islands of St. Thomas and Santa Cruz are the onlycountries in the new world that have ever been possessed by theDanes. These little settlements, too, were under the government ofan exclusive company, which had the sole right, both ofpurchasing the surplus produce of the colonists, and of supplyingthem with such goods of other countries as they wanted, andwhich, therefore, both in its purchases and sales, had not only thepower 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. Itwas not, however, able to stop altogether the progress of thesecolonies, though it rendered it more slow and languid. The lateKing of Denmark dissolved this company, and since that time theprosperity of these colonies has been very great.

The Dutch settlements in the West, as well as those in the EastIndies, were originally put under the government of an exclusivecompany. The progress of some of them, therefore, though it hasbeen considerable, in comparison with that of almost any countrythat has been long peopled and established, has been languid andslow in comparison with that of the greater part of new colonies.The colony of Surinam, though very considerable, is still inferiorto the greater part of the sugar colonies of the other Europeannations. The colony of Nova Belgia, now divided into the twoprovinces of New York and New Jersey, would probably have soonbecome considerable too, even though it had remained under the



753

government of the Dutch. The plenty and cheapness of good landare such powerful causes of prosperity that the very worstgovernment is scarce capable of checking altogether the efficacy oftheir operation. The great distance, too, from the mother countrywould enable the colonists to evade more or less, by smuggling,the monopoly which the company enjoyed against them. Atpresent the company allows all Dutch ships to trade to Surinamupon paying two and a half per cent upon the value of their cargofor a licence; and only reserves to itself exclusively the direct tradefrom Africa to America, which consists almost entirely in the slavetrade. This relaxation in the exclusive privileges of the company isprobably the principal cause of that degree of prosperity whichthat colony at present enjoys. Curaçoa and Eustatia, the twoprincipal islands belonging to the Dutch, are free ports open to theships of all nations; and this freedom, in the midst of bettercolonies whose ports are open to those of one nation only, hasbeen the great cause of the prosperity of those two barren islands.

The French colony of Canada was, during the greater part ofthe last century, and some part of the present, under thegovernment of an exclusive company. Under so unfavourable anadministration its progress was necessarily very slow incomparison with that of other new colonies; but it became muchmore rapid when this company was dissolved after the fall of whatis called the Mississippi scheme. When the English got possessionof this country, they found in it near double the number ofinhabitants which Father Charlevoix had assigned to it betweentwenty and thirty years before. That Jesuit had travelled over thewhole country, and had no inclination to represent it as lessconsiderable than it really was.



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The French colony of St. Domingo was established by piratesand freebooters, who, for a long time, neither required theprotection, nor acknowledged the authority of France; and whenthat race of banditti became so far citizens as to acknowledge thisauthority, it was for a long time necessary to exercise it with verygreat gentleness. During this period the population andimprovement of this colony increased very fast. Even theoppression of the exclusive company, to which it was for sometime subjected, with all the other colonies of France, though it nodoubt retarded, had not been able to stop its progress altogether.The course of its prosperity returned as soon as it was relievedfrom that oppression.

It is now the most important of the sugar colonies of the WestIndies, and its produce is said to be greater than that of all theEnglish sugar colonies put together. The other sugar colonies ofFrance are in general all very thriving.

But there are no colonies of which the progress has been morerapid than that of the English in North America.

Plenty of good land, and liberty to manage their own affairstheir own way, seem to be the two great causes of the prosperity ofall new colonies.

In the plenty of good land the English colonies of NorthAmerica, though no doubt very abundantly provided, are howeverinferior to those of the Spaniards and Portuguese, and notsuperior to some of those possessed by the French before the latewar. But the political institutions of the English colonies havebeen more favourable to the improvement and cultivation of thisland than those of any of the other three nations.

First, the engrossing of uncultivated land, though it has by no



755

means been prevented altogether, has been more restrained in theEnglish colonies than in any other. The colony law which imposesupon every proprietor the obligation of improving and cultivating,within a limited time, a certain proportion of his lands, and whichin case of failure, declares those neglected lands grantable to anyother person, though it has not, perhaps, been very strictlyexecuted, has, however, had some effect.

Secondly, in Pennsylvania there is no right of primogeniture,and lands, like movables, are divided equally among all thechildren of the family. In three of the provinces of New Englandthe oldest has only a double share, as in the Mosaical law. Thoughin those provinces, therefore, too great a quantity of land shouldsometimes be engrossed by a particular individual, it is likely, inthe course of a generation or two, to be sufficiently divided again.In the other English colonies, indeed, the right of primogenituretakes place, as in the law of England. But in all the Englishcolonies the tenure of the lands, which are all held by free socage,facilitates alienation, and the grantee of any extensive tract of landgenerally finds it for his interest to alienate, as fast as he can, thegreater part of it, reserving only a small quit-rent. In the Spanishand Portuguese colonies, what is called the right of Majorazzo1

takes place in the succession of all those great estates to which anytitle of honour is annexed. Such estates go all to one person, andare in effect entailed and unalienable. The French colonies,indeed, are subject to the custom of Paris, which, in theinheritance of land, is much more favourable to the youngerchildren than the law of England. But in the French colonies, if

1Jus majoratus.



756

any part of an estate, held by the noble tenure of chivalry andhomage, is alienated, it is, for a limited time, subject to the right ofredemption, either by the heir of the superior or by the heir of thefamily; and all the largest estates of the country are held by suchnoble tenures, which necessarily embarrass alienation. But in anew colony a great uncultivated estate is likely to be much morespeedily divided by alienation than by succession. The plenty andcheapness of good land, it has already been observed, are theprincipal causes of the rapid prosperity of new colonies. Theengrossing of land, in effect, destroys this plenty and cheapness.The engrossing of uncultivated land, besides, is the greatestobstruction to its improvement. But the labour that is employed inthe improvement and cultivation of land affords the greatest andmost valuable produce to the society. The produce of labour, inthis case, pays not only its own wages, and the profit of the stockwhich employs it, but the rent of the land too upon which it isemployed. The labour of the English colonists, therefore, beingmore employed in the improvement and cultivation of land, islikely to afford a greater and more valuable produce than that ofany of the other three nations, which, by the engrossing of land, ismore or less diverted towards other employments.

Thirdly, the labour of the English colonists is not only likely toafford a greater and more valuable produce, but, in consequenceof the moderation of their taxes, a greater proportion of thisproduce belongs to themselves, which they may store up andemploy in putting into motion a still greater quantity of labour.The English colonists have never yet contributed anythingtowards the defence of the mother country, or towards the supportof its civil government.



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They themselves, on the contrary, have hitherto been defendedalmost entirely at the expense of the mother country. But theexpense of fleets and armies is out of all proportion greater thanthe necessary expense of civil government. The expense of theirown civil government has always been very moderate. It hasgenerally been confined to what was necessary for payingcompetent salaries to the governor, to the judges, and to someother officers of police, and for maintaining a few of the mostuseful public works. The expense of the civil establishment ofMassachusetts Bay, before the commencement of the presentdisturbances, used to be but about £18,000 a year. That of NewHampshire and Rhode Island, £3500 each. That of Connecticut,£4000. That of New York and Pennsylvania, £4500 each. That ofNew Jersey, £1200. That of Virginia and South Carolina, £8000each. The civil establishments of Nova Scotia and Georgia arepartly supported by an annual grant of Parliament. But NovaScotia pays, besides, about £7000 a year towards the publicexpenses of the colony; and Georgia about £2500 a year. All thedifferent civil establishments in North America, in short, exclusiveof those of Maryland and North Carolina, of which no exactaccount has been got, did not, before the commencement of thepresent disturbances, cost the inhabitants above £64,700 a year; anever-memorable example at how small an expense three millionsof people may not only be governed, but well governed. The mostimportant part of the expense of government, indeed, that ofdefence and protection, has constantly fallen upon the mothercountry. The ceremonial, too, of the civil government in thecolonies, upon the reception of a new governor, upon the openingof a new assembly, etc., though sufficiently decent, is not



758

accompanied with any expensive pomp or parade. Theirecclesiastical government is conducted upon a plan equally frugal.Tithes are unknown among them; and their clergy, who are farfrom being numerous, are maintained either by moderatestipends, or by the voluntary contributions of the people.

The power of Spain and Portugal, on the contrary, derivessome support from the taxes levied upon their colonies. France,indeed, has never drawn any considerable revenue from itscolonies, the taxes which it levies upon them being generally spentamong them. But the colony government of all these three nationsis conducted upon a much more expensive ceremonial. The sumsspent upon the reception of a new viceroy of Peru, for example,have frequently been enormous. Such ceremonials are not onlyreal taxes paid by the rich colonists upon those particularoccasions, but they serve to introduce among them the habit ofvanity and expense upon all other occasions. They are not onlyvery grievous occasional taxes, but they contribute to establishperpetual taxes of the same kind still more grievous; the ruinoustaxes of private luxury and extravagance. In the colonies of allthose three nations too, the ecclesiastical government is extremelyoppressive. Tithes take place in all of them, and are levied with theutmost rigour in those of Spain and Portugal. All of them, besides,are oppressed with a numerous race of mendicant friars, whosebeggary being not only licensed but consecrated by religion, is amost grievous tax upon the poor people, who are most carefullytaught that it is a duty to give, and a very great sin to refuse themtheir 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



759

over and above their own consumption, the English colonies havebeen more favoured, and have been allowed a more extensivemarket, than those of any other European nation. Every Europeannation has endeavoured more or less to monopolise to itself thecommerce of its colonies, and, upon that account, has prohibitedthe ships of foreign nations from trading to them, and hasprohibited them from importing European goods from any foreignnation. But the manner in which this monopoly has beenexercised in different nations has been very different.

Some nations have given up the whole commerce of theircolonies to an exclusive company, of whom the colonists wereobliged to buy all such European goods as they wanted, and towhom they were obliged to sell the whole of their own surplusproduce. It was the interest of the company, therefore, not only tosell 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 whatthey could dispose of for a very high price in Europe. It was theirinterest, not only to degrade in all cases the value of the surplusproduce of the colony, but in many cases to discourage and keepdown the natural increase of its quantity. Of all the expedients thatcan 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 theircompany, in the course of the present century, has given up inmany respects the exertion of their exclusive privilege. This, too,was the policy of Denmark till the reign of the late king.* It hasoccasionally been the policy of France, and of late, since 1755, after

*Frederick V.



760

it had been abandoned by all other nations on account of itsabsurdity, it has become the policy of Portugal with regard at leastto two of the principal provinces of Brazil, Fernambuco andMarannon.

Other nations, without establishing an exclusive company, haveconfined the whole commerce of their colonies to a particular portof the mother country, from whence no ship was allowed to sail,but either in a fleet and at a particular season, or, if single, inconsequence of a particular licence, which in most cases was verywell paid for. This policy opened, indeed, the trade of the coloniesto all the natives of the mother country, provided they traded fromthe proper port, at the proper season, and in the proper vessels.But as all the different merchants, who joined their stocks in orderto fit out those licensed vessels, would find it for their interest toact in concert, the trade which was carried on in this mannerwould necessarily be conducted very nearly upon the sameprinciples as that of an exclusive company. The profit of thosemerchants would be almost equally exorbitant and oppressive.The colonies would be ill supplied, and would be obliged both tobuy very dear, and to sell very cheap. This, however, till withinthese few years, had always been the policy of Spain, and the priceof all European goods, accordingly, is said to have been enormousin the Spanish West Indies. At Quito, we are told by Ulloa, a poundof iron sold for about four and sixpence, and a pound of steel forabout six and ninepence sterling. But it is chiefly in order topurchase European goods that the colonies part with their ownproduce. The more, therefore, they pay for the one, the less theyreally get for the other, and the dearness of the one is the samething with the cheapness of the other. The policy of Portugal is in



761

this respect the same as the ancient policy of Spain with regard toall its colonies, except Fernambuco and Marannon, and withregard to these it has lately adopted a still worse.

Other nations leave the trade of their colonies free to all theirsubjects who may carry it on from all the different ports of themother country, and who have occasion for no other licence thanthe common despatches of the custom-house. In this case thenumber and dispersed situation of the different traders renders itimpossible for them to enter into any general combination, andtheir competition is sufficient to hinder them from making veryexorbitant profits. Under so liberal a policy the colonies areenabled both to sell their own produce and to buy the goods ofEurope at a reasonable price. But since the dissolution of thePlymouth 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 beenuniformly so since the dissolution of what, in England, iscommonly called their Mississippi Company. The profits of thetrade, therefore, which France and England carry on with theircolonies, though no doubt somewhat higher than if thecompetition was free to all other nations, are, however, by nomeans exorbitant; and the price of European goods accordingly isnot extravagantly high in the greater part of the colonies of eitherof those nations.

In the exportation of their own surplus produce too, it is onlywith regard to certain commodities that the colonies of GreatBritain are confined to the market of the mother country. Thesecommodities having been enumerated in the Act of Navigationand in some other subsequent acts, have upon that account been



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called enumerated commodities. The rest are called non-enumerated, and may be exported directly to other countriesprovided it is in British or Plantation ships, of which the ownersand three-fourths of the mariners are British subjects.

Among the non-enumerated commodities are some of the mostimportant productions of America and the West Indies; grain of allsorts, lumber, salt provisions, fish, sugar and rum.

Grain is naturally the first and principal object of the culture ofall new colonies. By allowing them a very extensive market for it,the law encourages them to extend this culture much beyond theconsumption of a thinly inhabited country, and thus to providebeforehand an ample subsistence for a continually increasingpopulation.

In a country quite covered with wood, where timberconsequently is of little or no value, the expense of clearing theground is the principal obstacle to improvement. By allowing thecolonies a very extensive market for their lumber, the lawendeavours to facilitate improvement by raising the price of acommodity which would otherwise be of little value, and therebyenabling them to make some profit of what would otherwise be amere expense.

In a country neither half-peopled nor half-cultivated, cattlenaturally multiply beyond the consumption of the inhabitants, andare often upon that account of little or no value. But it isnecessary, it has already been shown, that the price of cattleshould bear a certain proportion to that of corn before the greaterpart of the lands of any country can be improved. By allowing toAmerican cattle, in all shapes, dead or alive, a very extensivemarket, the law endeavours to raise the value of a commodity of



763

which the high price is so very essential to improvement. The goodeffects of this liberty, however, must be somewhat diminished bythe 4th of George III, c. 15, which puts hides and skins among theenumerated commodities, and thereby tends to reduce the valueof American cattle.

To increase the shipping and naval power of Great Britain, bythe extension of the fisheries of our colonies, is an object which thelegislature seems to have had almost constantly in view. Thosefisheries, upon this account, have had all the encouragementwhich freedom can give them, and they have flourishedaccordingly. The New England fishery in particular was, beforethe late disturbances, one of the most important, perhaps, in theworld. The whale-fishery which, notwithstanding an extravagantbounty, is in Great Britain carried on to so little purpose that inthe opinion of many people (which I do not, however, pretend towarrant) the whole produce does not much exceed the value of thebounties which are annually paid for it, is in New England carriedon without any bounty to a very great extent. Fish is one of theprincipal articles with which the North Americans trade to Spain,Portugal, and the Mediterranean.

Sugar was originally an enumerated commodity which could beexported only to Great Britain. But in 1731, upon a representationof the sugar-planters, its exportation was permitted to all parts ofthe world. The restrictions, however, with which this liberty wasgranted, joined to the high price of sugar in Great Britain, haverendered it, in a great measure, ineffectual. Great Britain and hercolonies still continue to be almost the sole market for all the sugarproduced in the British plantations. Their consumption increasesso fast that, though in consequence of the increasing improvement



764

of Jamaica, as well as of the Ceded Islands, the importation ofsugar has increased very greatly within these twenty years, theexportation to foreign countries is said to be not much greaterthan before.

Rum is a very important article in the trade which theAmericans carry on to the coast of Africa, from which they bringback negro slaves in return.

If the whole surplus produce of America in grain of all sorts, insalt provisions and in fish, had been put into the enumeration, andthereby forced into the market of Great Britain, it would haveinterfered too much with the produce of the industry of our ownpeople. It was probably not so much from any regard to theinterest of America as from a jealousy of this interference thatthose important commodities have not only been kept out of theenumeration, but that the importation into Great Britain of allgrain, except rice, and of salt provisions, has, in the ordinary stateof the law, been prohibited.

The non-enumerated commodities could originally be exportedto all parts of the world. Lumber and rice, having been once putinto the enumeration, when they were afterwards taken out of it,were confined, as to the European market, to the countries that liesouth 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 notmanufacturing countries, and we were less jealous of the colonyships carrying home from them any manufactures which couldinterfere with our own.

The enumerated commodities are of two sorts: first, such as areeither the peculiar produce of America, or as cannot be produced,



765

or at least are not produced, in the mother country. Of this kindare molasses, coffee, cocoa-nuts, tobacco, pimento, ginger,whalefins, raw silk, cotton-wool, beaver, and other peltry ofAmerica, indigo, fustic, and other dyeing woods; secondly, such asare not the peculiar produce of America, but which are and maybe produced in the mother country, though not in such quantitiesas to supply the greater part of her demand, which is principallysupplied from foreign countries. Of this kind are all naval stores,masts, yards, and bowsprits, tar, pitch, and turpentine, pig and bariron, copper ore, hides and skins, pot and pearl ashes.

The largest importation of commodities of the first kind couldnot discourage the growth or interfere with the sale of any part ofthe produce of the mother country. By confining them to the homemarket, our merchants, it was expected, would not only beenabled to buy them cheaper in the plantations, and consequentlyto sell them with a better profit at home, but to establish betweenthe plantations and foreign countries an advantageous carryingtrade, of which Great Britain was necessarily to be the centre oremporium, as the European country into which those commoditieswere first to be imported. The importation of commodities of thesecond kind might be so managed too, it was supposed, as tointerfere, not with the sale of those of the same kind which wereproduced at home, but with that of those which were importedfrom foreign countries; because, by means of proper duties, theymight be rendered always somewhat dearer than the former, andyet a good deal cheaper than the latter. By confining suchcommodities to the home market, therefore, it was proposed todiscourage the produce, not of Great Britain, but of some foreigncountries with which the balance of trade was believed to be



766

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 inthe colonies, and consequently to increase the expense of clearingtheir lands, the principal obstacle to their improvement. But aboutthe beginning of the present century, in 1703, the pitch and tarcompany of Sweden endeavoured to raise the price of theircommodities to Great Britain, by prohibiting their exportation,except in their own ships, at their own price, and in suchquantities as they thought proper. In order to counteract thisnotable piece of mercantile policy, and to render herself as muchas possible independent, not only of Sweden, but of all the othernorthern powers, Great Britain gave a bounty upon theimportation of naval stores from America, and the effect of thisbounty was to raise the price of timber in America much morethan the confinement to the home market could lower it; and asboth regulations were enacted at the same time, their joint effectwas rather to encourage than to discourage the clearing of land inAmerica.

Though pig and bar iron too have been put among theenumerated commodities, yet as, when imported from America,they were exempted from considerable duties to which they aresubject when imported from any other country, the one part of theregulation contributes more to encourage the erection of furnacesin America than the other to discourage it. There is nomanufacture which occasions so great a consumption of wood as afurnace, or which can contribute so much to the clearing of acountry overgrown with it.



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The tendency of some of these regulations to raise the value oftimber in America, and thereby to facilitate the clearing of theland, was neither, perhaps, intended nor understood by thelegislature. Though their beneficial effects, however, have been inthis respect accidental, they have not upon that account been lessreal.

The most perfect freedom of trade is permitted between theBritish colonies of America and the West Indies, both in theenumerated and in the non-enumerated commodities. Thosecolonies are now become so populous and thriving that each ofthem finds in some of the others a great and extensive market forevery part of its produce. All of them taken together, they make agreat internal market for the produce of one another.

The liberality of England, however, towards the trade of hercolonies has been confined chiefly to what concerns the market fortheir produce, either in its rude state, or in what may be called thevery first stage of manufacture. The more advanced or morerefined manufactures even of the colony produce, the merchantsand manufacturers of Great Britain choose to reserve tothemselves, and have prevailed upon the legislature to preventtheir establishment in the colonies, sometimes by high duties, andsometimes by absolute prohibitions.

While, for example, Muskovado sugars from the Britishplantations pay upon importation only 6s. 4d. the hundredweight;white sugars pay £1 1s. 1d.; and refined, either double or single, inloaves £4 2s. 58/20d. When those high duties were imposed, GreatBritain was the sole, and she still continues to be the principalmarket to which the sugars of the British colonies could beexported. They amounted, therefore, to a prohibition, at first of



768

claying or refining sugar for any foreign market, and at present ofclaying or refining it for the market, which takes off, perhaps,more than nine-tenths of the whole produce. The manufacture ofclaying or refining sugar accordingly, though it has flourished inall the sugar colonies of France, has been little cultivated in any ofthose of England except for the market of the colonies themselves.While Grenada was in the hands of the French there was arefinery of sugar, by claying at least, upon almost every plantation.Since it fell into those of the English, almost all works of this kindhave been given tip, and there are at present, October 1773, I amassured not above two or three remaining in the island. Atpresent, however, by an indulgence of the custom-house, clayed orrefined sugar, if reduced from loaves into powder, is commonlyimported as Muskovado.

While Great Britain encourages in America the manufactures ofpig and bar iron, by exempting them from duties to which the likecommodities are subject when imported from any other country,she imposes an absolute prohibition upon the erection of steelfurnaces and slitmills in any of her American plantations. She willnot suffer her colonists to work in those more refinedmanufactures even for their own consumption; but insists upontheir purchasing of her merchants and manufacturers all goods ofthis kind which they have occasion for.

She prohibits the exportation from one province to another bywater, and even the carriage by land upon horseback or in a cart,of hats, of wools and woollen goods, of the produce of America; aregulation which effectually prevents the establishment of anymanufacture of such commodities for distant sale, and confinesthe industry of her colonists in this way to such coarse and



769

household manufactures as a private family commonly makes forits own use or for that of some of its neighbours in the sameprovince.

To prohibit a great people, however, from making all that theycan of every part of their own produce, or from employing theirstock and industry in the way that they judge most advantageousto themselves, is a manifest violation of the most sacred rights ofmankind. Unjust, however, as such prohibitions may be, they havenot hitherto been very hurtful to the colonies. Land is still socheap, and, consequently, labour so dear among them, that theycan import from the mother country almost all the more refined ormore advanced manufactures cheaper than they could make forthemselves. Though they had not, therefore, been prohibited fromestablishing such manufactures, yet in their present state ofimprovement a regard to their own interest would, probably, haveprevented them from doing so.

In their present state of improvement those prohibitions,perhaps, without cramping their industry, or restraining it fromany 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 themerchants and manufacturers of the mother country. In a moreadvanced state they might be really oppressive and insupportable.

Great Britain too, as she confines to her own market some ofthe most important productions of the colonies, so incompensation she gives to some of them an advantage in thatmarket, sometimes by imposing higher duties upon the likeproductions when imported from other countries, and sometimesby giving bounties upon their importation from the colonies. In the



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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 theirraw silk, to their hemp and flax, to their indigo, to their navalstores, and to their building timber. This second way ofencouraging the colony produce by bounties upon importation, is,so far as I have been able to learn, peculiar to Great Britain. Thefirst is not. Portugal does not content herself with imposing higherduties 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, Englandhas likewise dealt more liberally with her colonies than any othernation.

Great Britain allows a part, almost always the half, generally alarger portion, and sometimes the whole of the duty which is paidupon the importation of foreign goods, to be drawn back upontheir exportation to any foreign country. No independent foreigncountry, it was easy to foresee, would receive them if they came toit loaded with the heavy duties to which almost all foreign goodsare subjected on their importation into Great Britain. Unless,therefore, some part of those duties was drawn back uponexportation, there was an end of the carrying trade; a trade somuch favoured by the mercantile system.

Our colonies, however, are by no means independent foreigncountries; and Great Britain having assumed to herself theexclusive right of supplying them with all goods from Europe,might have forced them (in the same manner as other countrieshave done their colonies) to receive such goods, loaded with all thesame duties which they paid in the mother country. But, on thecontrary, till 1763, the same drawbacks were paid upon the



771

exportation of the greater part of foreign goods to our colonies asto any independent foreign country. In 1763, indeed, by the 4th ofGeorge III, c. 15, this indulgence was a good deal abated, and itwas enacted, “That no part of the duty called the Old Subsidyshould be drawn back for any goods of the growth, production, ormanufacture of Europe or the East Indies, which should beexported from this kingdom to any British colony or plantation inAmerica; wines, white calicoes and muslins excepted.” Before thislaw, many different sorts of foreign goods might have been boughtcheaper in the plantations than in the mother country; and somemay still.

Of the greater part of the regulations concerning the colonytrade, the merchants who carry it on, it must be observed, havebeen the principal advisers. We must not wonder, therefore, if, inthe greater part of them, their interest has been more consideredthan either that of the colonies or that of the mother country. Intheir exclusive privilege of supplying the colonies with all thegoods which they wanted from Europe, and of purchasing all suchparts of their surplus produce as could not interfere with any ofthe trades which they themselves carried on at home, the interestof the colonies was sacrificed to the interest of those merchants. Inallowing the same drawbacks upon the re-exportation of thegreater part of European and East India goods to the colonies asupon their re-exportation to any independent country, the interestof the mother country was sacrificed to it, even according to themercantile ideas of that interest. It was for the interest of themerchants to pay as little as possible for the foreign which theysent to the colonies, and, consequently, to get back as much aspossible of the duties which they advanced upon their importation



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into Great Britain. They might thereby be enabled to sell in thecolonies either the same quantity of goods with a greater profit, ora greater quantity with the same profit, and, consequently, to gainsomething either in the one way or the other. It was likewise forthe interest of the colonies to get all such goods as cheap and in asgreat abundance as possible. But this might not always be for theinterest of the mother country. She might frequently suffer both inher revenue, by giving back a great part of the duties which hadbeen paid upon the importation of such goods; and in hermanufactures, by being undersold in the colony market, inconsequence of the easy terms upon which foreign manufacturescould be carried thither by means of those drawbacks. Theprogress of the linen manufacture of Great Britain, it is commonlysaid, 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 tradeof her colonies has been dictated by the same mercantile spirit asthat of other nations, it has, however, upon the whole, been lessilliberal and oppressive than that of any of them.

In everything, except their foreign trade, the liberty of theEnglish colonists to manage their own affairs their own way iscomplete. It is in every respect equal to that of their fellow-citizensat home, and is secured in the same manner, by an assembly of therepresentatives of the people, who claim the sole right of imposingtaxes 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 longas he obeys the law, has anything to fear from the resentment,either of the governor or of any other civil or military officer in the



773

province.The colony assemblies though, like the House of Commons in

England, are not always a very equal representation of the people,yet they approach more nearly to that character; and as theexecutive power either has not the means to corrupt them, or, onaccount of the support which it receives from the mother country,is not under the necessity of doing so, they are perhaps in generalmore influenced by the inclinations of their constituents. Thecouncils which, in the colony legislatures, correspond to the Houseof Lords in Great Britain, are not composed of an hereditarynobility. In some of the colonies, as in three of the governments ofNew England, those councils are not appointed by the king, butchosen by the representatives of the people. In none of the Englishcolonies is there any hereditary nobility. In all of them, indeed, asin all other free countries, the descendant of an old colony familyis more respected than an upstart of equal merit and fortune; buthe is only more respected, and he has no privileges by which hecan be troublesome to his neighbours. Before the commencementof the present disturbances, the colony assemblies had not onlythe legislative but a part of the executive power. In Connecticutand Rhode Island, they elected the governor. In the other coloniesthey appointed the revenue officers who collected the taxesimposed by those respective assemblies, to whom those officerswere immediately responsible. There is more equality, therefore,among the English colonists than among the inhabitants of themother country. Their manners are more republican, and theirgovernments, those of three of the provinces of New England inparticular, have hitherto been more republican too.

The absolute governments of Spain, Portugal, and France, on



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the contrary, take place in their colonies; and the discretionarypowers which such governments commonly delegate to all theirinferior officers are, on account of the great distance, naturallyexercised there with more than ordinary violence. Under allabsolute governments there is more liberty in the capital than inany other part of the country. The sovereign himself can neverhave either interest or inclination to pervert the order of justice, orto oppress the great body of the people. In the capital his presenceoverawes more or less all his inferior officers, who in the remoterprovinces, from whence the complaints of the people are less likelyto reach him, can exercise their tyranny with much more safety.But the European colonies in America are more remote than themost distant provinces of the greatest empires which had everbeen known before. The government of the English colonies isperhaps the only one which, since the world began, could giveperfect security to the inhabitants of so very distant a province.The administration of the French colonies, however, has alwaysbeen conducted with more gentleness and moderation than that ofthe Spanish and Portuguese. This superiority of conduct issuitable both to the character of the French nation, and to whatforms the character of every nation, the nature of theirgovernment, which though arbitrary and violent in comparisonwith that of Great Britain, is legal and free in comparison withthose of Spain and Portugal.

It is in the progress of the North American colonies, however,that the superiority of the English policy chiefly appears. Theprogress 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



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nearly of the same kind with that which takes place in her coloniesof North America. But the sugar colonies of France are notdiscouraged, like those of England, from refining their own sugar;and, what is of still greater importance, the genius of theirgovernment naturally introduces a better management of theirnegro slaves.

In all European colonies the culture of the sugar-cane is carriedon by negro slaves. The constitution of those who have been bornin the temperate climate of Europe could not, it is supposed,support the labour of digging the ground under the burning sun ofthe West Indies; and the culture of the sugarcane, as it is managedat present, is all hand labour, though, in the opinion of many, thedrill plough might be introduced into it with great advantage. But,as the profit and success of the cultivation which is carried on bymeans of cattle, depend very much upon the good management ofthose cattle, so the profit and success of that which is carried on byslaves must depend equally upon the good management of thoseslaves; and in the good management of their slaves the Frenchplanters, I think it is generally allowed, are superior to theEnglish. The law, so far as it gives some weak protection to theslave against the violence of his master, is likely to be betterexecuted in a colony where the government is in a great measurearbitrary than in one where it is altogether free. In every countrywhere the unfortunate law of slavery is established, themagistrate, when he protects the slave, intermeddles in somemeasure in the management of the private property of the master;and, in a free country, where the master is perhaps either amember of the colony assembly, or an elector of such a member,he dare not do this but with the greatest caution and



776

circumspection. The respect which he is obliged to pay to themaster renders it more difficult for him to protect the slave. But ina country where the government is in a great measure arbitrary,where it is usual for the magistrate to intermeddle even in themanagement of the private property of individuals, and to sendthem, perhaps, a lettre de cachet if they do not manage it accordingto his liking, it is much easier for him to give some protection tothe slave; and common humanity naturally disposes him to do so.The protection of the magistrate renders the slave lesscontemptible in the eyes of his master, who is thereby induced toconsider him with more regard, and to treat him with moregentleness. Gentle usage renders the slave not only more faithful,but more intelligent, and therefore, upon a double account, moreuseful. He approaches more to the condition of a free servant, andmay possess some degree of integrity and attachment to hismaster’s interest, virtues which frequently belong to free servants,but which never can belong to a slave who is treated as slavescommonly are in countries where the master is perfectly free andsecure.

That the condition of a slave is better under an arbitrary thanunder a free government is, I believe, supported by the history ofall ages and nations. In the Roman history, the first time we readof the magistrate interposing to protect the slave from the violenceof his master is under the emperors. When Vedius Pollio, in thepresence of Augustus, ordered one of his slaves, who hadcommitted a slight fault, to be cut into pieces and thrown into hisfish 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



777

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 sugarcolonies of France, particularly the great colony of St. Domingo,has been raised almost entirely from the gradual improvementand cultivation of those colonies. It has been almost altogether theproduce of the soil and of the industry of the colonies, or, whatcomes to the same thing, the price of that produce graduallyaccumulated by good management, and employed in raising a stillgreater produce. But the stock which has improved and cultivatedthe sugar colonies of England has, a great part of it, been sent outfrom England, and has by no means been altogether the produceof the soil and industry of the colonists. The prosperity of theEnglish sugar colonies has been, in a great measure, owing to thegreat riches of England, of which a part has overflowed, if one maysay so, upon those colonies. But the prosperity of the sugarcolonies of France has been entirely owing to the good conduct ofthe colonists, which must therefore have had some superiorityover that of the English; and this superiority has been remarked innothing so much as in the good management of their slaves.

Such have been the general outlines of the policy of thedifferent European nations with regard to their colonies.

The policy of Europe, therefore, has very little to boast of, eitherin the original establishment or, so far as concerns their internalgovernment, in the subsequent prosperity of the colonies ofAmerica.

Folly and injustice seem to have been the principles whichpresided over and directed the first project of establishing thosecolonies; the folly of hunting after gold and silver mines, and the



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injustice of coveting the possession of a country whose harmlessnatives, far from having ever injured the people of Europe, hadreceived the first adventurers with every mark of kindness andhospitality.

The adventurers, indeed, who formed some of the laterestablishments, joined to the chimerical project of finding gold andsilver mines other motives more reasonable and more laudable;but even these motives do very little honour to the policy ofEurope.

The English Puritans, restrained at home, fled for freedom toAmerica, and established there the four governments of NewEngland. The English Catholics, treated with much greaterinjustice, established that of Maryland; the Quakers, that ofPennsylvania. The Portuguese Jews, persecuted by theInquisition, stripped of their fortunes, and banished to Brazil,introduced by their example some sort of order and industryamong the transported felons and strumpets by whom that colonywas originally peopled, and taught them the culture of the sugar-cane. Upon all these different occasions it was not the wisdom andpolicy, but the disorder and injustice of the Europeangovernments which peopled and cultivated America.

In effectuating some of the most important of theseestablishments, the different governments of Europe had as littlemerit as in projecting them. The conquest of Mexico was theproject, not of the council of Spain, but of a governor of Cuba; andit was effectuated by the spirit of the bold adventurer to whom itwas entrusted, in spite of everything which that governor, whosoon repented of having trusted such a person, could do to thwartit. The conquerors of Chili and Peru, and of almost all the other



779

Spanish settlements upon the continent of America, carried outwith them no other public encouragement, but a generalpermission to make settlements and conquests in the name of theking of Spain. Those adventures were all at the private risk andexpense of the adventurers. The government of Spain contributedscarce anything to any of them. That of England contributed aslittle towards effectuating the establishment of some of its mostimportant colonies in North America.

When those establishments were effectuated, and had becomeso considerable as to attract the attention of the mother country,the first regulations which she made with regard to them hadalways in view to secure to herself the monopoly of theircommerce; to confine their market, and to enlarge her own at theirexpense, and, consequently, rather to damp and discourage thanto quicken and forward the course of their prosperity. In thedifferent ways in which this monopoly has been exercised consistsone of the most essential differences in the policy of the differentEuropean nations with regard to their colonies. The best of themall, that of England, is only somewhat less illiberal and oppressivethan that of any of the rest.

In what way, therefore, has the policy of Europe contributedeither to the first establishment, or to the present grandeur of thecolonies of America? In one way, and in one way only, it hascontributed a good deal. Magna virûm Mater! It bred and formedthe men who were capable of achieving such great actions, and oflaying the foundation of so great an empire; and there is no otherquarter of the world of which the policy is capable of forming, orhas ever actually and in fact formed such men. The colonies oweto the policy of Europe the education and great views of their



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active and enterprising founders; and some of the greatest andmost important of them, so far as concerns their internalgovernment, owe to it scarce anything else.

PART 3

Of the Advantages which Europe has derived from theDiscovery 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 havederived from the policy of Europe.

What are those which Europe has derived from the discoveryand colonization of America?

Those advantages may be divided, first, into the generaladvantages which Europe, considered as one great country, hasderived from those great events; and, secondly, into the particularadvantages which each colonizing country has derived from thecolonies which particularly belong to it, in consequence of theauthority or dominion which it exercises over them.

The general advantages which Europe, considered as one greatcountry, has derived from the discovery and colonisation ofAmerica, 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 ofcommodities which they could not otherwise have possessed;some for conveniency and use, some for pleasure, and some forornament, and thereby contributes to increase their enjoyments.



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The discovery and colonization of America, it will readily beallowed, have contributed to augment the industry, first, of all thecountries which trade to it directly, such as Spain, Portugal,France, and England; and, secondly, of all those which, withouttrading to it directly, send, through the medium of other countries,goods to it of their own produce; such as Austrian Flanders, andsome provinces of Germany, which, through the medium of thecountries before mentioned, send to it a considerable quantity oflinen and other goods. All such countries have evidently gained amore extensive market for their surplus produce, and mustconsequently have been encouraged to increase its quantity.

But that those great events should likewise have contributed toencourage the industry of countries, such as Hungary and Poland,which may never, perhaps, have sent a single commodity of theirown 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 andPoland, and there is some demand there for the sugar, chocolate,and tobacco of that new quarter of the world. But thosecommodities must be purchased with something which is eitherthe produce of the industry of Hungary and Poland, or withsomething which had been purchased with some part of thatproduce. Those commodities of America are new values, newequivalents, introduced into Hungary and Poland to be exchangedthere for the surplus produce of those countries. By being carriedthither they create a new and more extensive market for thatsurplus produce. They raise its value, and thereby contribute toencourage its increase. Though no part of it may ever be carried toAmerica, it may be carried to other countries which purchase it



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with a part of their share of the surplus produce of America; and itmay find a market by means of the circulation of that trade whichwas originally put into motion by the surplus produce of America.

Those great events may even have contributed to increase theenjoyments, and to augment the industry of countries which notonly never sent any commodities to America, but never receivedany from it. Even such countries may have received a greaterabundance of other commodities from countries of which thesurplus produce had been augmented by means of the Americantrade. This greater abundance, as it must necessarily haveincreased their enjoyments, so it must likewise have augmentedtheir industry. A greater number of new equivalents of some kindor other must have been presented to them to be exchanged forthe surplus produce of that industry. A more extensive marketmust have been created for that surplus produce so as to raise itsvalue, and thereby encourage its increase. The mass ofcommodities annually thrown into the great circle of Europeancommerce, and by its various revolutions annually distributedamong all the different nations comprehended within it, musthave been augmented by the whole surplus produce of America. Agreater share of this greater mass, therefore, is likely to have fallento each of those nations, to have increased their enjoyments, andaugmented 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 weightupon the action of one of the great springs which puts into motiona great part of the business of mankind. By rendering the colony



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produce dearer in all other countries, it lessens its consumption,and thereby cramps the industry of the colonies, and both theenjoyments and the industry of all other countries, which bothenjoy less when they pay more for what they enjoy, and produceless when they get less for what they produce. By rendering theproduce of all other countries dearer in the colonies, it cramps, inthe same manner the industry of all other countries, and both theenjoyments and the industry of the colonies.

It is a clog which, for the supposed benefit of some particularcountries, embarrasses the pleasures and encumbers the industryof all other countries; but of the colonies more than of any other. Itnot only excludes, as much as possible, all other countries fromone particular market; but it confines, as much as Possible, thecolonies to one particular market; and the difference is very greatbetween being excluded from one particular market, when allothers 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 enjoymentsand industry which Europe derives from the discovery andcolonization of America; and the exclusive trade of the mothercountries tends to render this source much less abundant than itotherwise would be.

The particular advantages which each colonizing countryderives from the colonies which particularly belong to it are of twodifferent kinds; first, those common advantages which everyempire derives from the provinces subject to its dominion; and,secondly, those peculiar advantages which are supposed to resultfrom provinces of so very peculiar a nature as the Europeancolonies of America.



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The common advantages which every empire derives from theprovinces subject to its dominion consist, first, in the military forcewhich they furnish for its defence; and, secondly, in the revenuewhich they furnish for the support of its civil government. TheRoman colonies furnished occasionally both the one and the other.The Greek colonies, sometimes, furnished a military force, butseldom any revenue. They seldom acknowledged themselvessubject to the dominion of the mother city. They were generallyher allies in war, but very seldom her subjects in peace.

The European colonies of America have never yet furnishedany military force for the defence of the mother country. Theirmilitary force has never yet been sufficient for their own defence;and in the different wars in which the mother countries have beenengaged, the defence of their colonies has generally occasioned avery considerable distraction of the military force of thosecountries.

In this respect, therefore, all the European colonies have,without exception, been a cause rather of weakness than ofstrength to their respective mother countries.

The colonies of Spain and Portugal only have contributed anyrevenue towards the defence of the mother country, or the supportof her civil government. The taxes which have been levied uponthose of other European nations, upon those of England inparticular, have seldom been equal to the expense laid out uponthem in time of peace, and never sufficient to defray that whichthey occasioned in time of war. Such colonies, therefore, havebeen a source of expense and not of revenue to their respectivemother countries.

The advantages of such colonies to their respective mother



785

countries consist altogether in those peculiar advantages whichare supposed to result from provinces of so very peculiar a natureas the European colonies of America; and the exclusive trade, it isacknowledged, is the sole source of all those peculiar advantages.

In consequence of this exclusive trade, all that part of thesurplus produce of the English colonies, for example, whichconsists in what are called enumerated commodities, can be sentto no other country but England. Other countries must afterwardsbuy it of her. It must be cheaper therefore in England than it canbe in any other country, and must contribute more to increase theenjoyments of England than those of any other country. It mustlikewise contribute more to encourage her industry. For all thoseparts of her own surplus produce which England exchanges forthose enumerated commodities, she must get a better price thanany other countries can get for the like parts of theirs, when theyexchange them for the same commodities. The manufacturers ofEngland, for example, will purchase a greater quantity of thesugar and tobacco of her own colonies than the like manufacturesof other countries can purchase of that sugar and tobacco. So far,therefore, as the manufactures of England and those of othercountries are both to be exchanged for the sugar and tobacco ofthe English colonies, this superiority of price gives anencouragement to the former beyond what the latter can in thesecircumstances enjoy. The exclusive trade of the colonies,therefore, as it diminishes, or at least keeps down below what theywould otherwise rise to, both the enjoyments and the industry ofthe countries which do not possess it; so it gives an evidentadvantage to the countries which do possess it over those othercountries.



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This advantage, however, will perhaps be found to be ratherwhat may be called a relative than an absolute advantage; and togive a superiority to the country which enjoys it rather bydepressing the industry and produce of other countries than byraising those of that particular country above what they wouldnaturally rise to in the case of a free trade.

The tobacco of Maryland and Virginia, for example, by meansof the monopoly which England enjoys of it, certainly comescheaper to England than it can do to France, to whom Englandcommonly sells a considerable part of it. But had France, and allother European countries been, at all times, allowed a free trade toMaryland and Virginia, the tobacco of those colonies might, by thistime, have come cheaper than it actually does, not only to all thoseother countries, but likewise to England. The produce of tobacco,in consequence of a market so much more extensive than anywhich it has hitherto enjoyed, might, and probably would, by thistime, have been so much increased as to reduce the profits of atobacco plantation to their natural level with those of a cornplantation, which, it is supposed, they are still somewhat above.The price of tobacco might, and probably would, by this time, havefallen somewhat lower than it is at present. An equal quantity ofthe commodities either of England or of those other countriesmight have purchased in Maryland and Virginia a greater quantityof tobacco than it can do at present, and consequently have beensold there for so much a better price. So far as that weed,therefore, can, by its cheapness and abundance, increase theenjoyments or augment the industry either of England or of anyother country, it would, probably, in the case of a free trade, haveproduced both these effects in somewhat a greater degree than it



787

can do at present. England, indeed, would not in this case havehad any advantage over other countries. She might have boughtthe tobacco of her colonies somewhat cheaper, and consequentlyhave sold some of her own commodities somewhat dearer thanshe actually does. But she could neither have bought the onecheaper nor sold the other dearer than any other country mighthave done. She might, perhaps have gained an absolute, but shewould certainly have lost a relative advantage.

In order, however, to obtain this relative advantage in thecolony trade, in order to execute the invidious and malignantproject of excluding as much as possible other nations from anyshare 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 relativedisadvantage in almost every other branch of trade.

When, by the Act of Navigation, England assumed to herself themonopoly of the colony trade, the foreign capitals which hadbefore 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 beforesupplied the colonies with but a part of the goods which theywanted from Europe was now all that was employed to supplythem with the whole. But it could not supply them with the whole,and the goods with which it did supply them were necessarily soldvery dear. The capital which had before bought but a part of thesurplus produce of the colonies, was now all that was employed tobuy the whole. But it could not buy the whole at anything near theold price, and, therefore, whatever it did buy it necessarily bought



788

very cheap. But in an employment of capital in which themerchant sold very dear and bought very cheap, the profit musthave been very great, and much above the ordinary level of profitin other branches of trade. This superiority of profit in the colonytrade could not fail to draw from other branches of trade a part ofthe capital which had before been employed in them. But thisrevulsion of capital, as it must have gradually increased thecompetition of capitals in the colony trade, so it must havegradually diminished that competition in all those other branchesof trade; as it must have gradually lowered the profits of the one,so it must have gradually raised those of the other, till the profitsof all came to a new level, different from and somewhat higherthan that at which they had been before.

This double effect of drawing capital from all other trades, andof raising the rate of profit somewhat higher than it otherwisewould have been in all trades, was not only produced by thismonopoly upon its first establishment, but has continued to beproduced by it ever since.

First, this monopoly has been continually drawing capital fromall other trades to be employed in that of the colonies.

Though the wealth of Great Britain has increased very muchsince the establishment of the Act of Navigation, it certainly hasnot increased in the same proportion as that of the colonies. Butthe foreign trade of every country naturally increases inproportion to its wealth, its surplus produce in proportion to itswhole produce; and Great Britain having engrossed to herselfalmost the whole of what may be called the foreign trade of thecolonies, and her capital not having increased in the sameproportion as the extent of that trade, she could not carry it on



789

without continually withdrawing from other branches of tradesome part of the capital which had before been employed in themas well as withholding from them a great deal more which wouldotherwise have gone to them. Since the establishment of the Act ofNavigation, accordingly, the colony trade has been continuallyincreasing, while many other branches of foreign trade,particularly of that to other parts of Europe, have been continuallydecaying. Our manufactures for foreign sale, instead of beingsuited, as before the Act of Navigation, to the neighbouring marketof Europe, or to the more distant one of the countries which lieround the Mediterranean Sea, have, the greater part of them, beenaccommodated to the still more distant one of the colonies, to themarket in which they have the monopoly rather than to that inwhich they have many competitors. The causes of decay in otherbranches of foreign trade, which, by Sir Matthew Decker andother writers, have been sought for in the excess and impropermode of taxation, in the high price of labour, in the increase ofluxury, etc., may all be found in the overgrowth of the colonytrade. The mercantile capital of Great Britain, though very great,yet not being infinite, and though greatly increased since the Actof Navigation, yet not being increased in the same proportion asthe colony trade, that trade could not possibly be carried onwithout withdrawing some part of that capital from otherbranches of trade, nor consequently without some decay of thoseother branches.

England, it must be observed, was a great trading country, hermercantile capital was very great and likely to become still greaterand greater every day, not only before the Act of Navigation hadestablished the monopoly of the colony trade, but before that trade



790

was very considerable. In the Dutch war, during the governmentof Cromwell, her navy was superior to that of Holland; and in thatwhich broke out in the beginning of the reign of Charles II, it wasat last equal, perhaps superior, to the united navies of France andHolland. Its superiority, perhaps, would scarce appear greater inthe present times; at least if the Dutch navy was to bear the sameproportion to the Dutch commerce now which it did then. But thisgreat naval power could not, in either of those wars, be owing tothe Act of Navigation. During the first of them the plan of that acthad been but just formed; and though before the breaking out ofthe second it had been fully enacted by legal authority, yet no partof it could have had time to produce any considerable effect, andleast of all that part which established the exclusive trade to thecolonies. Both the colonies and their trade were inconsiderablethen in comparison of what they are now. The island of Jamaicawas 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 ofAntigua, the two Carolinas, Pennsylvania, Georgia, and NovaScotia were not planted. Virginia, Maryland, and New Englandwere planted; and though they were very thriving colonies, yetthere was not, perhaps, at that time, either in Europe or America,a single person who foresaw or even suspected the rapid progresswhich they have since made in wealth, population, andimprovement. The island of Barbadoes, in short, was the onlyBritish colony of any consequence of which the condition at thattime bore any resemblance to what it is at present. The trade ofthe colonies, of which England, even for some time after the Act ofNavigation, enjoyed but a part (for the Act of Navigation was not



791

very strictly executed till several years after it was enacted), couldnot at that time be the cause of the great trade of England, nor ofthe great naval power which was supported by that trade. Thetrade which at that time supported that great naval power was thetrade of Europe, and of the countries which lie round theMediterranean Sea. But the share which Great Britain at presentenjoys 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 veryconsiderable share would probably have fallen to her, must havebeen all an addition to this great trade of which she was before inpossession. In consequence of the monopoly, the increase of thecolony trade has not so much occasioned an addition to the tradewhich Great Britain had before as a total change in its direction.

Secondly, this monopoly has necessarily contributed to keep upthe rate of profit in all the different branches of British tradehigher than it naturally would have been had all nations beenallowed a free trade to the British colonies.

The monopoly of the colony trade, as it necessarily drewtowards that trade a greater proportion of the capital of GreatBritain than what would have gone to it of its own accord; so bythe expulsion of all foreign capitals it necessarily reduced thewhole quantity of capital employed in that trade below what itnaturally would have been in the case of a free trade. But, bylessening the competition of capitals in that branch of trade, itnecessarily raised the rate of profit in that branch. By lessening,too, the competition of British capitals in all other branches oftrade, it necessarily raised the rate of British profit in all thoseother branches. Whatever may have been, at any particular



792

period, since the establishment of the Act of Navigation, the stateor extent of the mercantile capital of Great Britain, the monopolyof the colony trade must, during the continuance of that state,have raised the ordinary rate of British profit higher than itotherwise would have been both in that and in all the otherbranches of British trade. If, since the establishment of the Act ofNavigation, the ordinary rate of British profit has fallenconsiderably, as it certainly has, it must have fallen still lower, hadnot the monopoly established by that act contributed to keep it up.

But whatever raises in any country the ordinary rate of profithigher than it otherwise would be, necessarily subjects thatcountry both to an absolute and to a relative disadvantage in everybranch of trade of which she has not the monopoly.

It subjects her to an absolute disadvantage; because in suchbranches of trade her merchants cannot get this greater profitwithout selling dearer than they otherwise would do both thegoods of foreign countries which they import into their own, andthe goods of their own country which they export to foreigncountries. Their own country must both buy dearer and selldearer; must both buy less and sell less; must both enjoy less andproduce less, than she otherwise would do.

It subjects her to a relative disadvantage; because in suchbranches of trade it sets other countries which are not subject tothe same absolute disadvantage either more above her or lessbelow her than they otherwise would be. It enables them both toenjoy more and to produce more in proportion to what she enjoysand produces. It renders their superiority greater or theirinferiority less than it otherwise would be. By raising the price ofher produce above what it otherwise would be, it enables the



793

merchants of other countries to undersell her in foreign markets,and thereby to jostle 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 Britishlabour as the cause of their manufactures being undersold inforeign markets, but they are silent about the high profits of stock.They complain of the extravagant gain of other people, but theysay nothing of their own. The high profits of British stock,however, may contribute towards raising the price of Britishmanufactures 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 mayjustly say, has partly been drawn and partly been driven from thegreater part of the different branches of trade of which she has notthe monopoly; from the trade of Europe in particular, and fromthat of the countries which lie round the Mediterranean Sea.

It has partly been drawn from those branches of trade by theattraction of superior profit in the colony trade in consequence ofthe continual increase of that trade, and of the continualinsufficiency of the capital which had carried it on one year tocarry it on the next.

It has partly been driven from them by the advantage which thehigh rate of profit, established in Great Britain, gives to othercountries in all the different branches of trade of which GreatBritain has not the monopoly.

As the monopoly of the colony trade has drawn from thoseother branches a part of the British capital which would otherwisehave been employed in them, so it has forced into them manyforeign capitals which would never have gone to them had they



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not been expelled from the colony trade. In those other branchesof trade it has diminished the competition of British capital, andthereby raised the rate of British profit higher than it otherwisewould have been. On the contrary, it has increased thecompetition of foreign capitals, and thereby sunk the rate offoreign profit lower than it otherwise would have been. Both in theone way and in the other it must evidently have subjected GreatBritain to a relative disadvantage in all those other branches oftrade.

The colony trade, however, it may perhaps be said, is moreadvantageous to Great Britain than any other; and the monopoly,by forcing into that trade a greater proportion of the capital ofGreat Britain than what would otherwise have gone to it, hasturned that capital into an employment more advantageous to thecountry than any other which it could have found.

The most advantageous employment of any capital to thecountry to which it belongs is that which maintains there thegreatest quantity of productive labour, and increases the most theannual produce of the land and labour of that country. But thequantity of productive labour which any capital employed in theforeign trade of consumption can maintain is exactly inproportion, it has been shown in the second book, to the frequencyof its returns. A capital of a thousand pounds, for example,employed in a foreign trade of consumption, of which the returnsare made regularly once in the year, can keep in constantemployment, in the country to which it belongs, a quantity ofproductive labour equal to what a thousand pounds can maintainthere for a year. If the returns are made twice or thrice in the year,it can keep in constant employment a quantity of productive



795

labour equal to what two or three thousand pounds can maintainthere for a year. A foreign trade of consumption carried on with aneighbouring country is, upon this account, in general moreadvantageous than one carried on with a distant country; and forthe same reason a direct foreign trade of consumption, as it haslikewise been shown in the second book, is in general moreadvantageous than a round-about one.

But the monopoly of the colony trade, so far as it has operatedupon the employment of the capital of Great Britain, has in allcases forced some part of it from a foreign trade of consumptioncarried on with a neighbouring, to one carried on with a moredistant country, and in many cases from a direct foreign trade ofconsumption to a round-about one.

First, the monopoly of the colony trade has in all cases forcedsome part of the capital of Great Britain from a foreign trade ofconsumption carried on with a neighbouring to one carried onwith a more distant country.

It has, in all cases, forced some part of that capital from thetrade with Europe, and with the countries which lie round theMediterranean Sea, to that with the more distant regions ofAmerica and the West Indies, from which the returns arenecessarily less frequent, not only on account of the greaterdistance, but on account of the peculiar circumstances of thosecountries. New colonies, it has already been observed, are alwaysunderstocked. Their capital is always much less than what theycould employ with great profit and advantage in the improvementand cultivation of their land.

They have a constant demand, therefore, for more capital thanthey have of their own; and, in order to supply the deficiency of



796

their own, they endeavour to borrow as much as they can of themother country, to whom they are, therefore, always in debt. Themost common way in which the colonists contract this debt is notby borrowing upon bond of the rich people of the mother country,though they sometimes do this too, but by running as much inarrear to their correspondents, who supply them with goods fromEurope, as those correspondents will allow them. Their annualreturns frequently do not amount to more than a third, andsometimes not to so great a proportion of what they owe. Thewhole capital, therefore, which their correspondents advance tothem is seldom returned to Britain in less than three, andsometimes not in less than four or five years. But a British capitalof a thousand pounds, for example, which is returned to GreatBritain only once in five years, can keep in constant employmentonly one-fifth part of the British industry which it could maintainif the whole was returned once in the year; and, instead of thequantity of industry which a thousand pounds could maintain fora year, can keep in constant employment the quantity only whichtwo hundred pounds can maintain for a year. The planter, nodoubt, by the high price which he pays for the goods from Europe,by the interest upon the bills which he grants at distant dates, andby the commission upon the renewal of those which he grants atnear dates, makes up, and probably more than makes up, all theloss which his correspondent can sustain by this delay. But thoughhe may make up the loss of his correspondent, he cannot make upthat of Great Britain. In a trade of which the returns are verydistant, the profit of the merchant may be as great or greater thanin one in which they are very frequent and near; but theadvantage of the country in which he resides, the quantity of



797

productive labour constantly maintained there, the annualproduce of the land and labour must always be much less. Thatthe returns of the trade to America, and still more those of that tothe West Indies are, in general, not only more distant but moreirregular, and more uncertain too, than those of the trade to anypart of Europe, or even of the countries which lie round theMediterranean Sea, will readily be allowed, I imagine, byeverybody who has any experience of those different branches oftrade.

Secondly, the monopoly of the colony trade has, in many cases,forced some part of the capital of Great Britain from a directforeign trade of consumption into a round-about one.

Among the enumerated commodities which can be sent to noother market but Great Britain, there are several of which thequantity exceeds very much the consumption of Great Britain, andof which a part, therefore, must be exported to other countries.But this cannot be done without forcing some part of the capital ofGreat Britain into a round-about foreign trade of consumption.Maryland and Virginia, for example, send annually to GreatBritain upwards of ninety-six thousand hogsheads of tobacco, andthe consumption of Great Britain is said not to exceed fourteenthousand. Upwards of eighty-two thousand hogsheads, therefore,must be exported to other countries, to France, to Holland, and tothe countries which lie round the Baltic and Mediterranean Seas.But that part of the capital of Great Britain which brings thoseeighty-two thousand hogsheads to Great Britain, which re-exportsthem from thence to those other countries, and which brings backfrom those other countries to Great Britain either goods or moneyin return, is employed in a round-about foreign trade of



798

consumption; and is necessarily forced into this employment inorder to dispose of this great surplus. If we would compute in howmany years the whole of this capital is likely to come back to GreatBritain, we must add to the distance of the American returns thatof the returns from those other countries. If, in the direct foreigntrade of consumption which we carry on with America, the wholecapital employed frequently does not come back in less than threeor four years, the whole capital employed in this round-about oneis not likely to come back in less than four or five. If the one cankeep in constant employment but a third or a fourth part of thedomestic industry which could be maintained by a capitalreturned once in the year, the other can keep in constantemployment but a fourth or fifth part of that industry. At some ofthe out-ports a credit is commonly given to those foreigncorrespondents to whom they export their tobacco. At the port ofLondon, indeed, it is commonly sold for ready money. The rule is,Weigh and pay. At the port of London, therefore, the final returnsof the whole round-about trade are more distant than the returnsfrom America by the time only which the goods may lie unsold inthe warehouse; where, however, they may sometimes lie longenough. But had not the colonies been confined to the market ofGreat Britain for the sale of their tobacco, very little more of itwould probably have come to us than what was necessary for thehome consumption. The goods which Great Britain purchases atpresent for her own consumption with the great surplus of tobaccowhich she exports to other countries, she would in this caseprobably have purchased with the immediate produce of her ownindustry, or with some part of her own manufactures. Thatproduce, those manufactures, instead of being almost entirely



799

suited to one great market, as at present, would probably havebeen 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 ofsmall direct foreign trades of the same kind. On account of thefrequency of the returns, a part, and probably but a small part;perhaps not above a third or a fourth of the capital which atpresent carries on this great round-about trade might have beensufficient to carry on all those small direct ones, might have keptin constant employment an equal quantity of British industry, andhave equally supported the annual produce of the land and labourof Great Britain. All the purposes of this trade being, in thismanner, answered by a much smaller capital, there would havebeen a large spare capital to apply to other purposes: to improvethe lands, to increase the manufactures, and to extend thecommerce of Great Britain; to come into competition at least withthe other British capitals employed in all those different ways, toreduce the rate of profit in them all, and thereby to give to GreatBritain, in all of them, a superiority over other countries stillgreater than what she at present enjoys.

The monopoly of the colony trade, too, has forced some part ofthe capital of Great Britain from all foreign trade of consumptionto a carrying trade; and consequently, from supporting more orless the industry of Great Britain, to be employed altogether insupporting partly that of the colonies and partly that of some othercountries.

The goods, for example, which are annually purchased with thegreat surplus of eighty-two thousand hogsheads of tobaccoannually re-exported from Great Britain are not all consumed in



800

Great Britain. Part of them, linen from Germany and Holland, forexample, is returned to the colonies for their particularconsumption. But that part of the capital of Great Britain whichbuys the tobacco with which this linen is afterwards bought isnecessarily withdrawn from supporting the industry of GreatBritain, to be employed altogether in supporting, partly that of thecolonies, and partly that of the particular countries who pay forthis tobacco with the produce of their own industry.

The monopoly of the colony trade besides, by forcing towards ita much greater proportion of the capital of Great Britain thanwhat would naturally have gone to it, seems to have brokenaltogether that natural balance which would otherwise have takenplace among all the different branches of British industry. Theindustry of Great Britain, instead of being accommodated to agreat number of small markets, has been principally suited to onegreat market. Her commerce, instead of running in a greatnumber of small channels, has been taught to run principally inone great channel. But the whole system of her industry andcommerce has thereby been rendered less secure, the whole stateof her body politic less healthful than it otherwise would havebeen. In her present condition, Great Britain resembles one ofthose unwholesome bodies in which some of the vital parts areovergrown, and which, upon that account, are liable to manydangerous disorders scarce incident to those in which all the partsare more properly proportioned. A small stop in that great blood-vessel, which has been artificially swelled beyond its naturaldimensions, and through which an unnatural proportion of theindustry and commerce of the country has been forced tocirculate, is very likely to bring on the most dangerous disorders



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upon the whole body politic. The expectation of a rupture with thecolonies, accordingly, has struck the people of Great Britain withmore terror than they ever felt for a Spanish armada, or a Frenchinvasion. It was this terror, whether well or ill grounded, whichrendered the repeal of the Stamp Act, among the merchants atleast, a popular measure.

In the total exclusion from the colony market, was it to last onlyfor a few years, the greater part of our merchants used to fancythat they foresaw an entire stop to their trade; the greater part ofour master manufacturers, the entire ruin of their business; andthe greater part of our workmen, an end of their employment. Arupture with any of our neighbours upon the continent, thoughlikely, too, to occasion some stop or interruption in theemployments of some of all these different orders of people, isforeseen, however, without any such general emotion. The blood,of which the circulation is stopped in some of the smaller vessels,easily disgorges itself into the greater without occasioning anydangerous disorder; but, when it is stopped in any of the greatervessels, convulsions, apoplexy, or death, are the immediate andunavoidable consequences. If but one of those overgrownmanufactures, which, by means either of bounties or of themonopoly of the home and colony markets, have been artificiallyraised up to an unnatural height, finds some small stop orinterruption in its employment, it frequently occasions a mutinyand disorder alarming to government, and embarrassing even tothe deliberations of the legislature. How great, therefore, would bethe disorder and confusion, it was thought, which must necessarilybe occasioned by a sudden and entire stop in the employment ofso great a proportion of our principal manufacturers.



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Some moderate and gradual relaxation of the laws which giveto Great Britain the exclusive trade to the colonies, till it isrendered in a great measure free, seems to be the only expedientwhich can, in all future times, deliver her from this danger, whichcan enable her or even force her to withdraw some part of hercapital from this overgrown employment, and to turn it, thoughwith less profit, towards other employments; and which, bygradually diminishing one branch of her industry and graduallyincreasing all the rest, can by degrees restore all the differentbranches of it to that natural, healthful, and proper proportionwhich perfect liberty necessarily establishes, and which perfectliberty can alone preserve. To open the colony trade all at once toall nations might not only occasion some transitory inconveniency,but a great permanent loss to the greater part of those whoseindustry or capital is at present engaged in it. The sudden loss ofthe employment even of the ships which import the eighty-twothousand hogsheads of tobacco, which are over and above theconsumption of Great Britain, might alone be felt very sensibly.

Such are the unfortunate effects of all the regulations of themercantile system! They not only introduce very dangerousdisorders into the state of the body politic, but disorders which it isoften difficult to remedy, without occasioning for a time at least,still greater disorders. In what manner, therefore, the colony tradeought gradually to be opened; what are the restraints which oughtfirst, and what are those which ought last to be taken away; or inwhat manner the natural system of perfect liberty and justiceought gradually to be restored, we must leave to the wisdom offuture statesmen and legislators to determine.

Five different events, unforeseen and unthought of, have very



803

fortunately concurred to hinder Great Britain from feeling, sosensibly as it was generally expected she would, the total exclusionwhich has now taken place for more than a year (from the first ofDecember, 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-importationagreement, drained Great Britain completely of all thecommodities which were fit for their market; secondly, theextraordinary demand of the Spanish Flota has, this year, drainedGermany 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 betweenRussia and Turkey has occasioned an extraordinary demand fromthe Turkey market, which, during the distress of the country, andwhile a Russian fleet was cruising in the Archipelago, had beenvery poorly supplied; fourthly, the demand of the North of Europefor the manufactures of Great Britain has been increasing fromyear to year for some time past; and fifthly, the late partition andconsequential pacification of Poland, by opening the market ofthat great country, have this year added an extraordinary demandfrom thence to the increasing demand of the North. These eventsare 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 occasionsome degree of distress. This distress, however, as it will come ongradually, will be felt much less severely than if it had come on allat once; and, in the meantime, the industry and capital of thecountry may find a new employment and direction, so as toprevent this distress from ever rising to any considerable height.



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The monopoly of the colony trade, therefore, so far as it hasturned towards that trade a greater proportion of the capital ofGreat Britain than what would otherwise have gone to it, has in allcases turned it, from a foreign trade of consumption with aneighbouring 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 acarrying trade. It has in all cases, therefore, turned it from adirection in which it would have maintained a greater quantity ofproductive labour into one in which it can maintain a muchsmaller quantity. By suiting, besides, to one particular market onlyso great a part of the industry and commerce of Great Britain, ithas rendered the whole state of that industry and commerce moreprecarious and less secure than if their produce had beenaccommodated to a greater variety of markets.

We must carefully distinguish between the effects of the colonytrade and those of the monopoly of that trade. The former arealways and necessarily beneficial; the latter always andnecessarily hurtful. But the former are so beneficial that thecolony trade, though subject to a monopoly, and notwithstandingthe hurtful effects of that monopoly, is still upon the wholebeneficial, and greatly beneficial; though a good deal less so than itotherwise would be.

The effect of the colony trade in its natural and free state is toopen a great, though distant, market for such parts of the produceof British industry as may exceed the demand of the marketsnearer home, of those of Europe, and of the countries which lieround the Mediterranean Sea. In its natural and free state, thecolony trade, without drawing from those markets any part of the



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produce which had ever been sent to them, encourages GreatBritain to increase the surplus continually by continuallypresenting new equivalents to be exchanged for it. In its naturaland free state, the colony trade tends to increase the quantity ofproductive labour in Great Britain, but without altering in anyrespect the direction of that which had been employed therebefore. In the natural and free state of the colony trade, thecompetition of all other nations would hinder the rate of profitfrom rising above the common level either in the new market or inthe new employment. The new market, without drawing anythingfrom the old one, would create, if one may say so, a new producefor its own supply; and that new produce would constitute a newcapital for carrying on the new employment, which in the samemanner would draw nothing from the old one.

The monopoly of the colony trade, on the contrary, byexcluding the competition of other nations, and thereby raisingthe rate of profit both in the new market and in the newemployment, draws produce from the old market and capital fromthe old employment. To augment our share of the colony tradebeyond what it otherwise would be is the avowed purpose of themonopoly. If our share of that trade were to be no greater withthan it would have been without the monopoly, there could havebeen no reason for establishing the monopoly. But whateverforces into a branch of trade of which the returns are slower andmore distant than those of the greater part of other trades, agreater proportion of the capital of any country than what of itsown accord would go to that branch, necessarily renders thewhole quantity of productive labour annually maintained there,the whole annual produce of the land and labour of that country,



806

less than they otherwise would be. It keeps down the revenue ofthe inhabitants of that country below what it would naturally riseto, and thereby diminishes their power of accumulation. It notonly hinders, at all times, their capital from maintaining so great aquantity of productive labour as it would otherwise maintain, butit hinders it from increasing so fast as it would otherwise increase,and consequently from maintaining a still greater quantity ofproductive labour.

The natural good effects of the colony trade, however, morethan counterbalance to Great Britain the bad effects of themonopoly, so that, monopoly and all together, that trade, even as itcarried on at present, is not only advantageous, but greatlyadvantageous. The new market and the new employment whichare opened by the colony trade are of much greater extent thanthat portion of the old market and of the old employment which islost by the monopoly. The new produce and the new capital whichhas been created, if one may say so, by the colony trade, maintainin Great Britain a greater quantity of productive labour than whatcan have been thrown out of employment by the revulsion ofcapital from other trades of which the returns are more frequent.If the colony trade, however, even as it is carried on at present, isadvantageous 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 ofEurope that the colony trade opens a new market. Agriculture isthe proper business of all new colonies; a business which thecheapness of land renders more advantageous than any other.They abound, therefore, in the rude produce of land, and insteadof importing it from other countries, they have generally a large



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surplus to export. In new colonies, agriculture either draws handsfrom all other employments, or keeps them from going to anyother employment. There are few hands to spare for thenecessary, and none for the ornamental manufactures. Thegreater part of the manufactures of both kinds they find it cheaperto purchase of other countries than to make for themselves. It ischiefly by encouraging the manufactures of Europe that the colonytrade indirectly encourages its agriculture. The manufactures ofEurope, to whom that trade gives employment, constitute a newmarket for the produce of the land; and the most advantageous ofall markets, the home market for the corn and cattle, for the breadand butcher’s meat of Europe, is thus greatly extended by meansof the trade to America.

But that the monopoly of the trade of populous and thrivingcolonies is not alone sufficient to establish, or even to maintainmanufactures in any country, the examples of Spain and Portugalsufficiently demonstrate. Spain and Portugal were manufacturingcountries before they had any considerable colonies. Since theyhad the richest and most fertile in the world, they have bothceased to be so.

In Spain and Portugal the bad effects of the monopoly,aggravated by other causes, have perhaps nearly overbalanced thenatural good effects of the colony trade. These causes seem to beother monopolies of different kinds; the degradation of the valueof gold and silver below what it is in most other countries; theexclusion from foreign markets by improper taxes uponexportation, and the narrowing of the home market, by still moreimproper taxes upon the transportation of goods from one part ofthe country to another; but above all, that irregular and partial



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administration of justice, which often protects the rich andpowerful debtor from the pursuit of his injured creditor, andwhich makes the industrious part of the nation afraid to preparegoods for the consumption of those haughty and great men towhom they dare not refuse to sell upon credit, and from they arealtogether uncertain of repayment.

In England, on the contrary, the natural good effects of thecolony trade, assisted by other causes, have in a great measureconquered the bad effects of the monopoly. These causes seem tobe: the general liberty of trade, which, notwithstanding somerestraints, is at least equal, perhaps superior, to what it is in anyother country; the liberty of exporting, duty free, almost all sorts ofgoods which are the produce of domestic industry to almost anyforeign country; and what perhaps is of still greater importance,the unbounded liberty of transporting them from any one part ofour own country to any other without being obliged to give anyaccount to any public office, without being liable to question orexamination of any kind; but above all, that equal and impartialadministration of justice which renders the rights of the meanestBritish subject respectable to the greatest, and which, by securingto every man the fruits of his own industry, gives the greatest andmost effectual encouragement to every sort of industry.

If the manufactures of Great Britain, however, have beenadvanced, as they certainly have, by the colony trade, it has notbeen by means of the monopoly of that trade but in spite of themonopoly.

The effect of the monopoly has been, not to augment thequantity, but to alter the quality and shape of a part of themanufactures of Great Britain, and to accommodate to a market,



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from which the returns are slow and distant, what wouldotherwise have been accommodated to one from which thereturns are frequent and near.

Its effect has consequently been to turn a part of the capital ofGreat Britain from an employment in which it would havemaintained a greater quantity of manufacturing industry to one inwhich it maintains a much smaller, and thereby to diminish,instead of increasing, the whole quantity of manufacturingindustry maintained in Great Britain.

The monopoly of the colony trade, therefore, like all the othermean and malignant expedients of the mercantile system,depresses the industry of all other countries, but chiefly that of thecolonies, without in the least increasing, but on the contrarydiminishing that of the country in whose favour it is established.

The monopoly hinders the capital of that country, whatevermay at any particular time be the extent of that capital, frommaintaining so great a quantity of productive labour as it wouldotherwise maintain, and from affording so great a revenue to theindustrious inhabitants as it would otherwise afford. But as capitalcan be increased only by savings from revenue, the monopoly, byhindering it from affording so great a revenue as it wouldotherwise afford, necessarily hinders it from increasing so fast as itwould otherwise increase, and consequently from maintaining astill greater quantity of productive labour, and affording a stillgreater revenue to the industrious inhabitants of that country. Onegreat original source of revenue, therefore, the wages of labour,the monopoly must necessarily have rendered at all times lessabundant than it otherwise would have been.

By raising the rate of mercantile profit, the monopoly



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discourages the improvement of land. The profit of improvementdepends upon the difference between what the land actuallyproduces, and what, by the application of a certain capital, it canbe made to produce. If this difference affords a greater profit thanwhat can be drawn from an equal capital in any mercantileemployment, the improvement of land will draw capital from allmercantile employments. If the profit is less, mercantileemployments will draw capital from the improvement of land.Whatever, therefore, raises the rate of mercantile profit, eitherlessens the superiority or increases the inferiority of the profit ofimprovement; and in the one case hinders capital from going toimprovement, and in the other draws capital from it. But bydiscouraging improvement, the monopoly necessarily retards thenatural increase of another great original source of revenue, therent of land. By raising the rate of profit, too, the monopolynecessarily keeps up the market rate of interest higher than itotherwise would be. But the price of land in proportion to the rentwhich it affords, the number of years purchase which is commonlypaid for it, necessarily falls as the rate of interest rises, and rises asthe rate of interest falls. The monopoly, therefore, hurts theinterest of the landlord two different ways, by retarding thenatural increase, first, of his rent, and secondly, of the price whichhe would get for his land in proportion to the rent which it affords.

The monopoly indeed raises the rate of mercantile profit, andthereby augments somewhat the gain of our merchants. But as itobstructs the natural increase of capital, it tends rather todiminish than to increase the sum total of the revenue which theinhabitants of the country derive from the profits of stock; a smallprofit upon a great capital generally affording a greater revenue



811

than a great profit upon a small one. The monopoly raises the rateof profit, but it hinders the sum of profit from rising so high as itotherwise would do.

All the original sources of revenue, the wages of labour, the rentof land, and the profits of stock, the monopoly renders much lessabundant than they otherwise would be. To promote the littleinterest of one little order of men in one country, it hurts theinterest of all other orders of men in that country, and of all menin all other countries.

It is solely by raising the ordinary rate of profit that themonopoly either has proved or could prove advantageous to anyone particular order of men. But besides all the bad effects to thecountry in general, which have already been mentioned asnecessarily resulting from a high rate of profit, there is one morefatal, perhaps, than all these put together, but which, if we mayjudge from experience, is inseparably connected with it. The highrate of profit seems everywhere to destroy that parsimony whichin other circumstances is natural to the character of the merchant.When profits are high that sober virtue seems to be superfluousand expensive luxury to suit better the affluence of his situation.But the owners of the great mercantile capitals are necessarily theleaders and conductors of the whole industry of every nation, andtheir example has a much greater influence upon the manners ofthe whole industrious part of it than that of any other order ofmen. If his employer is attentive and parsimonious, the workmanis very likely to be so too; but if the master is dissolute anddisorderly, the servant who shapes his work according to thepattern which his master prescribes to him will shape his life tooaccording to the example which he sets him. Accumulation is thus



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prevented in the hands of all those who are naturally the mostdisposed to accumulate, and the funds destined for themaintenance of productive labour receive no augmentation fromthe revenue of those who ought naturally to augment them themost. The capital of the country, instead of increasing, graduallydwindles away, and the quantity of productive labour maintainedin it grows every day less and less. Have the exorbitant profits ofthe merchants of Cadiz and Lisbon augmented the capital of Spainand Portugal? Have they alleviated the poverty, have theypromoted the industry of those two beggarly countries? Such hasbeen the tone of mercantile expense in those two trading citiesthat those exorbitant profits, far from augmenting the generalcapital of the country, seem scarce to have been sufficient to keepup the capitals upon which they were made. Foreign capitals areevery day intruding themselves, if I may say so, more and moreinto the trade of Cadiz and Lisbon. It is to expel those foreigncapitals from a trade which their own grows every day more andmore insufficient for carrying on that the Spaniards andPortuguese endeavour every day to straighten more and more thegalling bands of their absurd monopoly. Compare the mercantilemanners of Cadiz and Lisbon with those of Amsterdam, and youwill be sensible how differently the conduct and character ofmerchants are affected by the high and by the low profits of stock.The merchants of London, indeed, have not yet generally becomesuch magnificent lords as those of Cadiz and Lisbon, but neitherare they in general such attentive and parsimonious burghers asthose of Amsterdam. They are supposed, however, many of them,to be a good deal richer than the greater part of the former, andnot quite so rich as many of the latter. But the rate of their profit is



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commonly much lower than that of the former, and a good dealhigher than that of the latter. Light come, light go, says theproverb; and the ordinary tone of expense seems everywhere to beregulated, not so much according to the real ability of spending, asto the supposed facility of getting money to spend.

It is thus that the single advantage which the monopolyprocures to a single order of men is in many different ways hurtfulto the general interest of the country.

To found a great empire for the sole purpose of raising up apeople of customers may at first sight appear a project fit only fora nation of shopkeepers. It is, however, a project altogether unfitfor a nation of shopkeepers; but extremely fit for a nation whosegovernment is influenced by shopkeepers. Such statesmen, andsuch statesmen only, are capable of fancying that they will findsome advantage in employing the blood and treasure of theirfellow-citizens to found and maintain such an empire. Say to ashopkeeper, “Buy me a good estate, and I shall always buy myclothes at your shop, even though I should pay somewhat dearerthan what I can have them for at other shops”; and you will notfind him very forward to embrace your proposal. But should anyother person buy you such an estate, the shopkeeper would bemuch obliged to your benefactor if he would enjoin you to buy allyour clothes at his shop. England purchased for some of hersubjects, who found themselves uneasy at home, a great estate in adistant country. The price, indeed, was very small, and instead ofthirty years’ purchase, the ordinary price of land in the presenttimes, it amounted to little more than the expense of the differentequipments which made the first discovery, reconnoitred thecoast, and took a fictitious possession of the country. The land was



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good and of great extent, and the cultivators having plenty of goodground to work upon, and being for some time at liberty to selltheir produce where they pleased, became in the course of littlemore than thirty or forty years (between 1620 and 1660) sonumerous and thriving a people that the shopkeepers and othertraders of England wished to secure to themselves the monopolyof their custom. Without pretending, therefore, that they had paidany part, either of the original purchase-money, or of thesubsequent expense of improvement, they petitioned theParliament that the cultivators of America might for the future beconfined to their shop; first, for buying all the goods which theywanted from Europe; and, secondly, for selling all such parts oftheir own produce as those traders might find it convenient to buy.For they did not find it convenient to buy every part of it. Someparts of it imported into England might have interfered with someof the trades which they themselves carried on at home. Thoseparticular parts of it, therefore, they were willing that the colonistsshould sell where they could—the farther off the better; and uponthat account purposed that their market should be confined to thecountries south of Cape Finisterre. A clause in the famous Act ofNavigation established this truly shopkeeper proposal into a law.

The maintenance of this monopoly has hitherto been theprincipal, or more properly perhaps the sole end and purpose ofthe dominion which Great Britain assumes over her colonies. Inthe exclusive trade, it is supposed, consists the great advantage ofprovinces, which have never yet afforded either revenue ormilitary force for the support of the civil government, or thedefence of the mother country. The monopoly is the principalbadge of their dependency, and it is the sole fruit which has



815

hitherto been gathered from that dependency. Whatever expenseGreat Britain has hitherto laid out in maintaining this dependencyhas really been laid out in order to support this monopoly. Theexpense of the ordinary peace establishment of the coloniesamounted, before the commencement of the present disturbances,to the pay of twenty regiments of foot; to the expense of theartillery, stores, and extraordinary provisions with which it wasnecessary to supply them; and to the expense of a veryconsiderable naval force which was constantly kept up, in order toguard, from the smuggling vessels of other nations, the immensecoast of North America, and that of our West Indian islands. Thewhole expense of this peace establishment was a charge upon therevenue of Great Britain, and was, at the same time, the smallestpart of what the dominion of the colonies has cost the mothercountry. If we would know the amount of the whole, we must addto the annual expense of this peace establishment the interest ofthe sums which, in consequence of her considering her colonies asprovinces subject to her dominion, Great Britain has upondifferent occasions laid out upon their defence. We must add to it,in particular, the whole expense of the late war, and a great part ofthat of the war which preceded it. The late war was altogether acolony quarrel, and the whole expense of it, in whatever part ofthe world it may have been laid out, whether in Germany or theEast Indies, ought justly to be stated to the account of the colonies.It amounted to more than ninety millions sterling, including notonly the new debt which was contracted, but the two shillings inthe pound additional land tax, and the sums which were everyyear borrowed from the sinking fund. The Spanish war, whichbegan in 1739, was principally a colony quarrel. Its principal object



816

was to prevent the search of the colony ships which carried on acontraband trade with the Spanish Main. This whole expense is, inreality, a bounty which has been given in order to support amonopoly. The pretended purpose of it was to encourage themanufactures, and to increase the commerce of Great Britain. Butits real effect has been to raise the rate of mercantile profit, and toenable our merchants to turn into a branch of trade, of which thereturns are more slow and distant than those of the greater part ofother trades, a greater proportion of their capital than theyotherwise would have done; two events which, if a bounty couldhave prevented, it might perhaps have been very well worth whileto give such a bounty.

Under the present system of management, therefore, GreatBritain derives nothing but loss from the dominion which sheassumes over her colonies.

To propose that Great Britain should voluntarily give up allauthority over her colonies, and leave them to elect their ownmagistrates, to enact their own laws, and to make peace and waras they might think proper, would be to propose such a measureas never was, and never will be adopted, by any nation in theworld. No nation ever voluntarily gave up the dominion of anyprovince, how troublesome soever it might be to govern it, andhow small soever the revenue which it afforded might be inproportion to the expense which it occasioned. Such sacrifices,though they might frequently be agreeable to the interest, arealways mortifying to the pride of every nation, and what isperhaps of still greater consequence, they are always contrary tothe private interest of the governing part of it, who would therebybe deprived of the disposal of many places of trust and profit, of



817

many opportunities of acquiring wealth and distinction, which thepossession of the most turbulent, and, to the great body of thepeople, the most unprofitable province seldom fails to afford. Themost visionary enthusiast would scarce be capable of proposingsuch a measure with any serious hopes at least of its ever beingadopted. If it was adopted, however, Great Britain would not onlybe immediately freed from the whole annual expense of the peaceestablishment of the colonies, but might settle with them such atreaty of commerce as would effectually secure to her a free trade,more advantageous to the great body of the people, though less soto the merchants, than the monopoly which she at present enjoys.By thus parting good friends, the natural affection of the coloniesto the mother country which, perhaps, our late dissensions havewell nigh extinguished, would quickly revive. It might disposethem not only to respect, for whole centuries together, that treatyof commerce which they had concluded with us at parting, but tofavour us in war as well as in trade, and, instead of turbulent andfactious subjects, to become our most faithful, affectionate, andgenerous allies; and the same sort of parental affection on the oneside, and filial respect on the other, might revive between GreatBritain and her colonies, which used to subsist between those ofancient Greece and the mother city from which they descended.

In order to render any province advantageous to the empire towhich it belongs, it ought to afford, in time of peace, a revenue tothe public sufficient not only for defraying the whole expense of itsown peace establishment, but for contributing its proportion to thesupport of the general government of the empire. Every provincenecessarily contributes, more or less, to increase the expense ofthat general government. If any particular province, therefore,



818

does not contribute its share towards defraying this expense, anunequal burden must be thrown upon some other part of theempire. The extraordinary revenue, too, which every provinceaffords to the public in time of war, ought, from parity of reason, tobear the same proportion to the extraordinary revenue of thewhole empire which its ordinary revenue does in time of peace.That neither the ordinary nor extraordinary revenue which GreatBritain derives from her colonies, bears this proportion to thewhole revenue of the British empire, will readily be allowed. Themonopoly, it has been supposed, indeed, by increasing the privaterevenue of the people of Great Britain, and thereby enabling themto pay greater taxes, compensates the deficiency of the publicrevenue of the colonies. But this monopoly, I have endeavoured toshow, though a very grievous tax upon the colonies, and though itmay increase the revenue of a particular order of men in GreatBritain, diminishes instead of increasing that of the great body ofthe people; and consequently diminishes instead of increasing theability of the great body of the people to pay taxes. The men, too,whose revenue the monopoly increases, constitute a particularorder, which it is both absolutely impossible to tax beyond theproportion of other orders, and extremely impolitic even toattempt to tax beyond that proportion, as I shall endeavour toshow in the following book. No particular resource, therefore, canbe drawn from this particular order.

The colonies may be taxed either by their own assemblies, or bythe Parliament of Great Britain.

That the colony assemblies can ever be so managed as to levyupon their constituents a public revenue sufficient not only tomaintain at all times their own civil and military establishment,



819

but to pay their proper proportion of the expense of the generalgovernment of the British empire seems not very probable. It wasa long time before even the Parliament of England, though placedimmediately under the eye of the sovereign, could be broughtunder such a system of management, or could be renderedsufficiently liberal in their grants for supporting the civil andmilitary establishments even of their own country. It was only bydistributing among the particular Members of Parliament a greatpart either of the offices, or of the disposal of the offices arisingfrom this civil and military establishment, that such a system ofmanagement could be established even with regard to theParliament of England. But the distance of the colony assembliesfrom the eye of the sovereign, their number, their dispersedsituation, and their various constitutions, would render it verydifficult to manage them in the same manner, even though thesovereign had the same means of doing it; and those means arewanting.

It would be absolutely impossible to distribute among all theleading members of all the colony assemblies such a share, eitherof the offices or of the disposal of the offices arising from thegeneral government of the British empire, as to dispose them togive up their popularity at home, and to tax their constituents forthe support of that general government, of which almost the wholeemoluments were to be divided among people who were strangersto them.

The unavoidable ignorance of administration, besides,concerning the relative importance of the different members ofthose different assemblies, the offences which must frequently begiven, the blunders which must constantly be committed in



820

attempting to manage them in this manner, seems to render sucha system of management altogether impracticable with regard tothem.

The colony assemblies, besides, cannot be supposed the properjudges of what is necessary for the defence and support of thewhole empire. The care of that defence and support is notentrusted to them. It is not their business, and they have noregular means of information concerning it. The assembly of aprovince, like the vestry of a parish, may judge very properlyconcerning the affairs of its own particular district; but can haveno proper means of judging concerning those of the whole empire.It cannot even judge properly concerning the proportion which itsown province bears to the whole empire; or concerning therelative degree of its wealth and importance compared with theother provinces; because those other provinces are not under theinspection and superintendency of the assembly of a particularprovince. What is necessary for the defence and support of thewhole empire, and in what proportion each part ought tocontribute, can be judged of only by that assembly which inspectsand superintends the affairs of the whole empire.

It has been proposed, accordingly, that the colonies should betaxed by requisition, the Parliament of Great Britain determiningthe sum which each colony ought to pay, and the provincialassembly assessing and levying it in the way that suited best thecircumstances of the province. What concerned the whole empirewould in this way be determined by the assembly which inspectsand superintends the affairs of the whole empire; and theprovincial affairs of each colony might still be regulated by its ownassembly. Though the colonies should in this case have no



821

representatives in the British Parliament, yet, if we may judge byexperience, there is no probability that the Parliamentaryrequisition would be unreasonable. The Parliament of Englandhas not upon any occasion shown the smallest disposition tooverburden those parts of the empire which are not represented inParliament. The islands of Guernsey and Jersey, without anymeans of resisting the authority of Parliament, are more lightlytaxed than any part of Great Britain. Parliament in attempting toexercise its supposed right, whether well or ill grounded, of taxingthe colonies, has never hitherto demanded of them anythingwhich even approached to a just proportion to what was paid bytheir fellow subjects at home. If the contribution of the colonies,besides, was to rise or fall in proportion to the rise or fall of theland tax, Parliament could not tax them without taxing at thesame time its own constituents, and the colonies might in this casebe considered as virtually represented in Parliament.

Examples are not wanting of empires in which all the differentprovinces are not taxed, if I may be allowed the expression, in onemass; but in which the sovereign regulates the sum which eachprovince ought to pay, and in some provinces assesses and levies itas he thinks proper; while in others, he leaves it to be assessed andlevied as the respective states of each province shall determine. Insome provinces of France, the king not only imposes what taxes hethinks proper, but assesses and levies them in the way he thinksproper. From others he demands a certain sum, but leaves it to thestates of each province to assess and levy that sum as they thinkproper. According to the scheme of taxing by requisition, theParliament of Great Britain would stand nearly in the samesituation towards the colony assemblies as the King of France



822

does towards the states of those provinces which still enjoy theprivilege of having states of their own, the provinces of Francewhich are supposed to be the best governed.

But though, according to this scheme, the colonies could haveno just reason to fear that their share of the public burdens shouldever exceed the proper proportion to that of their fellow-citizens athome; Great Britain might have just reason to fear that it neverwould amount to that proper proportion. The Parliament of GreatBritain has not for some time past had the same establishedauthority in the colonies, which the French king has in thoseprovinces of France which still enjoy the privilege of having statesof their own. The colony assemblies, if they were not veryfavourably disposed (and unless more skilfully managed than theyever have been hitherto, they are not very likely to be so) mightstill find many pretences for evading or rejecting the mostreasonable requisitions of Parliament. A French war breaks out,we shall suppose; ten millions must immediately be raised in orderto defend the seat of the empire. This sum must be borrowed uponthe credit of some Parliamentary fund mortgaged for paying theinterest. Part of this fund Parliament proposes to raise by a tax tobe levied in Great Britain, and part of it by a requisition to all thedifferent colony assemblies of America and the West Indies.

Would people readily advance their money upon the credit of afund, which partly depended upon the good humour of all thoseassemblies, far distant from the seat of the war, and sometimes,perhaps, thinking themselves not much concerned in the event ofit? Upon such a fund no more money would probably be advancedthan what the tax to be levied in Great Britain might be supposedto answer for. The whole burden of the debt contracted on account



823

of the war would in this manner fall, as it always has donehitherto, upon Great Britain; upon a part of the empire, and notupon the whole empire. Great Britain is, perhaps, since the worldbegan, the only state which, as it has extended its empire, has onlyincreased its expense without once augmenting its resources.Other states have generally disburdened themselves upon theirsubject and subordinate provinces of the most considerable part ofthe expense of defending the empire. Great Britain has hithertosuffered her subject and subordinate provinces to disburdenthemselves upon her of almost this whole expense. In order to putGreat Britain upon a footing of equality with her own colonies,which the law has hitherto supposed to be subject andsubordinate, it seems necessary, upon the scheme of taxing themby Parliamentary requisition, that Parliament should have somemeans of rendering its requisitions immediately effectual, in casethe colony assemblies should attempt to evade or reject them; andwhat those means are, it is not very easy to conceive, and it has notyet been explained.

Should the Parliament of Great Britain, at the same time, beever fully established in the right of taxing the colonies, evenindependent of the consent of their own assemblies, theimportance of those assemblies would from that moment be at anend, and with it, that of all the leading men of British America.Men desire to have some share in the management of publicaffairs chiefly on account of the importance which it gives them.Upon the power which the greater part of the leading men, thenatural aristocracy of every country, have of preserving ordefending their respective importance, depends the stability andduration of every system of free government. In the attacks which



824

those leading men are continually making upon the importance ofone another, and in the defence of their own, consists the wholeplay of domestic faction and ambition. The leading men ofAmerica, like those of all other countries, desire to preserve theirown importance. They feel, or imagine, that if their assemblies,which they are fond of calling parliaments, and of considering asequal in authority to the Parliament of Great Britain, should be sofar degraded as to become the humble ministers and executiveofficers of that Parliament, the greater part of their ownimportance would be at end. They have rejected, therefore, theproposal of being taxed by Parliamentary requisition, and likeother ambitious and high-spirited men, have rather chosen todraw the sword in defence of their own importance.

Towards the declension of the Roman republic, the allies ofRome, who had borne the principal burden of defending the stateand extending the empire, demanded to be admitted to all theprivileges of Roman citizens. Upon being refused, the social warbroke out. During the course of that war, Rome granted thoseprivileges to the greater part of them one by one, and inproportion as they detached themselves from the generalconfederacy. The Parliament of Great Britain insists upon taxingthe colonies; and they refuse to be taxed by a Parliament in whichthey are not represented. If to each colony, which should detachitself from the general confederacy, Great Britain should allowsuch a number of representatives as suited the proportion of whatis contributed to the public revenue of the empire, in consequenceof its being subjected to the same taxes, and in compensationadmitted to the same freedom of trade with its fellow-subjects athome; the number of its representatives to be augmented as the



825

proportion of its contribution might afterwards augment; a newmethod of acquiring importance, a new and more dazzling objectof ambition would be presented to the leading men of each colony.Instead of piddling for the little prizes which are to be found inwhat may be called the paltry raffle of colony faction; they mightthen hope, from the presumption which men naturally have intheir own ability and good fortune, to draw some of the greatprizes which sometimes come from the wheel of the great statelottery of British polities. Unless this or some other method isfallen upon, and there seems to be none more obvious than this, ofpreserving the importance and of gratifying the ambition of theleading men of America, it is not very probable that they will evervoluntarily submit to us; and we ought to consider that the bloodwhich must be shed in forcing them to do so is, every drop of it,blood either of those who are, or of those whom we wish to havefor our fellow citizens. They are very weak who flatter themselvesthat, in the state to which things have come, our colonies will beeasily conquered by force alone. The persons who now govern theresolutions of what they call their Continental Congress, feel inthemselves at this moment a degree of importance which,perhaps, the greatest subjects in Europe scarce feel. Fromshopkeepers, tradesmen, and attornies, they are becomestatesmen and legislators, and are employed in contriving a newform of government for an extensive empire, which, they flatterthemselves, will become, and which, indeed, seems very likely tobecome, one of the greatest and most formidable that ever was inthe world. Five hundred different people, perhaps, who indifferent ways act immediately under the Continental Congress;and five hundred thousand, perhaps, who act under those five



826

hundred, all feel in the same manner a proportionable rise in theirown importance. Almost every individual of the governing party inAmerica fills, at present in his own fancy, a station superior, notonly to what he had ever filled before, but to what he had everexpected to fill; and unless some new object of ambition ispresented either to him or to his leaders, if he has the ordinaryspirit of a man, he will die in defence of that station.

It is a remark of the president Henaut, that we now read withpleasure the account of many little transactions of the Ligue,which when they happened were not perhaps considered as veryimportant pieces of news. But every man then, says he, fanciedhimself of some importance; and the innumerable memoirs whichhave come down to us from those times, were, the greater part ofthem, written by people who took pleasure in recording andmagnifying events in which, they flattered themselves, they hadbeen considerable actors. How obstinately the city of Paris uponthat occasion defended itself, what a dreadful famine it supportedrather than submit to the best and afterwards to the most belovedof all the French kings, is well known. The greater part of thecitizens, or those who governed the greater part of them, fought indefence of their own importance, which they foresaw was to be atan 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 mothercountries as obstinately as the city of Paris did against one of thebest of kings.

The idea of representation was unknown in ancient times.When the people of one state were admitted to the right of



827

citizenship in another, they had no other means of exercising thatright but by coming in a body to vote and deliberate with thepeople of that other state. The admission of the greater part of theinhabitants of Italy to the privileges of Roman citizens completelyruined the Roman republic. It was no longer possible todistinguish between who was and who was not a Roman citizen.No tribe could know its own members. A rabble of any kind couldbe introduced into the assemblies of the people, could drive outthe real citizens, and decide upon the affairs of the republic as ifthey themselves had been such. But though America were to sendfifty or sixty new representatives to Parliament, the doorkeeper ofthe House of Commons could not find any great difficulty indistinguishing between who was and who was not a member.Though the Roman constitution, therefore, was necessarily ruinedby the union of Rome with the allied states of Italy, there is not theleast probability that the British constitution would be hurt by theunion of Great Britain with her colonies. That constitution, on thecontrary, would be completed by it, and seems to be imperfectwithout it. The assembly which deliberates and decidesconcerning the affairs of every part of the empire, in order to beproperly informed, ought certainly to have representatives fromevery part of it That this union, however, could be easilyeffectuated, or that difficulties and great difficulties might notoccur in the execution, I do not pretend. I have yet heard of none,however, which appear insurmountable. The principal perhapsarise, not from the nature of things, but from the prejudices andopinions of the people both on this and on the other side of theAtlantic.

We, on this side of the water, are afraid lest the multitude of



828

American representatives should overturn the balance of theconstitution, and increase too much either the influence of thecrown on the one hand, or the force of the democracy on the other.But if the number of American representatives were to be inproportion to the produce of American taxation, the number ofpeople to be managed would increase exactly in proportion to themeans of managing them; and the means of managing to thenumber of people to be managed. The monarchical anddemocratical parts of the constitution would, after the union,stand exactly in the same degree of relative force with regard toone another as they had done before.

The people on the other side of the water are afraid lest theirdistance from the seat of government might expose them to manyoppressions. But their representatives in Parliament, of which thenumber ought from the first to be considerable, would easily beable to protect them from all oppression. The distance could notmuch weaken the dependency of the representative upon theconstituent, and the former would still feel that he owed his seat inParliament, and all the consequences which he derived from it, tothe good will of the latter. It would be the interest of the former,therefore, to cultivate that good will by complaining, with all theauthority of a member of the legislature, of every outrage whichany civil or military officer might be guilty of in those remote partsof the empire. The distance of America from the seat ofgovernment, besides, the natives of that country might flatterthemselves, with some appearance of reason too, would not be ofvery long continuance. Such has hitherto been the rapid progressof that country in wealth, population, and improvement, that inthe course of little more than a century, perhaps, the produce of



829

American might exceed that of British taxation. The seat of theempire would then naturally remove itself to that part of theempire which contributed most to the general defence andsupport of the whole.

The discovery of America, and that of a passage to the EastIndies by the Cape of Good Hope, are the two greatest and mostimportant events recorded in the history of mankind. Theirconsequences have already been very great; but, in the shortperiod of between two and three centuries which has elapsedsince these discoveries were made, it is impossible that the wholeextent of their consequences can have been seen. What benefits orwhat misfortunes to mankind may hereafter result from thosegreat events, no human wisdom can foresee.

By uniting, in some measure, the most distant parts of theworld, by enabling them to relieve one another’s wants, toincrease one another’s enjoyments, and to encourage oneanother’s industry, their general tendency would seem to bebeneficial. To the natives however, both of the East and WestIndies, all the commercial benefits which can have resulted fromthose events have been sunk and lost in the dreadful misfortuneswhich they have occasioned. These misfortunes, however, seem tohave arisen rather from accident than from anything in the natureof those events themselves. At the particular time when thesediscoveries were made, the superiority of force happened to be sogreat on the side of the Europeans that they were enabled tocommit with impunity every sort of injustice in those remotecountries. Hereafter, perhaps, the natives of those countries maygrow stronger, or those of Europe may grow weaker, and theinhabitants of all the different quarters of the world may arrive at



830

that equality of courage and force which, by inspiring mutual fear,can alone overawe the injustice of independent nations into somesort of respect for the rights of one another. But nothing seemsmore likely to establish this equality of force than that mutualcommunication of knowledge and of all sorts of improvementswhich an extensive commerce from all countries to all countriesnaturally, or rather necessarily, carries along with it.

In the meantime one of the principal effects of those discoverieshas been to raise the mercantile system to a degree of splendourand glory which it could never otherwise have attained to. It is theobject of that system to enrich a great nation rather by trade andmanufactures 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 townsof Europe, instead of being the manufacturers and carriers for buta very small part of the world (that part of Europe which is washedby the Atlantic Ocean, and the countries which lie round the Balticand Mediterranean seas), have now become the manufacturers forthe numerous and thriving cultivators of America, and thecarriers, and in some respects the manufacturers too, for almostall the different nations of Asia, Africa, and America. Two newworlds have been opened to their industry, each of them muchgreater and more extensive than the old one, and the market ofone of them growing still greater and greater every day.

The countries which possess the colonies of America, andwhich trade directly to the East Indies, enjoy, indeed, the wholeshow and splendour of this great commerce. Other countries,however, notwithstanding all the invidious restraints by which it ismeant to exclude them, frequently enjoy a greater share of the real



831

benefit of it. The colonies of Spain and Portugal, for example, givemore real encouragement to the industry of other countries thanto that of Spain and Portugal. In the single article of linen alonethe consumption of those colonies amounts, it is said, but I do notpretend to warrant the quantity, to more than three millionssterling a year. But this great consumption is almost entirelysupplied by France, Flanders, Holland, and Germany. Spain andPortugal furnish but a small part of it. The capital which suppliesthe colonies with this great quantity of linen is annuallydistributed among, and furnishes a revenue to the inhabitants of,those other countries. The profits of it only are spent in Spain andPortugal, where they help to support the sumptuous profusion ofthe merchants of Cadiz and Lisbon.

Even the regulations by which each nation endeavours tosecure to itself the exclusive trade of its own colonies arefrequently more hurtful to the countries in favour of which theyare 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 crushestheir industry more than it does that of those other countries. Bythose regulations for example, the merchant of Hamburg mustsend the linen which he destines for the American market toLondon, and he must bring back from thence the tobacco whichhe destines for the German market, because he can neither sendthe one directly to America nor bring back the other directly fromthence. By this restraint he is probably obliged to sell the onesomewhat cheaper, and to sell the one somewhat cheaper, and tobuy the other somewhat dearer than he otherwise might havedone; and his profits are probably somewhat abridged by means of



832

it. In this trade, however, between Hamburg and London, hecertainly receives the returns of his capital much more quicklythan 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 ofLondon. In the trade, therefore, to which those regulations confinethe merchant of Hamburg, his capital can keep in constantemployment a much greater quantity of German industry than itpossibly could have done in the trade from which he is excluded.Though the one employment, therefore, may to him perhaps beless profitable than the other, it cannot be less advantageous to hiscountry. It is quite otherwise with the employment into which themonopoly naturally attracts, if I may say so, the capital of theLondon merchant. That employment may, perhaps, be moreprofitable to him than the greater part of other employments, but,on account of the slowness of the returns, it cannot be moreadvantageous to his country.

After all the unjust attempts, therefore, of every country inEurope to engross to itself the whole advantage of the trade of itsown colonies, no country has yet been able to engross itselfanything but the expense of supporting in time of peace and ofdefending in time of war the oppressive authority which itassumes over them. The inconveniencies resulting from thepossession of its colonies, every country has engrossed to itselfcompletely. The advantages resulting from their trade it has beenobliged to share with many other countries.

At first sight, no doubt, the monopoly of the great commerce ofAmerica naturally seems to be an acquisition of the highest value.To the undiscerning eye of giddy ambition, it naturally presents



833

itself amidst the confused scramble of politics and war as a verydazzling object to fight for. The dazzling splendour of the object,however, the immense greatness of the commerce, is the veryquality which renders the monopoly of it hurtful, or which makesone employment, in its own nature necessarily less advantageousto the country than the greater part of other employments, absorba much greater proportion of the capital of the country than whatwould otherwise have gone to it.

The mercantile stock of every country, it has been shown in thesecond book, naturally seeks, if one may say so, the employmentmost advantageous to that country. If it is employed in thecarrying trade, the country to which it belongs becomes theemporium of the goods of all the countries whose trade that stockcarries on. But the owner of that stock necessarily wishes todispose of as great a part of those goods as he can at home. Hethereby saves himself the trouble, risk, and expense ofexportation, and he will upon that account be glad to sell them athome, not only for a much smaller price, but with somewhat asmaller profit than he might expect to make by sending themabroad. He naturally, therefore, endeavours as much as he can toturn his carrying trade into a foreign trade of consumption. If hisstock, again, is employed in a foreign trade of consumption, hewill, for the same reason, be glad to dispose of at home as great apart as he can of the home goods, which he collects in order toexport to some foreign market, and he will thus endeavour, asmuch as he can, to turn his foreign trade of consumption into ahome trade. The mercantile stock of every country naturallycourts in this manner the near, and shuns the distant employment;naturally courts the employment in which the returns are



834

frequent, and shuns that in which they are distant and slow;naturally courts the employment in which it can maintain thegreatest quantity of productive labour in the country to which itbelongs, or in which its owner resides, and shuns that in which itcan maintain there the smallest quantity. It naturally courts theemployment which in ordinary cases is most advantageous, andshuns that which in ordinary cases is least advantageous to thatcountry.

But if in any of those distant employments, which in ordinarycases are less advantageous to the country, the profit shouldhappen to rise somewhat higher than what is sufficient to balancethe natural preference which is given to nearer employments, thissuperiority of profit will draw stock from those neareremployments, till the profits of all return to their proper level. Thissuperiority of profit, however, is a proof that, in the actualcircumstances of the society, those distant employments aresomewhat understocked in proportion to other employments, andthat the stock of the society is not distributed in the properestmanner among all the different employments carried on in it. It isa proof that something is either bought cheaper or sold dearerthan it ought to be, and that some particular class of citizens ismore or less oppressed either by paying more or by getting lessthan what is suitable to that equality which ought to take place,and which naturally does take place among all the different classesof them. Though the same capital never will maintain the samequantity of productive labour in a distant as in a nearemployment, yet a distant employment may be as necessary forthe welfare of the society as a near one; the goods which thedistant employment deals in being necessary, perhaps, for



835

carrying on many of the nearer employments. But if the profits ofthose who deal in such goods are above their proper level, thosegoods will be sold dearer than they ought to be, or somewhatabove their natural price, and all those engaged in the neareremployments will be more or less oppressed by this high price.Their interest, therefore, in this case requires that some stockshould be withdrawn from those nearer employments, and turnedtowards that distant one, in order to reduce its profits to theirproper level, and the price of the goods which it deals in to theirnatural price. In this extraordinary case, the public interestrequires that some stock should be withdrawn from thoseemployments which in ordinary cases are more advantageous, andturned towards one which in ordinary cases is less advantageousto the public; and in this extraordinary case the natural interestsand inclinations of men coincide as exactly with the public interestas in all other ordinary cases, and lead them to withdraw stockfrom the near, and to turn it towards the distant employment.

It is thus that the private interests and passions of individualsnaturally dispose them to turn their stocks towards theemployments which in ordinary cases are most advantageous tothe society. But if from this natural preference they should turntoo much of it towards those employments, the fall of profit inthem and the rise of it in all others immediately dispose them toalter this faulty distribution. Without any intervention of law,therefore, the private interests and passions of men naturally leadthem to divide and distribute the stock of every society among allthe different employments carried on in it as nearly as possible inthe proportion which is most agreeable to the interest of the wholesociety.



836

All the different regulations of the mercantile systemnecessarily derange more or less this natural and mostadvantageous distribution of stock. But those which concern thetrade to America and the East Indies derange it perhaps morethan any other, because the trade to those two great continentsabsorbs a greater quantity of stock than any two other branches oftrade. The regulations, however, by which this derangement iseffected in those two different branches of trade are not altogetherthe same. Monopoly is the great engine of both; but it is a differentsort of monopoly. Monopoly of one kind or another, indeed, seemsto be the sole engine of the mercantile system.

In the trade to America every nation endeavours to engross asmuch as possible the whole market of its own colonies by fairlyexcluding all other nations from any direct trade to them. Duringthe greater part of the sixteenth century, the Portugueseendeavoured to manage the trade to the East Indies in the samemanner, by claiming the sole right of sailing in the Indian seas, onaccount of the merit of having first found out the road to them.The Dutch still continue to exclude all other European nationsfrom any direct trade to their spice islands. Monopolies of thiskind are evidently established against all other European nations,who are thereby not only excluded from a trade to which it mightbe convenient for them to turn some part of their stock, but areobliged to buy the goods which that trade deals in somewhatdearer than if they could import them themselves directly fromthe countries which produce them.

But since the fall of the power of Portugal, no European nationhas claimed the exclusive right of sailing in the Indian seas, ofwhich the principal ports are now open to the ships of all



837

European nations. Except in Portugal, however, and within thesefew years in France, the trade to the East Indies has in everyEuropean country been subjected to an exclusive company.Monopolies of this kind are properly established against the verynation which erects them. The greater part of that nation arethereby not only excluded from a trade to which it might beconvenient for them to turn some part of their stock, but areobliged to buy the goods which that trade deals somewhat dearerthan if it was open and free to all their countrymen. Since theestablishment of the English East India Company, for example,the other inhabitants of England, over and above being excludedfrom the trade, must have paid in the price of the East India goodswhich they have consumed, not only for all the extraordinaryprofits which the company may have made upon those goods inconsequence of their monopoly, but for all the extraordinary wastewhich the fraud and abuse, inseparable from the management ofthe affairs of so great a company, must necessarily haveoccasioned. 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 thenatural distribution of the stock of the society; but they do notalways derange it in the same way.

Monopolies of the first kind always attract to the particulartrade in which they are established a greater proportion of thestock of the society than what would go to that trade of its ownaccord.

Monopolies of the second kind may sometimes attract stocktowards the particular trade in which they are established, andsometimes repel it from that trade according to different



838

circumstances. In poor countries they naturally attract towardsthat trade more stock than would otherwise go to it. In richcountries they naturally repel from it a good deal of stock whichwould otherwise go to it.

Such poor countries as Sweden and Denmark, for example,would probably have never sent a single ship to the East Indieshad not the trade been subjected to an exclusive company. Theestablishment of such a company necessarily encouragesadventurers. Their monopoly secures them against all competitorsin the home market, and they have the same chance for foreignmarkets with the traders of other nations. Their monopoly showsthem the certainty of a great profit upon a considerable quantity ofgoods, and the chance of a considerable profit upon a greatquantity. Without such extraordinary encouragement, the poortraders of such poor countries would probably never have thoughtof hazarding their small capitals in so very distant and uncertainan adventure as the trade to the East Indies must naturally haveappeared to them.

Such a rich country as Holland, on the contrary, wouldprobably, in the case of a free trade, send many more ships to theEast Indies than it actually does. The limited stock of the DutchEast India Company probably repels from that trade many greatmercantile capitals which would otherwise go to it. The mercantilecapital of Holland is so great that it is, as it were, continuallyoverflowing, sometimes into the public funds of foreign countries,sometimes into loans to private traders and adventurers of foreigncountries, sometimes into the most round-about foreign trades ofconsumption, and sometimes into the carrying trade. All nearemployments being completely filled up, all the capital which can



839

be placed in them with any tolerable profit being already placed inthem, the capital of Holland necessarily flows towards the mostdistant employments. The trade to the East Indies, if it werealtogether free, would probably absorb the greater part of thisredundant capital. The East Indies offer a market for themanufactures of Europe and for the gold and silver as well as forseveral other productions of America greater and more extensivethan both Europe and America put together.

Every derangement of the natural distribution of stock isnecessarily hurtful to the society in which it takes place; whether itbe by repelling from a particular trade the stock which wouldotherwise go to it, or by attracting towards a particular trade thatwhich would not otherwise come to it. If, without any exclusivecompany, the trade of Holland to the East Indies would be greaterthan it actually is, that country must suffer a considerable loss bypart of its capital being excluded from the employment mostconvenient for that part. And in the same manner, if, without anexclusive company, the trade of Sweden and Denmark to the EastIndies would be less than it actually is, or, what perhaps is moreprobable, would not exist at all, those two countries must likewisesuffer a considerable loss by part of their capital being drawn intoan employment which must be more or less unsuitable to theirpresent circumstances. Better for them, perhaps, in their presentcircumstances, to buy East India goods of other nations, eventhough they should pay somewhat dearer, than to turn so great apart of their small capital to so very distant a trade, in which thereturns are so very slow, in which that capital can maintain sosmall a quantity of productive labour at home, where productivelabour is so much wanted, where so little is done, and where so



840

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 EastIndies, it will not from thence follow that such a company ought tobe established there, but only that such a country ought not inthese circumstances to trade directly to the East Indies. That suchcompanies are not in general necessary for carrying on the EastIndia trade is sufficiently demonstrated by the experience of thePortuguese, who enjoyed almost the whole of it for more than acentury together without any exclusive company.

No private merchant, it has been said, could well have capitalsufficient to maintain factors and agents in the different ports ofthe East Indies, in order to provide goods for the ships which hemight occasionally send thither; and yet, unless he was able to dothis, the difficulty of finding a cargo might frequently make hisships lose the season for returning, and the expense of so long adelay would not only eat up the whole profit of the adventure, butfrequently occasion a very considerable loss. This argument,however, if it proved anything at all, would prove that no one greatbranch of trade could be carried on without an exclusive company,which is contrary to the experience of all nations. There is no greatbranch of trade in which the capital of any one private merchant issufficient for carrying on all the subordinate branches which mustbe carried on, in order to carry on the principal one. But when anation is ripe for any great branch of trade, some merchantsnaturally turn their capitals towards the principal, and sometowards the subordinate branches of it; and though all thedifferent branches of it are in this manner carried on, yet it veryseldom happens that they are all carried on by the capital of one



841

private merchant. If a nation, therefore, is ripe for the East Indiatrade, a certain portion of its capital will naturally divide itselfamong all the different branches of that trade. Some of itsmerchants will find it for their interest to reside in the East Indies,and to employ their capitals there in providing goods for the shipswhich are to be sent out by other merchants who reside in Europe.The settlements which different European nations have obtainedin the East Indies, if they were taken from the exclusivecompanies to which they at present belong and put under theimmediate protection of the sovereign, would render thisresidence both safe and easy, at least to the merchants of theparticular nations to whom those settlements belong. If at anyparticular time that part of the capital of any country which of itsown accord tended and inclined, if I may say so, towards the EastIndia trade, was not sufficient for carrying on all those differentbranches of it, it would be a proof that, at that particular time, thatcountry was not ripe for that trade, and that it would do better tobuy for some time, even at a higher price, from other Europeannations, the East India goods it had occasion for, than to importthem itself directly from the East Indies. What it might lose by thehigh price of those goods could seldom be equal to the loss whichit would sustain by the distraction of a large portion of its capitalfrom other employments more necessary, or more useful, or moresuitable to its circumstances and situation, than a direct trade tothe East Indies.

Though the Europeans possess many considerable settlementsboth upon the coast of Africa and in the East Indies, they have notyet established in either of those countries such numerous andthriving colonies as those in the islands and continent of America.



842

Africa, however, as well as several of the countries comprehendedunder the general name of the East Indies, are inhabited bybarbarous nations.

But those nations were by no means so weak and defenceless asthe miserable and helpless Americans; and in proportion to thenatural fertility of the countries which they inhabited, they werebesides much more populous. The most barbarous nations eitherof Africa or of the East Indies were shepherds; even the Hottentotswere so. But the natives of every part of America, except Mexicoand Peru, were only hunters; and the difference is very greatbetween the number of shepherds and that of hunters whom thesame extent of equally fertile territory can maintain. In Africa andthe East Indies, therefore, it was more difficult to displace thenatives, and to extend the European plantations over the greaterpart of the lands of the original inhabitants. The genius ofexclusive companies, besides, is unfavourable, it has already beenobserved, to the growth of new colonies, and has probably beenthe principal cause of the little progress which they have made inthe East Indies. The Portuguese carried on the trade both toAfrica and the East Indies without any exclusive companies, andtheir settlements at Congo, Angola, and Benguela on the coast ofAfrica, and at Goa in the East Indies, though much depressed bysuperstition and every sort of bad government, yet bear some faintresemblance to the colonies of America, and are partly inhabitedby Portuguese who have been established there for severalgenerations. The Dutch settlements at the Cape of Good Hope andat Batavia are at present the most considerable colonies which theEuropeans have established either in Africa or in the East Indies,and both these settlements are peculiarly fortunate in their



843

situation. The Cape of Good Hope was inhabited by a race ofpeople almost as barbarous and quite as incapable of defendingthemselves as the natives of America. It is besides the halfwayhouse, if one may say so, between Europe and the East Indies, atwhich almost every European ship makes some stay, both in goingand returning. The supplying of those ships with every sort offresh provisions, with fruit and sometimes with wine, affords alonea very extensive market for the surplus produce of the colonists.

What the Cape of Good Hope is between Europe and every partof the East Indies, Batavia is between the principal countries ofthe East Indies. It lies upon the most frequented road fromIndostan to China and Japan, and is nearly about midway uponthat road. Almost all the ships, too, that sail between Europe andChina touch at Batavia; and it is, over and above all this, thecentre and principal mart of what is called the country trade of theEast Indies, not only of that part of it which is carried on byEuropeans, but of that which is carried on by the native Indians;and vessels navigated by the inhabitants of China and Japan, ofTonquin, Malacca, Cochin China, and the island of Celebes, arefrequently to be seen in its port. Such advantageous situationshave enabled those two colonies to surmount all the obstacleswhich the oppressive genius of an exclusive company may haveoccasionally opposed to their growth. They have enabled Bataviato surmount the additional disadvantage of perhaps the mostunwholesome climate in the world.

The English and Dutch companies, though they haveestablished no considerable colonies, except the two abovementioned, have both made considerable conquests in the EastIndies. But in the manner in which they both govern their new



844

subjects, the natural genius of an exclusive company has shownitself most distinctly. In the spice islands the Dutch are said toburn all the spiceries which a fertile season produces beyond whatthey expect to dispose of in Europe with such a profit as they thinksufficient. In the islands where they have no settlements, they givea premium to those who collect the young blossoms and greenleaves of the clove and nutmeg trees which naturally grow there,but which the savage policy has now, it is said, almost completelyextirpated. Even in the islands where they have settlements theyhave very much reduced, it is said, the number of those trees. Ifthe produce even of their own islands was much greater than whatsuited their market, the natives, they suspect, might find means toconvey some part of it to other nations; and the best way, theyimagine, to secure their own monopoly is to take care that no moreshall grow than what they themselves carry to market. Bydifferent arts of oppression they have reduced the population ofseveral of the Moluccas nearly to the number which is sufficient tosupply with fresh provisions and other necessaries of life their owninsignificant garrisons, and such of their ships as occasionallycome there for a cargo of spices. Under the government even ofthe Portuguese, however, those islands are said to have beentolerably well inhabited. The English company have not yet hadtime to establish in Bengal so perfectly destructive a system. Theplan of their government, however, has had exactly the sametendency. It has not been uncommon, I am well assured, for thechief, that is, the first clerk of a factory, to order a peasant toplough up a rich field of poppies and sow it with rice or some othergrain. The pretence was, to prevent a scarcity of provisions; butthe real reason, to give the chief an opportunity of selling at a



845

better price a large quantity of opium, which he happened then tohave upon hand. Upon other occasions the order has beenreversed; and a rich field of rice or other grain has been ploughedup, in order to make room for a plantation of poppies; when thechief foresaw that extraordinary profit was likely to be made byopium. The servants of the company have upon several occasionsattempted to establish in their own favour the monopoly of someof the most important branches, not only of the foreign, but of theinland trade of the country. Had they been allowed to go on, it isimpossible that they should not at some time or another haveattempted to restrain the production of the particular articles ofwhich they had thus usurped the monopoly, not only to thequantity which they themselves could purchase, but to that whichthey could expect to sell with such a profit as they might thinksufficient. In the course of the century or two, the policy of theEnglish company would in this manner have probably proved ascompletely destructive as that of the Dutch.

Nothing, however, can be more directly contrary to the realinterest of those companies, considered as the sovereigns of thecountries which they have conquered, than this destructive plan.In almost all countries the revenue of the sovereign is drawn fromthat 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 ofone whose revenue, like that of the sovereign of Bengal, ariseschiefly from a land-rent. That rent must necessarily be inproportion to the quantity and value of the produce, and both the



846

one and the other must depend upon the extent of the market. Thequantity will always be suited with more or less exactness to theconsumption of those who can afford to pay for it, and the pricewhich they will pay will always be in proportion to the eagernessof their competition. It is the interest of such a sovereign,therefore, to open the most extensive market for the produce of hiscountry, to allow the most perfect freedom of commerce, in orderto increase as much as possible the number and the competition ofbuyers; and upon this account to abolish, not only all monopolies,but all restraints upon the transportation of the home producefrom one part of the country to another, upon its exportation toforeign countries, or upon the importation of goods of any kind forwhich it can be exchanged. It is in this manner most likely toincrease both the quantity and value of that produce, andconsequently of his own share of it, or of his own revenue.

But a company of merchants are, it seems, incapable ofconsidering themselves as sovereigns, even after they havebecome such. Trade, or buying in order to sell again, they stillconsider as their principal business, and by a strange absurdityregard the character of the sovereign as but an appendix to that ofthe merchant, as something which ought to be made subservientto it, or by means of which they may be enabled to buy cheaper inIndia, and thereby to sell with a better profit in Europe. Theyendeavour for this purpose to keep out as much as possible allcompetitors from the market of the countries which are subject totheir government, and consequently to reduce, at least, some partof the surplus produce of those countries to what is barelysufficient for supplying their own demand, or to what they canexpect to sell in Europe with such a profit as they may think



847

reasonable. Their mercantile habits draw them in this manner,almost necessarily, though perhaps insensibly, to prefer upon allordinary occasions the little and transitory profit of the monopolistto the great and permanent revenue of the sovereign, and wouldgradually lead them to treat the countries subject to theirgovernment nearly as the Dutch treat the Moluccas. It is theinterest of the East India Company, considered as sovereigns, thatthe European goods which are carried to their Indian dominionsshould be sold there as cheap as possible; and that the Indiangoods which are brought from thence should bring there as good aprice, or should be sold there as dear as possible. But the reverseof this is their interest as merchants. As sovereigns, their interestis exactly the same with that of the country which they govern. Asmerchants their interest is directly opposite to that interest.

But if the genius of such a government, even as to whatconcerns its direction in Europe, is in this manner essentially andperhaps incurably faulty, that of its administration in India is stillmore so. That administration is necessarily composed of a councilof merchants, a profession no doubt extremely respectable, butwhich in no country in the world carries along with it that sort ofauthority which naturally overawes the people, and without forcecommands their willing obedience. Such a council can commandobedience only by the military force with which they areaccompanied, and their government is therefore necessarilymilitary and despotical. Their proper business, however, is that ofmerchants. It is to sell, upon their masters’ account, the Europeangoods consigned to them, and to buy in return Indian goods forthe European market. It is to sell the one as dear and to buy theother as cheap as possible, and consequently to exclude as much



848

as possible all rivals from the particular market where they keeptheir shop. The genius of the administration therefore, so far asconcerns the trade of the company, is the same as that of thedirection. It tends to make government subservient to the interestof monopoly, and consequently to stunt the natural growth ofsome parts at least of the surplus produce of the country to what isbarely sufficient for answering the demand of the company.

All the members of the administration, besides, trade more orless upon their own account, and it is in vain to prohibit them fromdoing so. Nothing can be more completely foolish than to expectthat the clerks of a great counting-house at ten thousand milesdistance, and consequently almost quite out of sight, should, upona simple order from their masters, give up at once doing any sortof business upon their own account, abandon for ever all hopes ofmaking a fortune, of which they have the means in their hands,and content themselves with the moderate salaries which thosemasters allow them, and which, moderate as they are, can seldombe augmented, being commonly as large as the real profits of thecompany trade can afford. In such circumstances, to prohibit theservants of the company from trading upon their own account canhave scarce any other effect than to enable the superior servants,under pretence of executing their masters’ order, to oppress suchof the inferior ones as have had the misfortune to fall under theirdispleasure. The servants naturally endeavour to establish thesame monopoly in favour of their own private trade as of thepublic trade of the company. If they are suffered to act as theycould wish, they will establish this monopoly openly and directly,by fairly prohibiting all other people from trading in the articles inwhich they choose to deal; and this, perhaps, is the best and least



849

oppressive way of establishing it.But if by an order from Europe they are prohibited from doing

this, they will, notwithstanding, endeavour to establish amonopoly of the same kind, secretly and indirectly, in a way that ismuch more destructive to the country. They will employ the wholeauthority of government, and pervert the administration of justice,in order to harass and ruin those who interfere with them in anybranch of commerce, which by means of agents, either concealed,or at least not publicly avowed, they may choose to carry on. Butthe private trade of the servants will naturally extend to a muchgreater variety of articles than the public trade of the company.The public trade of the company extends no further than the tradewith Europe, and comprehends a part only of the foreign trade ofthe country. But the private trade of the servants may extend to allthe different branches both of its inland and foreign trade. Themonopoly of the company can tend only to stunt the naturalgrowth of that part of the surplus produce which, in the case of afree trade, would be exported to Europe. That of the servantstends to stunt the natural growth of every part of the produce inwhich they choose to deal, of what is destined for homeconsumption, as well as of what is destined for exportation; andconsequently to degrade the cultivation of the whole country, andto reduce the number of its inhabitants. It tends to reduce thequantity of every sort of produce, even that of the necessaries oflife, whenever the servants of the company choose to deal in them,to what those servants can both afford to buy and expect to sellwith such a profit as pleases them.

From the nature of their situation, too, the servants must bemore disposed to support with rigorous severity their own interest



850

against that of the country which they govern than their masterscan be to support theirs. The country belongs to their masters,who cannot avoid having some regard for the interest of whatbelongs to them. But it does not belong to the servants. The realinterest of their masters, if they were capable of understanding it,is the same with that of the country,1 and it is from ignorancechiefly, and the meanness of mercantile prejudice, that they everoppress it. But the real interest of the servants is by no means thesame with that of the country, and the most perfect informationwould not necessarily put an end to their oppressions. Theregulations accordingly which have been sent out from Europe,though they have been frequently weak, have upon most occasionsbeen well-meaning. More intelligence and perhaps less good-meaning has sometimes appeared in those established by theservants in India. It is a very singular government in which everymember of the administration wishes to get out of the country, andconsequently to have done with the government as soon as he can,and to whose interest, the day after he has left it and carried hiswhole fortune with him, it is perfectly indifferent though the wholecountry was swallowed up by an earthquake.

I mean not, however, by anything which I have here said, tothrow any odious imputation upon the general character of theservants of the East India Company, and much less upon that ofany particular persons. It is the system of government, thesituation in which they are placed, that I mean to censure, not the

1The 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 bk. v. ch. i, pt. iii.



851

character of those who have acted in it. They acted as theirsituation naturally directed, and they who have clamoured theloudest against them would probably not have acted betterthemselves. In war and negotiation, the councils of Madras andCalcutta have upon several occasions conducted themselves with aresolution and decisive wisdom which would have done honour tothe senate of Rome in the best days of that republic. The membersof those councils, however, had been bred to professions verydifferent from war and polities. But their situation alone, withouteducation, experience, or even example, seems to have formed inthem all at once the great qualities which it required, and to haveinspired them both with abilities and virtues which theythemselves could not well know that they possessed. If upon someoccasions, therefore, it has animated them to actions ofmagnanimity which could not well have been expected from them,we should not wonder if upon others it has prompted them toexploits of somewhat a different nature.

Such exclusive companies, therefore, are nuisances in everyrespect; always more or less inconvenient to the countries inwhich they are established, and destructive to those which havethe misfortune to fall under their government.



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Chapter VIII

Conclusion of the Mercantile System

hough the encouragement of exportation and thediscouragement of importation are the two great enginesby which the mercantile system proposes to enrich every

country, yet with regard to some particular commodities it seemsto follow an opposite plan: to discourage exportation and toencourage importation. Its ultimate object, however, it pretends, isalways the same, to enrich the country by an advantageousbalance of trade. It discourages the exportation of the materials ofmanufacture, and of the instruments of trade, in order to give ourown workmen an advantage, and to enable them to undersellthose of other nations in all foreign markets; and by restraining, inthis manner, the exportation of a few commodities, of no greatprice, it proposes to occasion a much greater and more valuableexportation of others. It encourages the importation of thematerials of manufacture in order that our own people may beenabled to work them up more cheaply, and thereby prevent agreater and more valuable importation of the manufacturedcommodities. I do not observe, at least in our Statute Book, anyencouragement given to the importation of the instruments oftrade. When manufactures have advanced to a certain pitch ofgreatness, the fabrication of the instruments of trade becomesitself the object of a great number of very important manufactures.To give any particular encouragement to the importation of suchinstruments would interfere too much with the interest of those

T



853

manufactures. Such importation, therefore, instead of beingencouraged, has frequently been prohibited. Thus the importationof wool cards, except from Ireland, or when brought in as wreck orprize goods, was prohibited by the 3rd of Edward IV; whichprohibition was renewed by the 39th of Elizabeth, and has beencontinued and rendered perpetual by subsequent laws.

The importation of the materials of manufacture has sometimesbeen encouraged by an exemption from the duties to which othergoods are subject, and sometimes by bounties.

The importation of sheep’s wool from several differentcountries, of cotton wool from all countries, of undressed flax, ofthe greater part of dyeing drugs, of the greater part of undressedhides from Ireland or the British colonies, of sealskins from theBritish Greenland fishery, of pig and bar iron from the Britishcolonies, as well as of several other materials of manufacture, hasbeen encouraged by an exemption from all duties, if properlyentered at the custom house. The private interest of ourmerchants and manufacturers may, perhaps, have extorted fromthe legislature these exemptions as well as the greater part of ourother commercial regulations. They are, however, perfectly justand reasonable, and if, consistently with the necessities of thestate, they could be extended to all the other materials ofmanufacture, the public would certainly be a gainer.

The avidity of our great manufacturers, however, has in somecases extended these exemptions a good deal beyond what canjustly be considered as the rude materials of their work. By the24th George III, c. 46, a small duty of only one penny the poundwas imposed upon the importation of foreign brown linen yarn,instead of much higher duties to which it had been subjected



854

before, viz. of sixpence the pound upon sail yarn, of one shillingthe pound upon all French and Dutch yarn, and of two poundsthirteen shillings and fourpence upon the hundredweight of allspruce or Muscovia yarn. But our manufacturers were not longsatisfied with this reduction. By the 29th of the same king, c. 15,the same law which gave a bounty upon the exportation of Britishand Irish linen of which the price did not exceed eighteenpencethe yard, even this small duty upon the importation of brown linenyarn was taken away. In the different operations, however, whichare necessary for the preparation of linen yarn, a good deal moreindustry is employed than in the subsequent operation ofpreparing linen cloth from linen yarn. To say nothing of theindustry of the flax-growers and flax-dressers, three or fourspinners, at least, are necessary in order to keep one weaver inconstant employment; and more than four-fifths of the wholequantity of labour necessary for the preparation of linen cloth isemployed in that of linen yarn; but our spinners are poor people,women commonly scattered about in all different parts of thecountry, without support or protection. It is not by the sale of theirwork, but by that of the complete work of the weavers, that ourgreat master manufacturers make their profits. As it is theirinterest to sell the complete manufacture as dear, so is it to buythe materials as cheap as possible. By extorting from thelegislature bounties upon the exportation of their own linen, highduties upon the importation of all foreign linen, and a totalprohibition of the home consumption of some sorts of Frenchlinen, they endeavour to sell their own goods as dear as possible.By encouraging the importation of foreign linen yarn, and therebybringing it into competition with that which is made by our own



855

people, they endeavour to buy the work of the poor spinners ascheap as possible. They are as intent to keep down the wages oftheir own weavers as the earnings of the poor spinners, and it is byno means for the benefit of the workman that they endeavoureither to raise the price of the complete work or to lower that ofthe rude materials. It is the industry which is carried on for thebenefit of the rich and the powerful that is principally encouragedby our mercantile system. That which is carried on for the benefitof the poor and the indigent is too often either neglected oroppressed.

Both the bounty upon the exportation of linen, and theexemption from duty upon the importation of foreign yarn, whichwere granted only for fifteen years, but continued by two differentprolongations, expire with the end of the session of Parliamentwhich shall immediately follow the 24th of June 1786.

The encouragement given to the importation of the materials ofmanufacture by bounties has been principally confined to such aswere imported from our American plantations.

The first bounties of this kind were those granted about thebeginning of the present century upon the importation of navalstores from America. Under this denomination werecomprehended timber fit for masts, yards, and bowsprits; hemp;tar, pitch, and turpentine. The bounty, however, of one pound theton upon masting-timber, and that of six pounds the ton uponhemp, were extended to such as should be imported into Englandfrom Scotland. Both these bounties continued without anyvariation, at the same rate, till they were severally allowed toexpire; that upon hemp on the 1st of January 1741, and that uponmasting-timber at the end of the session of Parliament



856

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 four pounds the ton; that upon pitchthe same; and that upon turpentine, three pounds the ton. Thebounty of four pounds the ton upon tar was afterwards confined tosuch as had been prepared in a particular manner; that uponother good, clean, and merchantable tar was reduced to twopounds four shillings the ton. The bounty upon pitch was likewisereduced to one pound; and that upon turpentine to one pound tenshillings the ton.

The second bounty upon the importation of any of the materialsof manufacture, according to the order of time, was that grantedby the 21st George II, c. 30, upon the importation of indigo fromthe British plantations. When the plantation indigo was worththree-fourths of the price of the best French indigo, it was by thisact entitled to a bounty of sixpence the pound. This bounty, which,like most others, was granted only for a limited time, wascontinued by several prolongations, but was reduced to fourpencethe pound. It was allowed to expire with the end of the session ofParliament which followed the 25th March 1781.

The third bounty of this kind was that granted (much about thetime that we were beginning sometimes to court and sometimes toquarrel with our American colonies) by the 4th George III, c. 26,upon the importation of hemp, or undressed flax, from the Britishplantations. This bounty was granted for twenty-one years, fromthe 24th June 1764 to the 24th June 1785. For the first seven yearsit was to be at the rate of eight pounds the ton, for the second atsix pounds, and for the third at four pounds. It was not extended



857

to Scotland, of which the climate (although hemp is sometimesraised there in small quantities and of an inferior quality) is notvery fit for that produce. Such a bounty upon the importation ofScotch flax into England would have been too great adiscouragement to the native produce of the southern part of theUnited Kingdom.

The fourth bounty of this kind was that granted by the 5thGeorge III, c. 45, upon the importation of wood from America. Itwas granted for nine years, from the 1st January 1766 to the 1stJanuary 1775. During the first three years, it was to be for everyhundred and twenty good deals, at the rate of one pound, and forevery load containing fifty cubic feet of other squared timber atthe rate of twelve shillings. For the second three years, it was fordeals to be at. the rate of fifteen shillings, and for other squaredtimber at the rate of eight shillings; and for the third three years, itwas for deals to be at the rate of ten shillings, and for othersquared timber at the rate of five shillings.

The fifth bounty of this kind was that granted by the 9th GeorgeIII, c. 38, upon the importation of raw silk from the Britishplantations. It was granted for twenty-one years, from the 1stJanuary 1770 to the 1st January 1791. For the first seven years itwas to be at the rate of twenty-five pounds for every hundredpounds value; for the second at twenty pounds; and for the third atfifteen pounds. The management of the silk worm, and thepreparation of silk, requires so much hand labour, and labour is sovery dear in America that even this great bounty, I have beeninformed, was not likely to produce any considerable effect.

The sixth bounty of this kind was that granted by 2nd GeorgeIII, c. 50, for the importation of pipe, hogshead, and barrel staves



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and heading from the British plantations. It was granted for nineyears, from 1st January 1772 to the 1st January 1781. For the firstthree years it was for a certain quantity of each to be at the rate ofsix pounds; for the second three years at four pounds; and for thethird three years at two pounds.

The seventh and last bounty of this kind was that granted bythe 19th George III, c. 37, upon the importation of hemp fromIreland. It was granted in the same manner as that for theimportation of hemp and undressed flax from America, for twenty-one years, from the 24th June 1779 to the 24th June 1800. Thisterm is divided, likewise, into three periods of seven years each;and in each of those periods the rate of the Irish bounty is thesame with that of the American. It does not, however, like theAmerican bounty, extend to the importation of undressed flax. Itwould have been too great a discouragement to the cultivation ofthat plant in Great Britain. When this last bounty was granted, theBritish and Irish legislatures were not in much better humourwith one another than the British and American had been before.But this boon to Ireland, it is to be hoped, has been granted undermore fortunate auspices than all those to America.

The same commodities upon which we thus gave bountieswhen imported from America were subjected to considerableduties when imported from any other country. The interest of ourAmerican colonies was regarded as the same with that of themother country. Their wealth was considered as our wealth.Whatever money was sent out to them, it was said, came all backto us by the balance of trade, and we could never become afarthing the poorer by any expense which we could lay out uponthem. They were our own in every respect, and it was an expense



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laid out upon the improvement of our own property and for theprofitable employment of our own people. It is unnecessary, Iapprehend, at present to say anything further in order to exposethe folly of a system which fatal experience has now sufficientlyexposed. Had our American colonies really been a part of GreatBritain, those bounties might have been considered as bountiesupon production, and would still have been liable to all theobjections to which such bounties are liable, but to no other.

The exportation of the materials of manufacture is sometimesdiscouraged by absolute prohibitions, and sometimes by highduties.

Our woollen manufacturers have been more successful thanany other class of workmen in persuading the legislature that theprosperity of the nation depended upon the success and extensionof their particular business. They have not only obtained amonopoly against the consumers by an absolute prohibition ofimporting woollen cloths from any foreign country, but they havelikewise obtained another monopoly against the sheep farmersand growers of wool by a similar prohibition of the exportation oflive sheep and wool. The severity of many of the laws which havebeen enacted for the security of the revenue is very justlycomplained of, as imposing heavy penalties upon actions which,antecedent to the statutes that declared them to be crimes, hadalways been understood to be innocent. But the cruellest of ourrevenue laws, I will venture to affirm, are mild and gentle incomparison of some of those which the clamour of our merchantsand manufacturers has extorted from the legislature for thesupport of their own absurd and oppressive monopolies. Like thelaws of Draco, these laws may be said to be all written in blood.



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By the 8th of Elizabeth, c. 3, the exporter of sheep, lambs, orrams was for the first offence to forfeit all his goods for ever, tosuffer a year’s imprisonment, and then to have his left hand cut offin a market town upon a market day, to be there nailed up; and forthe second offence to be adjudged a felon, and to suffer deathaccordingly. To prevent the breed of our sheep from beingpropagated in foreign countries seems to have been the object ofthis law. By the 13th and 14th of Charles II, c. 18, the exportationof wool was made felony, and the exporter subjected to the samepenalties and forfeitures as a felon.

For the honour of the national humanity, it is to be hoped thatneither of these statutes were ever executed. The first of them,however; so far as I know, has never been directly repealed, andSerjeant Hawkins seems to consider it as still in force. It mayhowever, perhaps, be considered as virtually repealed by the 12thof Charles II, c. 32, sect. 3, which, without expressly taking awaythe penalties imposed by former statutes, imposes a new penalty,viz., that of twenty shillings for every sheep exported, or attemptedto be exported, together with the forfeiture of the sheep and of theowner’s share of the ship. The second of them was expresslyrepealed by the 7th and 8th of William III, c. 28, sect. 4. By which itis declared that, “Whereas the statute of the 13th and 14th of KingCharles II, made against the exportation of wool, among otherthings in the said act mentioned, doth enact the same to bedeemed felony; by the severity of which penalty the prosecution ofoffenders hath not been so effectually put in execution: Be it,therefore, enacted by the authority aforesaid, that so much of thesaid act, which relates to the making the said offence felony, berepealed and made void.”



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The penalties, however, which are either imposed by thismilder statute, or which, though imposed by former statutes, arenot repealed by this one, are still sufficiently severe. Besides theforfeiture of the goods, the exporter incurs the penalty of threeshillings for every pound weight of wool either exported orattempted to be exported, that is about four or five times the value.Any merchant or other person convicted of this offence is disabledfrom requiring any debt or account belonging to him from anyfactor or other person. Let his fortune be what it will, whether heis or is not able to pay those heavy penalties, the law means to ruinhim completely. But as the morals of the great body of the peopleare not yet so corrupt as those of the contrivers of this statute, Ihave not heard that any advantage has ever been taken of thisclause. If the person convicted of this offence is not able to pay thepenalties within three months after judgment, he is to betransported for seven years, and if he returns before the expirationof that term, he is liable to the pains of felony, without benefit ofclergy. The owner of the ship, knowing this offence, forfeits all hisinterest in the ship and furniture. The master and mariners,knowing this offence, forfeit all their goods and chattels, and sufferthree months’ imprisonment. By a subsequent statute the mastersuffers six months’ imprisonment.

In order to prevent exportation, the whole inland commerce ofwool is laid under very burdensome and oppressive restrictions. Itcannot be packed in any box, barrel, cask, case, chest, or any otherpackage, but only in packs of leather or pack-cloth, on which mustbe marked on the outside the words wool or yarn, in large lettersnot less than three inches long, on pain of forfeiting the same andthe package, and three shillings for every pound weight, to be paid



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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 horsesand carriages.

The hundred next adjoining to the sea-coast, out of or throughwhich the wool is carried or exported, forfeits twenty pounds, ifthe wool is under the value of ten pounds; and if of greater value,then treble that value, together with treble costs, to be sued forwithin the year. The execution to be against any two of theinhabitants, whom the sessions must reimburse, by an assessmenton the other inhabitants, as in the cases of robbery. And if anyperson compounds with the hundred for less than this penalty, heis to be imprisoned for five years; and any other person mayprosecute. These regulations take place through the wholekingdom.

But in the particular counties of Kent and Sussex, therestrictions are still more troublesome. Every owner of woolwithin ten miles of the sea-coast must given an account in writing,three days after shearing to the next officer of the customs, of thenumber of his fleeces, and of the places where they are lodged.And before he removes any part of them he must give the likenotice of the number and weight of the fleeces, and of the nameand abode of the person to whom they are sold, and of the place towhich it is intended they should be carried. No person withinfifteen miles of the sea, in the said counties, can buy any woolbefore he enters into bond to the king that no part of the woolwhich he shall so buy shall be sold by him to any other personwithin fifteen miles of the sea. If any wool is found carryingtowards the sea-side in the said counties, unless it has been



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entered and security given as aforesaid, it is forfeited, and theoffender also forfeits three shillings for every pound weight. If anyperson lays any wool not entered as aforesaid within fifteen milesof the sea, it must be seized and forfeited; and if, after suchseizure, any person claim the same, he must give security to theExchequer 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, thecoasting trade, we may believe, cannot be left very free. Everyowner of wool who carries or causes to be carried any wool to anyport or place on the seacoast, in order to be from thencetransported by sea to any other place or port on the coast, mustfirst cause an entry thereof to be made at the port from whence itis intended to be conveyed, containing the weight, marks, andnumber of the packages, before he brings the same within fivemiles of that port, on pain of forfeiting the same, and also thehorses, carts, and other carriages; and also of suffering andforfeiting as by the other laws in force against the exportation ofwool. This law, however (1st William III, c. 32), is so very indulgentas to declare that, “This shall not hinder any person from carryinghis wool home from the place of shearing, though it be within fivemiles of the sea, provided that in ten days after shearing, andbefore he remove the wool, he do under his hand certify to thenext officer of the customs, the true number of fleeces, and whereit is housed; and do not remove the same, without certifying tosuch officer, under his hand, his intention so to do, three daysbefore.” Bond must be given that the wool to be carried coastwaysis to be landed at the particular port for which it is enteredoutwards; and if any part of it is landed without the presence of an



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officer, not only the forfeiture of the wool is incurred as in othergoods, but the usual additional penalty of three shillings for everypound weight is likewise incurred.

Our woollen manufactures, in order to justify their demand ofsuch extraordinary restrictions and regulations, confidentlyasserted that English wool was of a peculiar quality, superior tothat of any other country; that the wool of other countries couldnot, without some mixture of it, be wrought up into any tolerablemanufacture; that fine cloth could not be made without it; thatEngland, therefore, if the exportation of it could be totallyprevented, could monopolize to herself almost the whole woollentrade of the world; and thus, having no rivals, could sell at whatprice she pleased, and in a short time acquire the most incredibledegree of wealth by the most advantageous balance of trade. Thisdoctrine, like most other doctrines which are confidently assertedby any considerable number of people, was, and still continues tobe, most implicitly believed by a much greater number—by almostall those who are either unacquainted with the woollen trade, orwho have not made particular inquiries.

It is, however, so perfectly false that English wool is in anyrespect necessary for the making of fine cloth that it is altogetherunfit for it. Fine cloth is made altogether of Spanish wool. Englishwool cannot be even so mixed with Spanish wool as to enter intothe 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 theeffect of these regulations has been to depress the price of Englishwool, not only below what it naturally would be in the presenttimes, but very much below what it actually was in the time of



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Edward III. The price of Scots wool, when in consequence of theunion it became subject to the same regulations, is said to havefallen about one half. It is observed by the very accurate andintelligent author of the Memoirs of Wool, the Reverend Mr. JohnSmith, that the price of the best English wool in England isgenerally below what wool of a very inferior quality commonlysells for in the market of Amsterdam. To depress the price of thiscommodity below what may be called its natural and proper pricewas the avowed purpose of those regulations; and there seems tobe no doubt of their having produced the effect that was expectedfrom them.

This reduction of price, it may perhaps be thought, bydiscouraging the growing of wool, must have reduced very muchthe annual produce of that commodity, though not below what itformerly was, yet below what, in the present state of things, itprobably would have been, had it, in consequence of an open andfree market, been allowed to rise to the natural and proper price. Iam, however, disposed to believe that the quantity of the annualproduce cannot have been much, though it may perhaps havebeen a little, affected by these regulations. The growing of wool isnot the chief purpose for which the sheep farmer employs hisindustry and stock. He expects his profit not so much from theprice of the fleece as from that of the carcass; and the average orordinary price of the latter must even, in many cases, make up tohim whatever deficiency there may be in the average or ordinaryprice of the former. It has been observed in the foregoing part ofthis work that, “Whatever regulations tend to sink the price, eitherof wool or of raw hides, below what it naturally would be, must, inan improved and cultivated country, have some tendency to raise



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the price of butcher’s meat. The price both of the great and smallcattle which are fed on improved and cultivated land must besufficient to pay the rent which the landlord, and the profit whichthe farmer has reason to expect from improved and cultivatedland. If it is not, they will soon cease to feed them. Whatever partof this price, therefore, is not paid by the wool and the hide mustbe paid by the carcass. The less there is paid for the one, the moremust be paid for the other. In what manner this price is to bedivided upon the different parts of the beast is indifferent to thelandlords and farmers, provided it is all paid to them. In animproved and cultivated country, therefore, their interest aslandlords and farmers cannot be much affected by suchregulations, though their interest as consumers may by the rise inthe price of provisions.” According to this reasoning, therefore,this degradation in the price of wool is not likely, in an improvedand cultivated country, to occasion any diminution in the annualproduce of that commodity, except so far as, by raising the price ofmutton, it may somewhat diminish the demand for, andconsequently the production of, that particular species ofbutcher’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 producemay not have been very considerable, its effect upon the quality, itmay perhaps be thought, must necessarily have been very great.The degradation in the quality of English wool, if not below what itwas in former times, yet below what it naturally would have beenin the present state of improvement and cultivation, must havebeen, it may perhaps be supposed, very nearly in proportion to thedegradation of price. As the quality depends upon the breed, upon



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the pasture, and upon the management and cleanliness of thesheep, during the whole progress of the growth of the fleece, theattention to these circumstances, it may naturally enough beimagined, can never be greater than in proportion to therecompense which the price of the fleece is likely to make for thelabour and expense which that attention requires. It happens,however, that the goodness of the fleece depends, in a greatmeasure, upon the health, growth, and bulk of the animal; thesame attention which is necessary for the improvement of thecarcase is, in some respects, sufficient for that of the fleece.Notwithstanding the degradation of price, English wool is said tohave been improved considerably during the course even of thepresent century. The improvement might perhaps have beengreater if the price had been better; but the lowness of price,though it may have obstructed, yet certainly it has not altogetherprevented that improvement.

The violence of these regulations, therefore, seems to haveaffected neither the quantity nor the quality of the annual produceof wool so much as it might have been expected to do (though Ithink it probable that it may have affected the latter a good dealmore than the former); and the interest of the growers of wool,though it must have been hurt in some degree, seems, upon thewhole, to have been much less hurt than could well have beenimagined.

These considerations, however, will not justify the absoluteprohibition of the exportation of wool. But they will fully justifythe 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



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evidently contrary to that justice and equality of treatment whichthe sovereign owes to all the different orders of his subjects. Butthe prohibition certainly hurts, in some degree, the interest of thegrowers of wool, for no other purpose but to promote that of themanufacturers.

Every different order of citizens is bound to contribute to thesupport of the sovereign or commonwealth. A tax of five, or evenof ten shillings upon the exportation of every ton of wool wouldproduce a very considerable revenue to the sovereign. It wouldhurt the interest of the growers somewhat less than theprohibition, because it would not probably lower the price of woolquite so much. It would afford a sufficient advantage to themanufacturer, because, though he might not buy his woolaltogether so cheap as under the prohibition, he would still buy it,at least, five or ten shillings cheaper than any foreignmanufacturer could buy it, besides saving the freight andinsurance, which the other would be obliged to pay. It is scarcepossible to devise a tax which could produce any considerablerevenue to the sovereign, and at the same time occasion so littleinconveniency to anybody.

The prohibition, notwithstanding all the penalties which guardit, does not prevent the exportation of wool. It is exported, it is wellknown, in great quantities. The great difference between the pricein the home and that in the foreign market presents such atemptation to smuggling that all the rigour of the law cannotprevent it. This illegal exportation is advantageous to nobody butthe smuggler. A legal exportation subject to a tax, by affording arevenue to the sovereign, and thereby saving the imposition ofsome other, perhaps, more burdensome and inconvenient taxes



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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 exportationof wool. Even tobacco-pipe clay, though acknowledged to bedifferent 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, c. 7, the exportation, not onlyof raw hides, but of tanned leather, except in the shape of boots,shoes, or slippers, was prohibited; and the law gave a monopoly toour bootmakers and shoemakers, not only against our graziers,but against our tanners. By subsequent statutes our tanners havegot themselves exempted from this monopoly upon paying a smalltax of only one shilling on the hundred-weight of tanned leather,weighing one hundred and twelve pounds. They have obtainedlikewise the drawback of two-thirds of the excise duties imposedupon their commodity even when exported without furthermanufacture. All manufactures of leather may be exported dutyfree; and the exporter is besides entitled to the drawback of thewhole duties of excise. Our graziers still continue subject to the oldmonopoly. Graziers separated from one another, and dispersedthrough all the different corners of the country, cannot, withoutgreat difficulty, combine together for the purpose either ofimposing monopolies upon their fellow citizens, or of exemptingthemselves from such as may have been imposed upon them byother people. Manufacturers of all kinds, collected together innumerous bodies in all great cities, easily can. Even the horns ofcattle are prohibited to be exported; and the two insignificant



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trades of the horner and combmaker enjoy, in this respect, amonopoly against the graziers.

Restraints, either by prohibitions or by taxes, upon theexportation of goods which are partially, but not completelymanufactured, are not peculiar to the manufacture of leather. Aslong as anything remains to be done, in order to fit any commodityfor immediate use and consumption, our manufacturers think thatthey themselves ought to have the doing of it. Woollen yarn andworsted are prohibited to be exported under the same penalties aswool. Even white cloths are subject to a duty upon exportation,and our dyers have so far obtained a monopoly against ourclothiers. Our clothiers would probably have been able to defendthemselves against it, but it happens that the greater part of ourprincipal clothiers are themselves likewise dyers. Watch-cases,clock-cases, and dial-plates for clocks and watches have beenprohibited to be exported. Our clock-makers and watch-makersare, it seems, unwilling that the price of this sort of workmanshipshould 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 werealone excepted probably on account of the great abundance ofthose metals, in the exportation of which a considerable part of thetrade of the kingdom in those days consisted. For theencouragement of the mining trade, the 5th of William and Mary,c. 17, exempted from the prohibition iron, copper, and mundicmetal made from British ore. The exportation of all sorts of copperbars, foreign as well as British, was afterwards permitted by the9th and 10th of William III, c. 26. The exportation ofunmanufactured brass, of what is called gun-metal, bell-metal, and



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shroff-metal, still continues to be prohibited. Brass manufacturesof all sorts may be exported duty free.

The exportation of the materials of manufacture, where it is notaltogether prohibited, is in many cases subjected to considerableduties.

By the 8th George I, c. 15, the exportation of all goods, theproduce or manufacture of Great Britain, upon which any dutieshad been imposed by former statutes, was rendered duty free. Thefollowing 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 expecthorses, all these are either materials of manufacture, orincomplete manufactures (which may be considered as materialsfor still further manufacture), or instruments of trade. This statuteleaves them subject to all the old duties which had ever beenimposed 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 avery heavy one, upon exportation. Our dyers, it seems, while theythought it for their interest to encourage the importation of thosedrugs, by an exemption from all duties, thought it likewise fortheir interest to throw some small discouragement upon theirexportation. The avidity, however, which suggested this notablepiece of mercantile ingenuity, most probably disappointed itself ofits object. It necessarily taught the importers to be more carefulthan they might otherwise have been that their importation shouldnot exceed what was necessary for the supply of the home market.



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The home market was at all times likely to be more scantilysupplied; the commodities were at all times likely to be somewhatdearer there than they would have been had the exportation beenrendered as free as the importation.

By the above-mentioned statute, gum senega, or gum arabic,being among the enumerated dyeing drugs, might be importedduty free. They were subjected, indeed, to a small poundage duty,amounting only to threepence in the hundredweight upon theirre-exportation. France enjoyed, at that time, an exclusive trade tothe country most productive of those drugs, that which lies in theneighbourhood of the Senegal; and the British market could noteasily be supplied by the immediate importation of them from theplace of growth. By the 25th George II, therefore, gum senega wasallowed to be imported (contrary to the general dispositions of theAct of Navigation) from any part of Europe. As the law, however,did not mean to encourage this species of trade, so contrary to thegeneral principles of the mercantile policy of England, it imposeda duty of ten shillings the hundredweight upon such importation,and no part of this duty was to be afterwards drawn back upon itsexportation. The successful war which began in 1755 gave GreatBritain the same exclusive trade to those countries which Francehad enjoyed before. Our manufacturers, as soon as the peace wasmade, endeavoured to avail themselves of this advantage, and toestablish a monopoly in their own favour both against the growersand against the importers of this commodity. By the 5th GeorgeIII, therefore, c. 37, the exportation of gum senega from hisMajesty’s dominions in Africa was confined to Great Britain, andwas subjected to all the same restrictions, regulations, forfeitures,and penalties as that of the enumerated commodities of the British



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colonies in America and the West Indies. Its importation, indeed,was subjected to a small duty of sixpence the hundredweight, butits re-exportation was subjected to the enormous duty of onepound ten shillings the hundredweight. It was the intention of ourmanufacturers that the whole produce of those countries shouldbe imported into Great Britain, and, in order that they themselvesmight be enabled to buy it at their own price, that no part of itshould be exported again but at such an expense as wouldsufficiently discourage that exportation.

Their avidity, however, upon this, as well as upon many otheroccasions, disappointed itself of its object. This enormous dutypresented such a temptation to smuggling that great quantities ofthis commodity were clandestinely exported, probably to all themanufacturing countries of Europe, put particularly to Holland,not only from Great Britain but from Africa. Upon this account, bythe 14th George III, c. 10, this duty upon exportation was reducedto five shillings the hundredweight.

In the book of rates, according to which the Old Subsidy waslevied, beaver skins were estimated at six shillings and eightpencea piece, and the different subsidies and imposts, which before theyear 1722 had been laid upon their importation, amounted to one-fifth part of the rate, or to sixteenpence upon each skin; all ofwhich, except half the Old Subsidy, amounting only to twopence,was drawn back upon exportation. This duty upon the importationof so important a material of manufacture had been thought toohigh, and in the year 1722 the rate was reduced to two shillingsand sixpence, which reduced the duty upon importation tosixpence, and of this only one half was to be drawn back uponexportation. The same successful war put the country most



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productive of beaver under the dominion of Great Britain, andbeaver skins being among the enumerated commodities, theirexportation from America was consequently confined to themarket of Great Britain. Our manufacturers soon bethoughtthemselves of the advantage which they might make of thiscircumstance, and in the year 1764 the duty upon the importationof beaver-skin was reduced to one penny, but the duty uponexportation was raised to sevenpence each skin, without anydrawback of the duty upon importation. By the same law, a duty ofeighteenpence the pound was imposed upon the exportation ofbeaver-wool or wombs, without making any alteration in the dutyupon the importation of that commodity, which, when imported byBritain and in British shipping, amounted at that time to betweenfourpence and fivepence the piece.

Coals may be considered both as a material of manufacture andas an instrument of trade. Heavy duties, accordingly, have beenimposed upon their exportation, amounting at present (1783) tomore than five shillings the ton, or to more than fifteen shillingsthe chaldron, Newcastle measures, which is in most cases morethan the original value of the commodity at the coal pit, or even atthe shipping port for exportation.

The exportation, however, of the instruments of trade, properlyso called, is commonly restrained, not by high duties, but byabsolute prohibitions. Thus by the 7th and 8th of William III, c. 20,sect. 8, the exportation of frames or engines for knitting gloves orstockings is prohibited under the penalty, not only of the forfeitureof such frames or engines so exported, or attempted to beexported, but of forty pounds, one half to the king, the other to theperson who shall inform or sue for the same. In the same manner,



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by the 14th George III, c. 71, the exportation to foreign parts of anyutensils made use of in the cotton, linen, woollen, and silkmanufactures is prohibited under the penalty, not only of theforfeiture of such utensils, but of two hundred pounds, to be paidby the person who shall offend in this manner, and likewise of twohundred pounds to be paid by the master of the ship who shallknowingly suffer such utensils to be loaded on board his ship.

When such heavy penalties were imposed upon the exportationof the dead instruments of trade, it could not well be expected thatthe living instrument, the artificer, should be allowed to go free.

Accordingly, by the 5th George I, c. 27, the person who shall beconvicted of enticing any artificer of, or in any of the manufacturesof Great Britain, to go into any foreign parts in order to practise orteach his trade, is liable for the first offence to be fined in any sumnot exceeding one hundred pounds, and to three months’imprisonment, and until the fine shall be paid; and for the secondoffence, to be fined in any sum at the discretion of the court, andto imprisonment for twelve months, and until the fine shall bepaid. By the 23rd George II, c. 13, this penalty is increased for thefirst offence to five hundred pounds for every artificer so enticed,and to twelve months’ imprisonment, and until the fine shall bepaid; and for the second offence, to one thousand pounds, and totwo years’ imprisonment, and until the fine shall be paid.

By the former of those two statutes, upon proof that any personhas been enticing any artificer, or that any artificer has promisedor contracted to go into foreign parts for the purposes aforesaid,such artificer may be obliged to give security at the discretion ofthe court that he shall not go beyond the seas, and may becommitted to prison until he give such security.



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If any artificer has gone beyond the seas, and is exercising orteaching his trade in any foreign country, upon warning beinggiven 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, ifhe does not, within six months after such warning, return into thisrealm, and from thenceforth abide and inhabit continually withinthe same, he is from thenceforth declared incapable of taking anylegacy devised to him within this kingdom, or of being executor oradministrator to any person, or of taking any lands within thiskingdom by descent, device, or purchase. He likewise forfeits tothe king all his lands, goods, and chattels, is declared an alien inevery respect, and is put out of the king’s protection.

It is unnecessary, I imagine, to observe how contrary suchregulations are to the boasted liberty of the subject, of which weaffect to be so very jealous; but which, in this case, is so plainlysacrificed to the futile interests of our merchants andmanufacturers.

The laudable motive of all these regulations is to extend ourown manufactures, not by their own improvement, but by thedepression of those of all our neighbours, and by putting an end,as much as possible, to the troublesome competition of suchodious and disagreeable rivals. Our master manufacturers think itreasonable that they themselves should have the monopoly of theingenuity of all their countrymen. Though by restraining, in sometrades, the number of apprentices which can be employed at onetime, and by imposing the necessity of a long apprenticeship in alltrades, they endeavour, all of them, to confine the knowledge oftheir respective employments to as small a number as possible;they are unwilling, however, that any part of this small number



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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 asit may be necessary for promoting that of the consumer. Themaxim is so perfectly self evident that it would be absurd toattempt to prove it. But in the mercantile system the interest ofthe consumer is almost constantly sacrificed to that of theproducer; and it seems to consider production, and notconsumption, as the ultimate end and object of all industry andcommerce.

In the restraints upon the importation of all foreigncommodities which can come into competition with those of ourown growth or manufacture, the interest of the home consumer isevidently sacrificed to that of the producer. It is altogether for thebenefit of the latter that the former is obliged to pay thatenhancement of price which this monopoly almost alwaysoccasions.

It is altogether for the benefit of the producer that bounties aregranted upon the exportation of some of his productions. Thehome consumer is obliged to pay, first, the tax which is necessaryfor paying the bounty, and secondly, the still greater tax whichnecessarily arises from the enhancement of the price of thecommodity in the home market.

By the famous treaty of commerce with Portugal, the consumeris prevented by high duties from purchasing of a neighbouringcountry a commodity which our own climate does not produce,but is obliged to purchase it of a distant country, though it isacknowledged that the commodity of the distant country is of aworse quality than that of the near one. The home consumer is



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obliged to submit to this inconveniency in order that the producermay import into the distant country some of his productions uponmore advantageous terms than he would otherwise have beenallowed to do. The consumer, too, is obliged to pay whateverenhancement in the price if those very productions this forcedexportation may occasion in the home market.

But in the system of laws which has been established for themanagement of our American and West Indian colonies, theinterest of the home consumer has been sacrificed to that of theproducer with a more extravagant profusion than in all our othercommercial regulations. A great empire has been established forthe sole purpose of raising up a nation of customers who should beobliged to buy from the shops of our different producers all thegoods with which these could supply them. For the sake of thatlittle enhancement of price which this monopoly might afford ourproducers, the home consumers have been burdened with thewhole expense of maintaining and defending that empire. For thispurpose, and for this purpose only, in the two last wars, more thantwo hundred millions have been spent, and a new debt of morethan a hundred and seventy millions has been contracted over andabove all that had been expended for the same purpose in formerwars. The interest of this debt alone is not only greater than thewhole extraordinary profit which it ever could be pretended wasmade by the monopoly of the colony trade, but than the wholevalue of that trade, or than the whole value of the goods which atan average have been annually exported to the colonies.

It cannot be very difficult to determine who have been thecontrivers of this whole mercantile system; not the consumers, wemay believe, whose interest has been entirely neglected; but the



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producers, whose interest has been so carefully attended to; andamong this latter class our merchants and manufacturers havebeen by far the principal architects. In the mercantile regulations,which have been taken notice of in this chapter, the interest of ourmanufacturers has been most peculiarly attended to; and theinterest, not so much of the consumers, as that of some other setsof producers, has been sacrificed to it.



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Chapter IX

Of the Agricultural Systems, or of those Systems ofPolitical Economy which represent the Produce ofLand as either the sole or the principal Source of

the Revenue and Wealth every Country

he agricultural systems of political economy will notrequire so long an explanation as that which I havethought 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 Iknow, never been adopted by any nation, and it at present existsonly in the speculations of a few men of great learning andingenuity in France. It would not, surely, be worth while toexamine at great length the errors of a system which never hasdone, and probably never will do, any harm in any part of theworld. 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 Louis XIV, was a man ofprobity, of great industry and knowledge of detail, of greatexperience and acuteness in the examination of public accounts,and of abilities, in short, every way fitted for introducing methodand good order into the collection and expenditure of the publicrevenue. That minister had unfortunately embraced all theprejudices of the mercantile system, in its nature and essence asystem of restraint and regulation, and such as could scarce fail to

T



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be agreeable to a laborious and plodding man of business, whohad been accustomed to regulate the different departments ofpublic offices, and to establish the necessary checks and controlsfor confining each to its proper sphere. The industry andcommerce of a great country he endeavoured to regulate upon thesame model as the departments of a public office; and instead ofallowing every man to pursue his own interest in his own way,upon the liberal plan of equality, liberty, and justice, he bestowedupon certain branches of industry extraordinary privileges, whilehe laid others under as extraordinary restraints. He was not onlydisposed, like other European ministers, to encourage more theindustry of the towns than that of the country; but, in order tosupport the industry of the towns, he was willing even to depressand keep down that of the country. In order to render provisionscheap to the inhabitants of the towns, and thereby to encouragemanufactures and foreign commerce, he prohibited altogether theexportation of corn, and thus excluded the inhabitants of thecountry from every foreign market for by far the most importantpart of the produce of their industry. This prohibition, joined tothe restraints imposed by the ancient provincial laws of Franceupon the transportation of corn from one province to another, andto the arbitrary and degrading taxes which are levied upon thecultivators in almost all the provinces, discouraged and kept downthe agriculture of that country very much below the state to whichit would naturally have risen in so very fertile a soil and so veryhappy a climate. This state of discouragement and depression wasfelt more or less in every different part of the country, and manydifferent inquiries were set on foot concerning the causes of it.One of those causes appeared to be the preference given, by the



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institutions of Mr. Colbert, to the industry of the towns above thatof the country.

If the rod be bent too much one way, says the proverb, in orderto make it straight you must bend it as much the other. TheFrench philosophers, who have proposed the system whichrepresents agriculture as the sole source of the revenue andwealth of every country, seem to have adopted this proverbialmaxim; and as in the plan of Mr. Colbert the industry of the townswas certainly overvalued in comparison with that of the country;so in their system it seems to be as certainly undervalued.

The different orders of people who have ever been supposed tocontribute in any respect towards the annual produce of the landand labour of the country, they divide into three classes. The firstis the class of the proprietors of land. The second is the class of thecultivators, of farmers and country labourers, whom they honourwith the peculiar appellation of the productive class. The third isthe class of artificers, manufacturers, and merchants, whom theyendeavour to degrade by the humiliating appellation of the barrenor unproductive class.

The class of proprietors contributes to the annual produce bythe expense which they may occasionally lay out upon theimprovement of the land, upon the buildings, drains, enclosures,and other ameliorations, which they may either make or maintainupon it, and by means of which the cultivators are enabled, withthe same capital, to raise a greater produce, and consequently topay a greater rent. This advanced rent may be considered as theinterest or profit due to the proprietor upon the expense or capitalwhich he thus employs in the improvement of his land. Suchexpenses are in this system called ground expenses (dépenses



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foncières.)The cultivators or farmers contribute to the annual produce by

what are in this system called the original and annual expenses(dépenses primitives et dépenses annuelles) which they lay out uponthe cultivation of the land. The original expenses consist in theinstruments of husbandry, in the stock of cattle, in the seed, and inthe maintenance of the farmer’s family, servants, and cattle duringat least a great part of the first year of his occupancy, or till he canreceive some return from the land. The annual expenses consist inthe seed, in the wear and tear of the 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 consideredas servants employed in cultivation. That part of the produce ofthe land which remains to him after paying the rent ought to besufficient, first, to replace to him within a reasonable time, at leastduring the term of his occupancy, the whole of his originalexpenses, together with the ordinary profits of stock; and,secondly, to replace to him annually the whole of his annualexpenses, together likewise with the ordering profits of stock.Those two sorts of expenses are two capitals which the farmeremploys in cultivation; and unless they are regularly restored tohim, together with a reasonable profit, he cannot carry on hisemployment upon a level with other employments; but, from aregard to his own interest, must desert it as soon as possible andseek some other. That part of the produce of the land which isthus necessary for enabling the farmer to continue his businessought to be considered as a fund sacred to cultivation, which, if thelandlord violates, he necessarily reduces the produce of his ownland, and in a few years not only disables the farmer from paying



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this racked rent, but from paying the reasonable rent which hemight otherwise have got for his land. The rent which properlybelongs to the landlord is no more than the net produce whichremains after paying in the completest manner all the necessaryexpenses which must be previously laid out in order to raise thegross or the whole produce. It is because the labour of thecultivators, over and above paying completely all those necessaryexpenses, affords a net produce of this kind that this class ofpeople are in this system peculiarly distinguished by thehonourable appellation of the productive class. Their original andannual expenses are for the same reason called, in this system,productive expenses, because, over and above replacing their ownvalue, they occasion the annual reproduction of this net produce.

The ground expenses, as they are called, or what the landlordlays out upon the improvement of his land, are in this system, too,honoured with the appellation of productive expenses. Till thewhole of those expenses, together with the ordinary profits ofstock, have been completely repaid to him by the advanced rentwhich he gets from his land, that advanced rent ought to beregarded as sacred and inviolable, both by the church and by theking; ought to be subject neither to tithe nor to taxation. If it isotherwise, by discouraging the improvement of land the churchdiscourages the future increase of her own tithes, and the king thefuture increase of his own taxes. As in a well-ordered state ofthings, therefore, those ground expenses, over and abovereproducing in the completest manner their own value, occasionlikewise after a certain time a reproduction of a net produce, theyare in this system considered as productive expenses.

The ground expenses of the landlord, however, together with



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the original and the annual expenses of the farmer, are the onlythree sorts of expenses which in this system are considered asproductive. All other expenses and all other orders of people, eventhose who in the common apprehensions of men are regarded asthe most productive, are in this account of things represented asaltogether barren and unproductive.

Artificers and manufacturers in particular, whose industry, inthe common apprehensions of men, increases so much the value ofthe rude produce of land, are in this system represented as a classof people altogether barren and unproductive. Their labour, it issaid, replaces only the stock which employs them, together with itsordinary profits.

That stock consists in the materials, tools, and wages advancedto them by their employer; and is the fund destined for theiremployment and maintenance. Its profits are the fund destined forthe maintenance of their employer. Their employer, as headvances to them the stock of materials, tools, and wagesnecessary for their employment, so he advances to himself what isnecessary for his own maintenance, and this maintenance hegenerally proportions to the profit which he expects to make bythe price of their work. Unless its price repays to him themaintenance which he advances to himself, as well as thematerials, tools, and wages which he advances to his workmen, itevidently does not repay to him the whole expense which he laysout upon it. The profits of manufacturing stock therefore are not,like the rent of land, a net produce which remains after completelyrepaying the whole expense which must be laid out in order toobtain them. The stock of the farmer yields him a profit as well asthat of the master manufacturer; and it yields a rent likewise to



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another person, which that of the master manufacturer does not.The expense, therefore, laid out in employing and maintainingartificers and manufacturers does no more than continue, if onemay say so, the existence of its own value, and does not produceany new value. It is therefore altogether a barren andunproductive expense. The expense, on the contrary, laid out inemploying farmers and country labourers, over and abovecontinuing 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 withmanufacturing stock. It only continues the existence of its ownvalue, without producing any new value. Its profits are only therepayment of the maintenance which its employer advances tohimself during the time that he employs it, or till he receives thereturns of it. They are only the repayment of a part of the expensewhich must be laid out in employing it.

The labour of artificers and manufacturers never adds anythingto the value of the whole annual amount of the rude produce of theland. It adds, indeed, greatly to the value of some particular partsof it. But the consumption which in the meantime it occasions ofother parts is precisely equal to the value which it adds to thoseparts; so that the value of the whole amount is not, at any onemoment of time, in the least augmented by it. The person whoworks the lace of a pair of fine ruffles, for example, will sometimesraise the value of perhaps a pennyworth of flax to thirty poundssterling. But though at first sight he appears thereby to multiplythe value of a part of the rude produce about seven thousand andtwo hundred times, he in reality adds nothing to the value of thewhole annual amount of the rude produce. The working of that



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lace costs him perhaps two years’ labour. The thirty pounds whichhe gets for it when it is finished is no more than the repayment ofthe subsistence which he advances to himself during the two yearsthat 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 thanreplace the value of his own consumption during that day, month,or year. At no moment of time, therefore, does he add anything tothe value of the whole annual amount of the rude produce of theland: the portion of that produce which he is continuallyconsuming being always equal to the value which he is continuallyproducing. The extreme poverty of the greater part of the personsemployed in this expensive though trifling manufacture maysatisfy us that the price of their work does not in ordinary casesexceed the value of their subsistence. It is otherwise with the workof farmers and country labourers. The rent of the landlord is avalue which, in ordinary cases, it is continually producing, overand above replacing, in the most complete manner, the wholeconsumption, the whole expense laid out upon the employmentand maintenance both of the workmen and of their employer.

Artificers, manufacturers, and merchants can augment therevenue and wealth of their society by parsimony only; or, as it inthis system, by privation, that is, by depriving themselves a part ofthe funds destined for their own subsistence. They annuallyreproduce nothing but those funds. Unless, therefore, theyannually save some part of them, unless they annually deprivethemselves of the enjoyment of some part of them, the revenueand wealth of their society can never be in the smallest degreeaugmented by means of their industry. Farmers and countrylabourers, on the contrary, may enjoy completely the whole funds



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destined for their own subsistence, and yet augment at the sametime the revenue and wealth of their society. Over and above whatis destined for their own subsistence, their industry annuallyaffords a net produce, of which the augmentation necessarilyaugments the revenue and wealth of their society.

Nations therefore which, like France or England, consist in agreat measure of proprietors and cultivators can be enriched byindustry and enjoyment. Nations, on the contrary, which, likeHolland and Hamburg, are composed chiefly of merchants,artificers, and manufacturers can grow rich only throughparsimony and privation. As the interest of nations so differentlycircumstanced is very different, so is likewise the commoncharacter of the people: in those of the former kind, liberality,frankness and good fellowship naturally make a part of thatcommon character: in the latter, narrowness, meanness, and aselfish disposition, averse to all social pleasure and enjoyment.

The unproductive class, that of merchants, artificers, andmanufacturers, is maintained and employed altogether at theexpense of the two other classes, of that of proprietors, and of thatof cultivators. They furnish it both with the materials of its workand with the fund of its subsistence, with the corn and cattlewhich it consumes while it is employed about that work. Theproprietors and cultivators finally pay both the wages of all theworkmen of the unproductive class, and of the profits of all theiremployers. Those workmen and their employers are properly theservants of the proprietors and cultivators. They are only servantswho work without doors, as menial servants work within. Both theone and the other, however, are equally maintained at the expenseof the same masters. The labour of both is equally unproductive. It



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adds nothing to the value of the sum total of the rude produce ofthe land. Instead of increasing the value of that sum total, it is acharge and expense which must be paid out of it.

The unproductive class, however, is not only useful, but greatlyuseful to the other two classes. By means of the industry ofmerchants, artificers, and manufacturers, the proprietors andcultivators can purchase both the foreign goods and themanufactured produce of their own country which they haveoccasion for with the produce of a much smaller quantity of theirown labour than what they would be obliged to employ if theywere to attempt, in an awkward and unskilful manner, either toimport the one or to make the other for their own use. By means ofthe unproductive class, the cultivators are delivered from manycares which would otherwise distract their attention from thecultivation of land. The superiority of produce, which, inconsequence of this undivided attention, they are enabled to raise,is fully sufficient to pay the whole expense which the maintenanceand employment of the unproductive class costs either theproprietors or themselves. The industry of merchants, artificers,and manufacturers, though in its own nature altogetherunproductive, yet contributes in this manner indirectly to increasethe produce of the land. It increases the productive powers ofproductive labour by leaving it at liberty to confine itself to itsproper employment, the cultivation of land; and the plough goesfrequently the easier and the better by means of the labour of theman whose business is most remote from the plough.

It can never be the interest of the proprietors and cultivators torestrain or to discourage in any respect the industry of merchants,artificers, and manufacturers. The greater the liberty which this



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unproductive class enjoys, the greater will be the competition inall the different trades which compose it, and the cheaper will theother two classes be supplied, both with foreign goods and withthe manufactured produce of their own country.

It can never be the interest of the unproductive class to oppressthe other two classes. It is the surplus produce of the land, or whatremains after deducting the maintenance, first, of the cultivators,and afterwards of the proprietors, that maintains and employs theunproductive class. The greater this surplus the greater mustlikewise be the maintenance and employment of that class. Theestablishment of perfect justice, of perfect liberty, and of perfectequality is the very simple secret which most effectually securesthe highest degree of prosperity to all the three classes.

The merchants, artificers, and manufacturers of thosemercantile states which, like Holland and Hamburg, consistchiefly of this unproductive class, are in the same mannermaintained and employed altogether at the expense of theproprietors and cultivators of land. The only difference is, thatthose 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 thematerials of their work and the fund of their subsistence,—theinhabitants of other countries and the subjects of othergovernments.

Such mercantile states, however, are not only useful, butgreatly useful to the inhabitants of those other countries. They fillup, in some measure, a very important void, and supply the placeof the merchants, artificers, and manufacturers whom theinhabitants of those countries ought to find at home, but whom,



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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 mercantilestates by imposing high duties upon their trade or upon thecommodities which they furnish. Such duties, by rendering thosecommodities dearer, could serve only to sink the real value of thesurplus produce of their own land, with which, or, what comes tothe same thing, with the price of which those commodities arepurchased.

Such duties could serve only to discourage the increase of thatsurplus produce, and consequently the improvement andcultivation of their own land. The most effectual expedient, on thecontrary, for raising the value of that surplus produce, forencouraging its increase, and consequently the improvement andcultivation of their own land would be to allow the most perfectfreedom to the trade of all such mercantile nations.

This perfect freedom of trade would even be the most effectualexpedient for supplying them, in due time, with all the artificers,manufacturers, and merchants whom they wanted at home, andfor filling up in the properest and most advantageous manner thatvery important void which they felt there.

The continual increase of the surplus produce of their landwould, in due time, create a greater capital than what could beemployed with the ordinary rate of profit in the improvement andcultivation of land; and the surplus part of it would naturally turnitself to the employment of artificers and manufacturers at home.But those artificers and manufacturers, finding at home both thematerials of their work and the fund of their subsistence, mightimmediately even with much less art and skill be able to work as



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cheap as the like artificers and manufacturers of such mercantilestates who had both to bring from a great distance. Even though,from want of art and skill, they might not for some time be able towork as cheap, yet, finding a market at home, they might be ableto sell their work there as cheap as that of the artificers andmanufacturers of such mercantile states, which could not bebrought to that market but from so great a distance; and as theirart 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 thoselanded nations, and soon after undersold and jostled out of italtogether. The cheapness of the manufactures of those landednations, in consequence of the gradual improvements of art andskill, would, in due time, extend their sale beyond the homemarket, and carry them to many foreign markets, from which theywould in the same manner gradually jostle out many of themanufacturers of such mercantile nations.

This continual increase both of the rude and manufacturedproduce of those landed nations would in due time create agreater capital than could, with the ordinary rate of profit, beemployed either in agriculture or in manufactures. The surplus ofthis capital would naturally turn itself to foreign trade, and beemployed in exporting to foreign countries such parts of the rudeand manufactured produce of its own country as exceeded thedemand of the home market. In the exportation of the produce oftheir own country, the merchants of a landed nation would havean advantage of the same kind over those of mercantile nationswhich its artificers and manufacturers had over the artificers andmanufacturers of such nations; the advantage of finding at home



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that cargo and those stores and provisions which the others wereobliged to seek for at a distance. With inferior art and skill innavigation, therefore, they would be able to sell that cargo ascheap in foreign markets as the merchants of such mercantilenations; and with equal art and skill they would be able to sell itcheaper. They would soon, therefore, rival those mercantilenations in this branch of foreign trade, and in due time wouldjostle them out of it altogether.

According to this liberal and generous system, therefore, themost advantageous method in which a landed nation can raise upartificers, manufacturers, and merchants of its own is to grant themost perfect freedom of trade to the artificers, manufacturers, andmerchants of all other nations. It thereby raises the value of thesurplus produce of its own land, of which the continual increasegradually establishes a fund, which in due time necessarily raisesup all the artificers, manufacturers, and merchants whom it hasoccasion for.

When a landed nation, on the contrary, oppresses either byhigh duties or by prohibitions the trade of foreign nations, itnecessarily hurts its own interest in two different ways. First, byraising the price of all foreign goods and of all sorts ofmanufactures, it necessarily sinks the real value of the surplusproduce of its own land, with which, or, what comes to the samething, with the price of which it purchases those foreign goods andmanufactures. Secondly, by giving a sort of monopoly of the homemarket to its own merchants, artificers, and manufacturers, itraises the rate of mercantile and manufacturing profit inproportion to that of agricultural profit, and consequently eitherdraws from agriculture a part of the capital which had before been



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employed in it, or hinders from going to it a part of what wouldotherwise have gone to it.

This policy, therefore, discourages agriculture in two differentways; first, by sinking the real value of its produce, and therebylowering the rate of its profit; and, secondly, by raising the rate ofprofit in all other employments. Agriculture is rendered lessadvantageous, and trade and manufactures more advantageousthan they otherwise would be; and every man is tempted by hisown interest to turn, as much as he can, both his capital and hisindustry from the former to the latter employments.

Though, by this oppressive policy, a landed nation should beable to raise up artificers, manufacturers, and merchants of itsown somewhat sooner than it could do by the freedom of trade—amatter, however, which is not a little doubtful—yet it would raisethem up, if one may say so, prematurely, and before it wasperfectly ripe for them. By raising up too hastily one species ofindustry, it would depress another more valuable species ofindustry. By raising up too hastily a species of industry which onlyreplaces the stock which employs it, together with the ordinaryprofit, it would depress a species of industry which, over andabove replacing that stock with its profit, affords likewise a netproduce, a free rent to the landlord. It would depress productivelabour, by encouraging too hastily that labour which is altogetherbarren and unproductive.

In what manner, according to this system, the sum total of theannual produce of the land is distributed among the three classesabove mentioned, and in what manner the labour of theunproductive class does no more than replace the value of its ownconsumption, without increasing in any respect the value of that



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sum total, is represented by Mr. Quesnai, the very ingenious andprofound author of this system, in some arithmetical formularies.The first of these formularies, which by way of eminence hepeculiarly distinguishes by the name of the Economical Table,represents the manner in which he supposes the distribution takesplace in a state of the most perfect liberty and therefore of thehighest prosperity—in a state where the annual produce is such asto afford the greatest possible net produce, and where each classenjoys its proper share of the whole annual produce. Somesubsequent formularies represent the manner in which hesupposes this distribution is made in different states of restraintand regulation; in which either the class of proprietors or thebarren and unproductive class is more favoured than the class ofcultivators, and in which either the one or the other encroachesmore or less upon the share which ought properly to belong to thisproductive class. Every such encroachment, every violation of thatnatural distribution, which the most perfect liberty wouldestablish, must, according to this system, necessarily degrademore or less, from one year to another, the value and sum total ofthe annual produce, and must necessarily occasion a gradualdeclension in the real wealth and revenue of the society; adeclension of which the progress must be quicker or slower,according to the degree of this encroachment, according as thatnatural distribution which the most perfect liberty would establishis more or less violated. Those subsequent formularies representthe different degrees of declension which, according to thissystem, correspond to the different degrees in which this naturaldistribution is violated.

Some speculative physicians seem to have imagined that the



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health of the human body could be preserved only by a certainprecise regimen of diet and exercise, of which every, the smallest,violation necessarily occasioned some degree of disease ordisorder proportioned to the degree of the violation. Experience,however, would seem to show that the human body frequentlypreserves, to all appearances at least, the most perfect state ofhealth under a vast variety of different regimens; even under somewhich are generally believed to be very far from being perfectlywholesome. But the healthful state of the human body, it wouldseem, contains in itself some unknown principle of preservation,capable either of preventing or of correcting, in many respects, thebad effects even of a very faulty regimen. Mr. Quesnai, who washimself a physician, and a very speculative physician, seems tohave entertained a notion of the same kind concerning thepolitical body, and to have imagined that it would thrive andprosper only under a certain precise regimen, the exact regimen ofperfect liberty and perfect justice. He seems not to haveconsidered that, in the political body, the natural effort whichevery man is continually making to better his own condition is aprinciple of preservation capable of preventing and correcting, inmany respects, the bad effects of a political economy, in somedegree, both partial and oppressive. Such a political economy,though it no doubt retards more or less, is not always capable ofstopping altogether the natural progress of a nation towardswealth and prosperity, and still less of making it go backwards. If anation could not prosper without the enjoyment of perfect libertyand perfect justice, there is not in the world a nation which couldever have prospered. In the political body, however, the wisdom ofnature has fortunately made ample provision for remedying many



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of the bad effects of the folly and injustice of man, in the samemanner as it has done in the natural body for remedying those ofhis sloth and intemperance.

The capital error of this system, however, seems to lie in itsrepresenting the class of artificers, manufacturers, and merchantsas altogether barren and unproductive. The followingobservations may serve to show the impropriety of thisrepresentation.

First, this class, it is acknowledged, reproduces annually thevalue of its own annual consumption, and continues, at least, theexistence of the stock or capital which maintains and employs it.But upon this account alone the denomination of barren orunproductive should seem to be very improperly applied to it. Weshould not call a marriage barren or unproductive though itproduced only a son and a daughter, to replace the father andmother, and though it did not increase the number of the humanspecies, but only continued it as it was before. Farmers andcountry labourers, indeed, over and above the stock whichmaintains and employs them, reproduce annually a net produce, afree rent to the landlord. As a marriage which affords threechildren is certainly more productive than one which affords onlytwo; so the labour of farmers and country labourers is certainlymore productive than that of merchants, artificers, andmanufacturers. The superior produce of the one class, however,does not render the other barren or unproductive.

Secondly, it seems, upon this account, altogether improper toconsider artificers, manufacturers, and merchants in the samelight as menial servants. The labour of menial servants does notcontinue the existence of the fund which maintains and employs



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them. Their maintenance and employment is altogether at theexpense of their masters, and the work which they perform is notof a nature to repay that expense. That work consists in serviceswhich perish generally in the very instant of their performance,and does not fix or realize itself in any vendible commodity whichcan replace the value of their wages and maintenance. The labour,on the contrary, of artificers, manufacturers, and merchantsnaturally does fix and realize itself in some such vendiblecommodity. It is upon this account that, in the chapter in which Itreat of productive and unproductive labour, I have classedartificers, manufacturers, and merchants among the productivelabourers, and menial servants among the barren or unproductive.

Thirdly, it seems upon every supposition improper to say thatthe labour of artificers, manufacturers, and merchants does notincrease the real revenue of the society. Though we shouldsuppose, for example, as it seems to be supposed in this system,that the value of the daily, monthly, and yearly consumption ofthis class was exactly equal to that of its daily, monthly, and yearlyproduction, yet it would not from thence follow that its labouradded nothing to the real revenue, to the real value of the annualproduce of the land and labour of the society. An artificer, forexample, who, in the first six months after harvest, executes tenpounds’ worth of work, though he should in the same timeconsume ten pounds’ worth of corn and other necessaries, yetreally adds the value of ten pounds to the annual produce of theland and labour of the society. While he has been consuming ahalf-yearly revenue of ten pounds’ worth of corn and othernecessaries, he has produced an equal value of work capable ofpurchasing, either to himself or some other person, an equal half-



899

yearly revenue. The value, therefore, of what has been consumedand produced during these six months is equal, not to ten, but totwenty pounds. It is possible, indeed, that no more than tenpounds’ worth of this value may ever have existed at any onemoment of time. But if the ten pounds’ worth of corn and othernecessaries, which were consumed by the artificer, had beenconsumed by a soldier or by a menial servant, the value of thatpart of the annual produce which existed at the end of the sixmonths would have been ten pounds less than it actually is inconsequence of the labour of the artificer. Though the value ofwhat the artificer produces, therefore, should not at any onemoment of time be supposed greater than the value he consumes,yet at every moment of time the actually existing value of goods inthe market is, in consequence of what he produces, greater than itotherwise would be.

When the patrons of this system assert that the consumption ofartificers, manufacturers, and merchants is equal to the value ofwhat they produce, they probably mean no more than that theirrevenue, or the fund destined for their consumption, is equal to it.But if they had expressed themselves more accurately, and onlyasserted that the revenue of this class was equal to the value ofwhat they produced, it might readily have occurred to the readerthat what would naturally be saved out of this revenue mustnecessarily increase more or less the real wealth of the society. Inorder, therefore, to make out something like an argument, it wasnecessary that they should express themselves as they have done;and this argument, even supposing things actually were as itseems to presume them to be, turns out to be a very inconclusiveone.



900

Fourthly, farmers and country labourers can no more augment,without parsimony, the real revenue, the annual produce of theland and labour of their society, than artificers, manufacturers,and merchants. The annual produce of the land and labour of anysociety can be augmented only in two ways; either, first, by someimprovement in the productive powers of the useful labouractually maintained within it; or, secondly, by some increase in thequantity of that labour.

The improvement in the productive powers of useful labourdepend, first, upon the improvement in the ability of theworkman; and, secondly, upon that of the machinery with whichhe works. But the labour of artificers and manufacturers, as it iscapable of being more subdivided, and the labour of eachworkman reduced to a greater simplicity of operation than that offarmers and country labourers, so it is likewise capable of boththese sorts of improvements in a much higher degree.1 In thisrespect, therefore, the class of cultivators can have no sort ofadvantage over that of artificers and manufacturers.

The increase in the quantity of useful labour actually employedwithin any society must depend altogether upon the increase ofthe capital which employs it; and the increase of that capital againmust be exactly equal to the amount of the savings from therevenue, either of the particular persons who manage and directthe employment of that capital, or of some other persons who lendit to them. If merchants, artificers, and manufacturers are, as thissystem seems to suppose, naturally more inclined to parsimonyand saving than proprietors and cultivators, they are, so far, more

1See Bk. i, ch. i.



901

likely to augment the quantity of useful labour employed withintheir society, and consequently to increase its real revenue, theannual produce of its land and labour.

Fifthly and lastly, though the revenue of the inhabitants ofevery country was supposed to consist altogether, as this systemseems to suppose, in the quantity of subsistence which theirindustry could procure to them; yet, even upon this supposition,the revenue of a trading and manufacturing country must, otherthings being equal, always be much greater than that of onewithout trade or manufactures.

By means of trade and manufactures, a greater quantity ofsubsistence can be annually imported into a particular countrythan what its own lands, in the actual state of their cultivation,could afford. The inhabitants of a town, though they frequentlypossess no lands of their own, yet draw to themselves by theirindustry such a quantity of the rude produce of the lands of otherpeople as supplies them, not only with the materials of their work,but with the fund of their subsistence. What a town always is withregard to the country in its neighbourhood, one independent stateor country may frequently be with regard to other independentstates or countries. It is thus that Holland draws a great part of itssubsistence from other countries; live cattle from Holstein andJutland, and corn from almost all the different countries ofEurope. A small quantity of manufactured produce purchases agreat quantity of rude produce. A trading and manufacturingcountry, therefore, naturally purchases with a small part of itsmanufactured produce a great part of the rude produce of othercountries; while, on the contrary, a country without trade andmanufactures is generally obliged to purchase, at the expense of a



902

great part of its rude produce, a very small part of themanufactured produce of other countries. The one exports whatcan subsist and accommodate but a very few, and imports thesubsistence and accommodation of a great number. The otherexports the accommodation and subsistence of a great number,and imports that of a very few only. The inhabitants of the onemust always enjoy a much greater quantity of subsistence thanwhat their own lands, in the actual state of their cultivation, couldafford. The inhabitants of the other must always enjoy a muchsmaller quantity.

This system, however, with all its imperfections is, perhaps, thenearest approximation to the truth that has yet been publishedupon the subject of political economy, and is upon that accountwell worth the consideration of every man who wishes to examinewith attention the principles of that very important science.Though in representing the labour which is employed upon landas the only productive labour, the notions which it inculcates areperhaps too narrow and confined; yet in representing the wealthof nations as consisting, not in the unconsumable riches of money,but in the consumable goods annually reproduced by the labour ofthe society, and in representing perfect liberty as the only effectualexpedient for rendering this annual reproduction the greatestpossible, its doctrine seems to be in every respect as just as it isgenerous and liberal.

Its followers are very numerous; and as men are fond ofparadoxes, and of appearing to understand what surpasses thecomprehension of ordinary people, the paradox which itmaintains, concerning the unproductive nature of manufacturinglabour, has not perhaps contributed a little to increase the number



903

of its admirers. They have for some years past made a prettyconsiderable sect, distinguished in the French republic of lettersby the name of The Economists. Their works have certainly beenof some service to their country; not only by bringing into generaldiscussion many subjects which had never been well examinedbefore, but by influencing in some measure the publicadministration in favour of agriculture. It has been in consequenceof their representations, accordingly, that the agriculture ofFrance has been delivered from several of the oppressions whichit before laboured under. The term during which such a lease canbe granted, as will be valid against every future purchaser orproprietor of the land, has been prolonged from nine to twenty-seven years. The ancient provincial restraints upon thetransportation of corn from one province of the kingdom toanother have been entirely taken away, and the liberty ofexporting it to all foreign countries has been established as thecommon law of the kingdom in all ordinary cases.

This sect, in their works, which are very numerous, and whichtreat not only of what is properly called Political Economy, or ofthe nature and causes of the wealth of nations, but of every otherbranch of the system of civil government, all follow implicitly andwithout any sensible variation, the doctrine of Mr. Quesnai. Thereis upon this account little variety in the greater part of their works.The most distinct and best connected account of this doctrine is tobe found in a little book written by Mr. Mercier de la Rivière, sometime intendant of Martinico, entitled, The Natural and EssentialOrder of Political Societies. The admiration of this whole sect fortheir master, who was himself a man of the greatest modesty andsimplicity, is not inferior to that of any of the ancient philosophers



904

for the founders of their respective systems. “There have been,since the world began,” says a very diligent and respectableauthor, the Marquis de Mirabeau, “three great inventions whichhave principally given stability to political societies, independentof many other inventions which have enriched and adorned them.The first is the invention of writing, which alone gives humannature the power of transmitting, without alteration, its laws, itscontracts, its annals, and its discoveries. The second is theinvention of money, which binds together all the relations betweencivilised societies. The third is the Economical Table, the result ofthe other two, which completes them both by perfecting theirobject; the great discovery of our age, but of which our posteritywill reap the benefit.”

As the political economy of the nations of modern Europe hasbeen more favourable to manufactures and foreign trade, theindustry of the towns, than to agriculture, the industry of thecountry; so that of other nations has followed a different plan, andhas been more favourable to agriculture than to manufactures andforeign trade.

The policy of China favours agriculture more than all otheremployments. In China the condition of a labourer is said to be asmuch superior to that of an artificer as in most parts of Europethat of an artificer is to that of a labourer. In China, the greatambition of every man is to get possession of some little bit of land,either in property or in lease; and leases are there said to begranted upon very moderate terms, and to be sufficiently securedto the lessees. The Chinese have little respect for foreign trade.Your beggarly commerce! was the language in which theMandarins of Pekin used to talk to Mr. de Lange, the Russian



905

envoy, concerning it.1 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 evenadmit the ships of foreign nations. Foreign trade therefore is, inChina, every way confined within a much narrower circle thanthat to which it would naturally extend itself, if more freedom wasallowed to it, either in their own ships, or in those of foreignnations.

Manufactures, as in a small bulk they frequently contain a greatvalue, and can upon that account be transported at less expensefrom one country to another than most parts of rude produce, are,in almost all countries, the principal support of foreign trade. Incountries, besides, less extensive and less favourablycircumstanced for inferior commerce than China, they generallyrequire the support of foreign trade. Without an extensive foreignmarket they could not well flourish, either in countries somoderately extensive as to afford but a narrow home market or incountries where the communication between one province andanother was so difficult as to render it impossible for the goods ofany particular place to enjoy the whole of that home market whichthe country could afford. The perfection of manufacturingindustry, it must be remembered, depends altogether upon thedivision of labour; and the degree to which the division of labourcan be introduced into any manufacture is necessarily regulated, ithas already been shown, by the extent of the market. But the greatextent of the empire of China, the vast multitude of its inhabitants,

1See the journal of Mr. de Lange in Bell’s Travels, vol. ii, pp. 258, 276 and

293.



906

the variety of climate, and consequently of productions in itsdifferent provinces, and the easy communication by means ofwater carriage between the greater part of them, render the homemarket of that country of so great extent as to be alone sufficientto support very great manufactures, and to admit of veryconsiderable subdivisions of labour. The home market of China is,perhaps, in extent, not much inferior to the market of all thedifferent countries of Europe put together. A more extensiveforeign trade, however, which to this great home market addedthe foreign market of all the rest of the world—especially if anyconsiderable 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 itsmanufacturing industry. By a more extensive navigation, theChinese would naturally learn the art of using and constructingthemselves all the different machines made use of in othercountries, as well as the other improvements of art and industrywhich are practised in all the different parts of the world. Upontheir present plan they have little opportunity except that of theJapanese.

The policy of ancient Egypt too, and that of the Gentoogovernment of Indostan, seem to have favoured agriculture morethan all other employments.

Both in ancient Egypt and Indostan the whole body of thepeople was divided into different castes or tribes, each of whichwas confined, from father to son, to a particular employment orclass 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; theson of a weaver, a weaver; the son of a tailor, a tailor, etc. In both



907

countries, the caste of the priests held the highest rank, and that ofthe soldiers the next; and in both countries, the caste of thefarmers and labourers was superior to the castes of merchants andmanufacturers.

The government of both countries was particularly attentive tothe interest of agriculture. The works constructed by the ancientsovereigns of Egypt for the proper distribution of the waters of theNile were famous in antiquity; and the ruined remains of some ofthem are still the admiration of travellers. Those of the same kindwhich were constructed by the ancient sovereigns of Indostan forthe proper distribution of the waters of the Ganges as well as ofmany other rivers, though they have been less celebrated, seem tohave been equally great. Both countries, accordingly, thoughsubject occasionally to dearths, have been famous for their greatfertility. Though both were extremely populous, yet, in years ofmoderate plenty, they were both able to export great quantities ofgrain 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 afire, nor consequently to dress any victuals upon the water, it ineffect prohibits them from all distant sea voyages. Both theEgyptians and Indians must have depended almost altogetherupon the navigation of other nations for the exportation of theirsurplus produce; and this dependency, as it must have confinedthe market, so it must have discouraged the increase of thissurplus produce. It must have discouraged, too, the increase of themanufactured produce more than that of the rude produce.Manufactures require a much more extensive market than themost important parts of the rude produce of the land. A single



908

shoemaker will make more than three hundred pairs of shoes inthe year; and his own family will not, perhaps, wear out six pairs.Unless therefore he has the custom of at least fifty such families ashis own, he cannot dispose of the whole produce of his own labour.The most numerous class of artificers will seldom, in a largecountry, make more than one in fifty or one in a hundred of thewhole number of families contained in it. But in such largecountries as France and England, the number of people employedin agriculture has by some authors been computed at a half, byothers at a third, and by no author that I know of, at less than afifth of the whole inhabitants of the country. But as the produce ofthe agriculture of both France and England is, the far greater partof it, consumed at home, each person employed in it must,according to these computations, require little more than thecustom of one, two, or at most, of four such families as his own inorder to dispose of the whole produce of his own labour.Agriculture, therefore, can support itself under thediscouragement of a confined market much better thanmanufactures. In both ancient Egypt and Indostan, indeed, theconfinement of the foreign market was in some measurecompensated by the conveniency of many inland navigations,which opened, in the most advantageous manner, the wholeextent of the home market to every part of the produce of everydifferent district of those countries. The great extent of Indostan,too, rendered the home market of that country very great, andsufficient to support a great variety of manufactures. But the smallextent of ancient Egypt, which was never equal to England, mustat all times have rendered the home market of that country toonarrow for supporting any great variety of manufactures. Bengal,



909

accordingly, the province of Indostan, which commonly exportsthe greatest quantity of rice, has always been more remarkable forthe exportation of a great variety of manufactures than for that ofits grain. Ancient Egypt, on the contrary, though it exported somemanufactures, fine linen in particular, as well as some other goods,was always most distinguished for its great exportation of grain. Itwas long the granary of the Roman empire.

The sovereigns of China, of ancient Egypt, and of the differentkingdoms into which Indostan has at different times been divided,have always derived the whole, or by far the most considerablepart, of their revenue from some sort of land tax or land rent. Thisland tax or land rent, like the tithe in Europe, consisted in acertain proportion, a fifth, it is said, of the produce of the land,which was either delivered in kind, or paid in money, according toa certain valuation, and which therefore varied from year to yearaccording to all the variations of the produce. It was naturaltherefore that the sovereigns of those countries should beparticularly attentive to the interests of agriculture, upon theprosperity or declension of which immediately depended theyearly 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 foreigntrade, yet seems rather to have discouraged the latteremployments than to have given any direct or intentionalencouragement to the former. In several of the ancient states ofGreece, foreign trade was prohibited altogether; and in severalothers the employments of artificers and manufacturers wereconsidered as hurtful to the strength and agility of the humanbody, as rendering it incapable of those habits which their military



910

and gymnastic exercises endeavoured to form in it, and as therebydisqualifying it more or less for undergoing the fatigues andencountering the dangers of war. Such occupations wereconsidered as fit only for slaves, and the free citizens of the statewere prohibited from exercising them.

Even in those states where no such prohibition took place, as inRome and Athens, the great body of the people were in effectexcluded from all the trades which are now commonly exercisedby the lower sort of the inhabitants of towns. Such trades were, atAthens and Rome, all occupied by the slaves of the rich, whoexercised them for the benefit of their masters, whose wealth,power, and protection made it almost impossible for a poorfreeman to find a market for his work, when it came intocompetition with that of the slaves of the rich. Slaves, however, arevery seldom inventive; and all the most important improvements,either in machinery, or in the arrangement and distribution ofwork which facilitate and abridge labour, have been thediscoveries of freemen. Should a slave propose any improvementof this kind, his master would be very apt to consider the proposalas the suggestion of laziness, and a desire to save his own labour atthe master’s expense. The poor slave, instead of reward, wouldprobably meet with much abuse, perhaps with some punishment.

In the manufactures carried on by slaves, therefore, morelabour must generally have been employed to execute the samequantity of work than in those carried on by freemen. The work ofthe former must, upon that account, generally have been dearerthan that of the latter.

The Hungarian mines, it is remarked by Mr. Montesquieu,though not richer, have always been wrought with less expense,



911

and therefore with more profit, than the Turkish mines in theirneighbourhood. The Turkish mines are wrought by slaves; and thearms of those slaves are the only machines which the Turks haveever thought of employing. The Hungarian mines are wrought byfreemen, who employ a great deal of machinery, by which theyfacilitate and abridge their own labour. From the very little that isknown about the price of manufactures in the times of the Greeksand Romans, it would appear that those of the finer sort wereexcessively dear. Silk sold for its weight in gold. It was not, indeed,in those times a European manufacture; and as it was all broughtfrom the East Indies, the distance of the carriage may in somemeasure account for the greatness of price. The price, however,which a lady, it is said, would sometimes pay for a piece of veryfine linen, seems to have been equally extravagant; and as linenwas always either a European, or at farthest, an Egyptianmanufacture, this high price can be accounted for only by thegreat expense of the labour which must have been employedabout it, and the expense of this labour again could arise fromnothing but the awkwardness of the machinery which it made useof. 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, dyed in a particular manner,cost a hundred denarii, or three pounds six shillings andeightpence the pound weight.1 Others dyed in another mannercost a thousand denarii the pound weight, or thirty-three poundssix shillings and eightpence.

The Roman pound, it must be remembered, contained only

1Pliny, ix, 39.



912

twelve of our avoirdupois ounces. This high price, indeed, seemsto have been principally owing to the dye. But had not the clothsthemselves been much dearer than any which are made in thepresent times, so very expensive a dye would not probably havebeen bestowed upon them. The disproportion would have beentoo great between the value of the accessory and that of theprincipal. The price mentioned by the same author of someTriclinaria, a sort of woollen pillows or cushions made use of tolean upon as they reclined upon their couches at table, passes allcredibility; some of them being said to have cost more than thirtythousand, others more than three hundred thousand pounds.

This high price, too, is not said to have arisen from the dye. Inthe dress of the people of fashion of both sexes there seems tohave been much less variety, it is observed by Doctor Arbuthnot,in ancient than in modern times; and the very little variety whichwe find in that of the ancient statues confirms his observation. Heinfers from this that their dress must upon the whole have beencheaper than ours; but the conclusion does not seem to follow.When the expense of fashionable dress is very great, the varietymust be very small. But when, by the improvements in theproductive powers of manufacturing art and industry, the expenseof any one dress comes to be very moderate, the variety willnaturally be very great. The rich, not being able to distinguishthemselves by the expense of any one dress, will naturallyendeavour to do so by the multitude and variety of their dresses.

The greatest and most important branch of the commerce ofevery nation, it has already been observed, is that which is carriedon between the inhabitants of the town and those of the country.The inhabitants of the town draw from the country the rude



913

produce which constitutes both the materials of their work and thefund of their subsistence; and they pay for this rude produce bysending back to the country a certain portion of it manufacturedand prepared for immediate use. The trade which is carried onbetween these two different sets of people consists ultimately in acertain quantity of rude produce exchanged for a certain quantityof manufactured produce. The dearer the latter, therefore, thecheaper the former; and whatever tends in any country to raisethe price of manufactured produce tends to lower that of the rudeproduce of the land, and thereby to discourage agriculture. Thesmaller the quantity of manufactured produce which in any givenquantity of rude produce, or, what comes to the same thing, whichthe price of any given quantity of rude produce is capable ofpurchasing, the smaller the exchangeable value of that givenquantity of rude produce, the smaller the encouragement whicheither the landlord has to increase its quantity by improving or thefarmer by cultivating the land. Whatever, besides, tends todiminish in any country the number of artificers andmanufacturers, tends to diminish the home market, the mostimportant of all markets for the rude produce of the land, andthereby still further to discourage agriculture.

Those systems, therefore, which, preferring agriculture to allother employments, in order to promote it, impose restraints uponmanufactures and foreign trade, act contrary to the very endwhich they propose, and indirectly discourage that very species ofindustry 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 thanagriculture, turns a certain portion of the capital of the society



914

from supporting a more advantageous, to support a lessadvantageous species of industry. But still it really and in the endencourages that species of industry which it means to promote.Those agricultural systems, on the contrary, really and in the enddiscourage their own favourite species of industry.

It is thus that every system which endeavours, either byextraordinary encouragements to draw towards a particularspecies of industry a greater share of the capital of the society thanwhat would naturally go to it, or, by extraordinary restraints, forcefrom a particular species of industry some share of the capitalwhich would otherwise be employed in it, is in reality subversiveof the great purpose which it means to promote. It retards, insteadof accelerating, the progress of the society towards real wealth andgreatness; and diminishes, instead of increasing, the real value ofthe annual produce of its land and labour.

All systems either of preference or of restraint, therefore, beingthus completely taken away, the obvious and simple system ofnatural liberty establishes itself of its own accord. Every man, aslong as he does not violate the laws of justice, is left perfectly freeto pursue his own interest his own way, and to bring both hisindustry and capital into competition with those of any other man,or order of men. The sovereign is completely discharged from aduty, in the attempting to perform which he must always beexposed to innumerable delusions, and for the properperformance of which no human wisdom or knowledge could everbe sufficient; the duty of superintending the industry of privatepeople, and of directing it towards the employments most suitableto the interest of the society. According to the system of naturalliberty, the sovereign has only three duties to attend to; three



915

duties of great importance, indeed, but plain and intelligible tocommon understandings: first, the duty of protecting the societyfrom violence and invasion of other independent societies;secondly, the duty of protecting, as far as possible, every memberof the society from the injustice or oppression of every othermember of it, or the duty of establishing an exact administration ofjustice; and, thirdly, the duty of erecting and maintaining certainpublic works and certain public institutions which it can never befor the interest of any individual, or small number of individuals,to erect and maintain; because the profit could never repay theexpense to any individual or small number of individuals, thoughit may frequently do much more than repay it to a great society.

The proper performance of those several duties of the sovereignnecessarily supposes a certain expense; and this expense againnecessarily requires a certain revenue to support it. In thefollowing book, therefore, I shall endeavour to explain, first, whatare the necessary expenses of the sovereign or commonwealth;and which of those expenses ought to be defrayed by the generalcontribution of the whole society; and which of them by that ofsome particular part only, or of some particular members of thesociety; secondly, what are the different methods in which thewhole society may be made to contribute towards defraying theexpenses incumbent on the whole society, and what are theprincipal advantages and inconveniences of each of thosemethods; and thirdly, what are the reasons and causes which haveinduced almost all modern governments to mortgage some part ofthis revenue, or to contract debts, and what have been the effectsof those debts upon the real wealth, the annual produce of theland and labour of the society. The following book, therefore, will



916

naturally be divided into three chapters.



917

Appendix

The two following accounts are subjoined in order to illustrate andconfirm what is said in the fifth chapter of the fourth book,concerning the tonnage bounty to the white-herring fishery. Thereader, I believe, may depend upon the accuracy of both accounts.

An account of Busses fitted out in Scotland for Eleven Years, withthe Number of Empty Barrels carried out, and the Number of Barrels

of Herrings caught; also the Bounty at a Medium on each Barrel ofSeasteeks, and on each Barrel when fully packed.

Years Number

of Busses

Empty

Barrels

carried out

Barrels of

Herrings

caught

Bounty paid of

the Busses

£ s. d.

1771 29 5948 2832 2085 0 0

1772 168 41316 22237 11055 7 6

1773 190 42333 42055 12510 8 6

1774 248 59303 56365 16952 2 6

1775 275 69144 52879 19315 15 0

1776 294 76329 51863 21290 7 6

1777 240 62679 43313 17592 2 6

1778 220 56390 40958 16316 2 6

1779 206 55194 29367 15287 0 0

1780 181 48315 19885 13445 12 6

1781 135 33992 16593 9613 12 6

Total 2186 550943 378347 155463 11 0



918

£ s. d.Seasteeks 378,347 Bounty at a medium for each barrel

of seasteeks £0 8 21/4But a barrel of seasteeks being

only reckoned two-thirds of a

barrel fully packed, one-third is

deducted, which brings the

bounty to £0 12 33/41/3 deducted 126,1152/3Barrels fully packed 252,2311/3And if the herrings are exported, there is, besides,

a premium of 0 2 8

-- -- -- -- -- -- --

So that the bounty paid by Government in

money for each barrel is £0 14 113/4But 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 53/4



919

If the herrings are cured with British salt, it will stand thus, viz.Bounty as before £0 14 113/4But if to this bounty the duty on two bushels

of Scots salt at 1s. 6d. per bushel,

supposed to be the quantity at a

medium used in curing each barrel

is added, to wit 0 3 0

-- -- -- -- -- -- --

The bounty on each barrel will amount to £0 17 113/4And,

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 33/4From which the 1s. a barrel is to be deducted 0 1 0

-- -- -- -- -- -- --

0 11 33/4But to that there is to be added again the duty of the foreign salt used in

curing a barrel of herrings, viz. 0 12 6

So that the premium allowed for each barrel of herring entered for home

consumption is £1 3 93/4

If the herrings are cured with British salt, it will stand as follows,viz.Bounty on each barrel brought in by the busses

as above £0 12 33/4From which deduct the 1s. a barrel paid at the

time they are entered for home consumption 0 1 0

-- -- -- -- -- -- --

£0 11 33/4



920

But if to the bounty the duty on two bushels

of Scots salt at 1s. 6d. per bushel, supposed

to be the quantity at a medium used

in curing each barrel, is added, to wit 0 3 0

-- -- -- -- -- -- --

The premium for each barrel entered for home

consumption will be £0 14 33/4

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 in Scotland,and of Scots Salt delivered Duty free from the Works there for theFishery, from the 5th of April 1771 to the 5th of April 1782, with a

Medium of both for one Year.

Period Foreign Salt

Imported

Scots Salt delivered

from the Works

Bushels Bushels

From the 5th of April 1771

to the 5th of April 1782

936,974 168,226

Medium for one Year 85,1795/11 15,2933/11

It is to be observed that the Bushel of Foreign Salt weights 84 lb.,that of British Salt 56 lb. only.



921

Book Five

Of the Revenue ofthe Sovereign orCommonwealth



922

Chapter I

Of the Expenses of the Sovereign or Commonwealth

PART 1

Of the Expense of Defence

he first duty of the sovereign, that of protecting the societyfrom the violence and invasion of other independentsocieties, can be performed only by means of a military

force. But the expense both of preparing this military force in timeof peace, and of employing it in time of war, is very different in thedifferent states of society, in the different periods of improvement.

Among nations of hunters, the lowest and rudest state ofsociety, such as we find it among the native tribes of NorthAmerica, every man is a warrior as well as a hunter. When he goesto war, either to defend his society or to revenge the injuries whichhave been done to it by other societies, he maintains himself by hisown labour in the same manner as when he lives at home. Hissociety, for in this state of things there is properly neithersovereign nor commonwealth, is at no sort of expense, either toprepare 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, inthe same manner, a warrior. Such nations have commonly nofixed habitation, but live either in tents or in a sort of coveredwaggons which are easily transported from place to place. The

T



923

whole tribe or nation changes its situation according to thedifferent seasons of the year, as well as according to otheraccidents. When its herds and flocks have consumed the forage ofone part of the country, it removes to another, and from that to athird. 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 anation goes to war, the warriors will not trust their herds andflocks to the feeble defence of their old men, their women andchildren; and their old men, their women and children, will not beleft behind without defence and without subsistence. The wholenation, besides, being accustomed to a wandering life, even in timeof peace, easily takes the field in time of war. Whether it marchesas an army, or moves about as a company of herdsmen, the way oflife is nearly the same, though the object proposed by it be verydifferent. They all go to war together, therefore, and every onedoes as well as he can. Among the Tartars, even the women havebeen frequently known to engage in battle. If they conquer,whatever belongs to the hostile tribe is the recompense of thevictory. But if they are vanquished, all is lost, and not only theirherds and flocks, but their women and children, become the bootyof the conqueror. Even the greater part of those who survive theaction are obliged to submit to him for the sake of immediatesubsistence. The rest are commonly dissipated and dispersed inthe desert.

The ordinary life, the ordinary exercises of a Tartar or Arab,prepare him sufficiently for war. Running, wrestling, cudgel-playing, throwing the javelin, drawing the bow, etc., are thecommon pastimes of those who live in the open air, and are all ofthem the images of war. When a Tartar or Arab actually goes to



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war, he is maintained by his own herds and flocks which hecarries with him in the same manner as in peace. His chief orsovereign, for those nations have all chiefs or sovereigns, is at nosort of expense in preparing him for the field; and when he is in itthe chance of plunder is the only pay which he either expects orrequires.

An army of hunters can seldom exceed two or three hundredmen. The precarious subsistence which the chase affords couldseldom allow a greater number to keep together for anyconsiderable time. An army of shepherds, on the contrary, maysometimes amount to two or three hundred thousand. As long asnothing stops their progress, as long as they can go on from onedistrict, of which they have consumed the forage, to another whichis yet entire, there seems to be scarce any limit to the number whocan march on together. A nation of hunters can never beformidable to the civilised nations in their neighbourhood. Anation of shepherds may. Nothing can be more contemptible thanan Indian war in North America. Nothing, on the contrary, can bemore dreadful than Tartar invasion has frequently been in Asia.The judgment of Thucydides, that both Europe and Asia could notresist the Scythians united, has been verified by the experience ofall ages. The inhabitants of the extensive but defenceless plains ofScythia or Tartary have been frequently united under thedominion of the chief of some conquering horde or clan, and thehavoc and devastation of Asia have always signalized their union.The inhabitants of the inhospitable deserts of Arabia, the othergreat nation of shepherds, have never been united but once; underMahomet and his immediate successors. Their union, which wasmore the effect of religious enthusiasm than of conquest, was



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signalized in the same manner. If the hunting nations of Americashould ever become shepherds, their neighbourhood would bemuch more dangerous to the European colonies than it is atpresent.

In a yet more advanced state of society, among those nations ofhusbandmen who have little foreign commerce, and no othermanufactures but those coarse and household ones which almostevery private family prepares for its own use, every man, in thesame manner, either is a warrior or easily becomes such. Theywho live by agriculture generally pass the whole day in the openair, exposed to all the inclemencies of the seasons. The hardinessof their ordinary life prepares them for the fatigues of war, to someof which their necessary occupations bear a great analogy. Thenecessary occupation of a ditcher prepares him to work in thetrenches, and to fortify a camp as well as to enclose a field. Theordinary pastimes of such husbandmen are the same as those ofshepherds, and are in the same manner the images of war. But ashusbandmen have less leisure than shepherds, they are not sofrequently employed in those pastimes. They are soldiers, butsoldiers not quite so much masters of their exercise. Such as theyare, however, it seldom costs the sovereign or commonwealth anyexpense to prepare them for the field.

Agriculture, even in its rudest and lowest state, supposes asettlement: some sort of fixed habitation which cannot beabandoned without great loss. When a nation of merehusbandmen, therefore, goes to war, the whole people cannot takethe field together. The old men, the women and children, at least,must remain at home to take care of the habitation. All the men ofthe military age, however, may take the field, and, in small nations



926

of this kind, have frequently done so. In every nation the men ofthe military age are supposed to amount to about a fourth or a fifthpart of the whole body of the people. If the campaign, should beginafter seed-time, and end before harvest, both the husbandman andhis principal labourers can be spared from the farm without muchloss. He trusts that the work which must be done in the meantimecan be well enough executed by the old men, the women, and thechildren. He is not unwilling, therefore, to serve without payduring a short campaign, and it frequently costs the sovereign orcommonwealth as little to maintain him in the field as to preparehim for it. The citizens of all the different states of ancient Greeceseem to have served in this manner till after the second Persianwar; and the people of Peloponnesus till after the Peloponnesianwar. The Peloponnesians, Thucydides observes, generally left thefield in the summer, and returned home to reap the harvest. TheRoman people under their kings, and during the first ages of therepublic, served in the same manner. It was not till the siege ofVeii that they who stayed at home began to contribute somethingtowards maintaining those who went to war. In the Europeanmonarchies, which were founded upon the ruins of the Romanempire, both before and for some time after the establishment ofwhat is properly called the feudal law, the great lords, with alltheir immediate dependents, used to serve the crown at their ownexpense. In the field, in the same manner as at home, theymaintained themselves by their own revenue, and not by anystipend or pay which they received from the king upon thatparticular occasion.

In a more advanced state of society, two different causescontribute to render it altogether impossible that they who take



927

the field should maintain themselves at their own expense. Thosetwo causes are, the progress of manufactures, and theimprovement in the art of war.

Though a husbandman should be employed in an expedition,provided it begins after seed-time and ends before harvest, theinterruption of his business will not always occasion anyconsiderable diminution of his revenue. Without the interventionof his labour, nature does herself the greater part of the workwhich remains to be done. But the moment that an artificer, asmith, a carpenter, or a weaver, for example, quits his workhouse,the sole source of his revenue is completely dried up. Nature doesnothing for him, he does all for himself. When he takes the field,therefore, in defence of the public, as he has no revenue tomaintain himself, he must necessarily be maintained by thepublic. But in a country of which a great part of the inhabitantsare artificers and manufacturers, a great part of the people who goto war must be drawn from those classes, and must therefore bemaintained by the public as long as they are employed in itsservice.

When the art of war, too, has gradually grown up to be a veryintricate and complicated science, when the event of war ceases tobe determined, as in the first ages of society, by a single irregularskirmish or battle, but when the contest is generally spun outthrough several different campaigns, each of which lasts duringthe greater part of the year, it becomes universally necessary thatthe public should maintain those who serve the public in war, atleast while they are employed in that service. Whatever in time ofpeace might be the ordinary occupation of those who go to war, sovery tedious and expensive a service would otherwise be far too



928

heavy a burden upon them. After the second Persian war,accordingly, the armies of Athens seem to have been generallycomposed of mercenary troops, consisting, indeed, partly ofcitizens, but partly too of foreigners, and all of them equally hiredand paid at the expense of the state. From the time of the siege ofVeii, the armies of Rome received pay for their service during thetime which they remained in the field. Under the feudalgovernments the military service both of the great lords and oftheir immediate dependants was, after a certain period,universally exchanged for a payment in money, which wasemployed to maintain those who served in their stead.

The number of those who can go to war, in proportion to thewhole number of the people, is necessarily much smaller in acivilised than in a rude state of society. In a civilised society, as thesoldiers are maintained altogether by the labour of those who arenot soldiers, the number of the former can never exceed what thelatter can maintain, over and above maintaining, in a mannersuitable to their respective stations, both themselves and the otherofficers of government and law whom they are obliged tomaintain. In the little agrarian states of ancient Greece, a fourth ora fifth part of the whole body of the people considered themselvesas soldiers, and would sometimes, it is said, take a field. Amongthe civilised nations of modern Europe, it is commonly computedthat not more than one-hundredth part of the inhabitants in anycountry can be employed as soldiers without ruin to the countrywhich pays the expenses of their service.

The expense of preparing the army for the field seems not tohave become considerable in any nation till long after that ofmaintaining it in the field had devolved entirely upon the



929

sovereign or commonwealth. In all the different republics ofancient Greece, to learn his military exercises was a necessarypart of education imposed by the state upon every free citizen. Inevery city there seems to have been a public field, in which, underthe protection of the public magistrate, the young people weretaught their different exercises by different masters. In this verysimple institution consisted the whole expense which any Grecianstate seems ever to have been at in preparing its citizens for war.In ancient Rome the exercises of the Campus Martius answeredthe same purpose with those of the Gymnasium in ancient Greece.Under the feudal governments, the many public ordinances thatthe citizens of every district should practise archery as well asseveral other military exercises were intended for promoting thesame purpose, but do not seem to have promoted it so well. Eitherfrom want of interest in the officers entrusted with the executionof those ordinances, or from some other cause, they appear tohave been universally neglected; and in the progress of all thosegovernments, military exercises seem to have gone gradually intodisuse among the great body of the people.

In the republics of ancient Greece and Rome, during the wholeperiod of their existence, and under the feudal governments for aconsiderable time after their first establishment, the trade of asoldier was not a separate, distinct trade, which constituted thesole or principal occupation of a particular class of citizens. Everysubject of the state, whatever might be the ordinary trade oroccupation by which he gained his livelihood, considered himself,upon all ordinary occasions, as fit likewise to exercise the trade ofa soldier, and upon many extraordinary occasions as bound toexercise it.



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The art of war, however, as it is certainly the noblest of all arts,so in the progress of improvement it necessarily becomes one ofthe most complicated among them. The state of the mechanical, aswell as of some other arts, with which it is necessarily connected,determines the degree of perfection to which it is capable of beingcarried at any particular time. But in order to carry it to thisdegree of perfection, it is necessary that it should become the soleor principal occupation of a particular class of citizens, and thedivision of labour is as necessary for the improvement of this, as ofevery other art. Into other arts the division of labour is naturallyintroduced by the prudence of individuals, who find that theypromote their private interest better by confining themselves to aparticular trade than by exercising a great number. But it is thewisdom of the state only which can render the trade of a soldier aparticular trade separate and distinct from all others. A privatecitizen who, in time of profound peace, and without any particularencouragement from the public, should spend the greater part ofhis time in military exercises, might, no doubt, both improvehimself very much in them, and amuse himself very well; but hecertainly would not promote his own interest. It is the wisdom ofthe state only which can render it for his interest to give up thegreater part of his time to this peculiar occupation: and states havenot always had this wisdom, even when their circumstances hadbecome such that the preservation of their existence required thatthey should have it.

A shepherd has a great deal of leisure; a husbandman, in therude state of husbandry, has some; an artificer or manufacturerhas none at all. The first may, without any loss, employ a greatdeal of his time in martial exercises; the second may employ some



931

part of it; but the last cannot employ a single hour in them withoutsome loss, and his attention to his own interest naturally leads himto neglect them altogether. These improvements in husbandry too,which the progress of arts and manufactures necessarilyintroduces, leave the husbandman as little leisure as the artificer.Military exercises come to be as much neglected by theinhabitants of the country as by those of the town, and the greatbody of the people becomes altogether unwarlike. That wealth, atthe same time, which always follows the improvements ofagriculture and manufactures, and which in reality is no morethan the accumulated produce of those improvements, provokesthe invasion of all their neighbours. An industrious, and upon thataccount a wealthy nation, is of all nations the most likely to beattacked; and unless the state takes some new measures for thepublic defence, the natural habits of the people render themaltogether incapable of defending themselves.

In these circumstances there seem to be but two methods bywhich the state can make any tolerable provision for the publicdefence.

It may either, first, by means of a very rigorous police, and inspite of the whole bent of the interest, genius, and inclinations ofthe people, enforce the practice of military exercises, and obligeeither all the citizens of the military age, or a certain number ofthem, to join in some measure the trade of a soldier to whateverother trade or profession they may happen to carry on.

Or, secondly, by maintaining and employing a certain numberof citizens in the constant practice of military exercises, it mayrender the trade of a soldier a particular trade, separate anddistinct from all others.



932

If the state has recourse to the first of those two expedients, itsmilitary force is said to consist in a militia; if to the second, it issaid to consist in a standing army. The practice of militaryexercises is the sole or principal occupation of the soldiers of astanding army, and the maintenance or pay which the stateaffords them is the principal and ordinary fund of theirsubsistence. The practice of military exercises is only theoccasional occupation of the soldiers of a militia, and they derivethe principal and ordinary fund of their subsistence from someother occupation. In a militia, the character of the labourer,artificer, or tradesman, predominates over that of the soldier; in astanding army, that of the soldier predominates over every othercharacter: and in this distinction seems to consist the essentialdifference between those two different species of military force.

Militias have been of several different kinds. In some countriesthe citizens destined for defending the states seem to have beenexercised 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 andpermanent officers. In the republics of ancient Greece and Rome,each citizen, as long as he remained at home, seems to havepractised his exercises either separately and independently, orwith such of his equals as he liked best, and not to have beenattached to any particular body of troops till he was actually calledupon to take the field. In other countries, the militia has not onlybeen exercised, but regimented. In England, in Switzerland, and, Ibelieve, in every other country of modern Europe where anyimperfect military force of this kind has been established, everymilitiaman is, even in time of peace, attached to a particular body



933

of troops, which performs its exercises under its own proper andpermanent officers.

Before the invention of firearms, that army was superior inwhich the soldiers had, each individually, the greatest skill anddexterity in the use of their arms. Strength and agility of bodywere of the highest consequence, and commonly determined thestate of battles. But this skill and dexterity in the use of their armscould be acquired only, in the same manner as fencing is atpresent, by practising, not in great bodies, but each manseparately, in a particular school, under a particular master, orwith his own particular equals and companions. Since theinvention of firearms, strength and agility of body, or evenextraordinary dexterity and skill in the use of arms, though theyare far from being of no consequence, are, however, of lessconsequence. The nature of the weapon, though it by no meansputs the awkward upon a level with the skilful, puts him morenearly so than he ever was before. All the dexterity and skill, it issupposed, which are necessary for using it, can be well enoughacquired by practising in great bodies.

Regularity, order, and prompt obedience to command arequalities which, in modern armies, are of more importancetowards determining the fate of battles than the dexterity and skillof the soldiers in the use of their arms. But the noise of firearms,the smoke, and the invisible death to which every man feelshimself every moment exposed as soon as he comes withincannon-shot, and frequently a long time before the battle can bewell said to be engaged, must render it very difficult to maintainany considerable degree of this regularity, order, and promptobedience, even in the beginning of a modern battle. In an ancient



934

battle there was no noise but what arose from the human voice;there was no smoke, there was no invisible cause of wounds ordeath. Every man, till some mortal weapon actually did approachhim, saw clearly that no such weapon was near him. In thesecircumstances, and among troops who had some confidence intheir own skill and dexterity in the use of their arms, it must havebeen a good deal less difficult to preserve some degree regularityand order, not only in the beginning, but through the wholeprogress of an ancient battle, and till one of the two armies wasfairly defeated. But the habits of regularity, order, and promptobedience to command can be acquired only by troops which areexercised in great bodies.

A militia, however, in whatever manner it may be eitherdisciplined 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 amonth, can never be so expert in the use of their arms as thosewho are exercised every day, or every other day; and though thiscircumstance may not be of so much consequence in modern as itwas in ancient times, yet the acknowledged superiority of thePrussian troops, owing, it is said, very much to their superiorexpertness in their exercise, may satisfy us that it is, even at thisday, of very considerable consequence.

The soldiers who are bound to obey their officer only once aweek or once a month, and who are at all other times at liberty tomanage their own affairs their own way, without being in anyrespect accountable to him, can never be under the same awe inhis presence, can never have the same disposition to readyobedience, with those whose whole life and conduct are every day



935

directed by him, and who every day even rise and go to bed, or atleast retire to their quarters, according to his orders. In what iscalled discipline, or in the habit of ready obedience, a militia mustalways be still more inferior to a standing army than it maysometimes be in what is called the manual exercise, or in themanagement and use of its arms. But in modern war the habit ofready and instant obedience is of much greater consequence thana considerable superiority in the management of arms.

Those militias which, like the Tartar or Arab militia, go to warunder the same chieftains whom they are accustomed to obey inpeace are by far the best. In respect for their officers, in the habitof ready obedience, they approach nearest to standing armies. Thehighland militia, when it served under its own chieftains, hadsome advantage of the same kind. As the highlanders, however,were not wandering, but stationary shepherds, as they had all afixed habitation, and were not, in peaceable times, accustomed tofollow their chieftain from place to place, so in time of war theywere less willing to follow him to any considerable distance, or tocontinue for any long time in the field. When they had acquiredany booty they were eager to return home, and his authority wasseldom sufficient to detain them. In point of obedience they werealways much inferior to what is reported of the Tartars and Arabs.As the highlanders too, from their stationary life, spend less oftheir time in the open air, they were always less accustomed tomilitary exercises, and were less expert in the use of their armsthan the Tartars and Arabs are said to be.

A militia of any kind, it must be observed, however, which hasserved for several successive campaigns in the field, becomes inevery respect a standing army. The soldiers are every day



936

exercised in the use of their arms, and, being constantly under thecommand of their officers, are habituated to the same promptobedience which takes place in standing armies. What they werebefore they took the field is of little importance. They necessarilybecome in every respect a standing army after they have passed afew campaigns in it. Should the war in America drag out throughanother campaign, the American militia may become in everyrespect a match for that standing army of which the valourappeared, in the last war, at least not inferior to that of thehardiest veterans of France and Spain.

This distinction being well understood, the history of all ages, itwill be found, bears testimony to the irresistible superiority whicha well-regulated standing army has over a militia.

One of the first standing armies of which we have any distinctaccount, in any well authenticated history, is that of Philip ofMacedon. His frequent wars with the Thracians, Illyrians,Thessalians, and some of the Greek cities in the neighbourhood ofMacedon, gradually formed his troops, which in the beginningwere probably militia, to the exact discipline of a standing army.When he was at peace, which he was very seldom, and never forany long time together, he was careful not to disband that army. Itvanquished and subdued, after a long and violent struggle, indeed,the gallant and well exercised militias of the principal republics ofancient Greece, and afterwards, with very little struggle, theeffeminate and ill-exercised militia of the great Persian empire.The fall of the Greek republics and of the Persian empire was theeffect of the irresistible superiority which a standing army hasover every sort of militia. It is the first great revolution in theaffairs of mankind of which history has preserved any distinct or



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circumstantial account.The fall of Carthage, and the consequent elevation of Rome, is

the second. All the varieties in the fortune of those two famousrepublics may very well be accounted for from the same cause.

From the end of the first to the beginning of the secondCarthaginian war the armies of Carthage were continually in thefield, and employed under three great generals, who succeededone another in the command: Hamilcar, his son-in-law Hasdrubal,and his son Hannibal; first in chastising their own rebelliousslaves, afterwards in subduing the revolted nations of Africa, and,lastly, in conquering the great kingdom of Spain. The army whichHannibal led from Spain into Italy must necessarily, in thosedifferent wars, have been gradually formed to the exact disciplineof a standing army.

The Romans, in the meantime, though they had not beenaltogether at peace, yet they had not, during this period, beenengaged in any war of very great consequence, and their militarydiscipline, it is generally said, was a good deal relaxed. The Romanarmies which Hannibal encountered at Trebia, Thrasymenus, andCannæ were militia opposed to a standing army. Thiscircumstance, it is probable, contributed more than any other todetermine the fate of those battles.

The standing army which Hannibal left behind him in Spainhad the like superiority over the militia which the Romans sent tooppose it, and in a few years, under the command of his brother,the younger Hasdrubal, expelled them almost entirely from thatcountry.

Hannibal was ill supplied from home. The Roman militia, beingcontinually in the field, became in the progress of the war a well



938

disciplined and well-exercised standing army, and the superiorityof Hannibal grew every day less and less. Hasdrubal judged itnecessary to lead the whole, or almost the whole of the standingarmy which he commanded in Spain, to the assistance of hisbrother in Italy. In this march he is said to have been misled by hisguides, and in a country which he did not know, was surprised andattacked by another standing army, in every respect equal orsuperior to his own, and was entirely defeated.

When Hasdrubal had left Spain, the great Scipio found nothingto oppose him but a militia inferior to his own. He conquered andsubdued that militia, and, in the course of the war, his own militianecessarily became a well-disciplined and well-exercised standingarmy. That standing army was afterwards carried to Africa, whereit found nothing but a militia to oppose it. In order to defendCarthage it became necessary to recall the standing army ofHannibal. The disheartened and frequently defeated Africanmilitia joined it, and, at the battle of Zama, composed the greaterpart of the troops of Hannibal. The event of that day determinedthe fate of the two rival republics.

From the end of the second Carthaginian war till the fall of theRoman republic, the armies of Rome were in every respectstanding armies. The standing army of Macedon made someresistance to their arms. In the height of their grandeur it costthem two great wars, and three great battles, to subdue that littlekingdom, of which the conquest would probably have been stillmore difficult had it not been for the cowardice of its last king. Themilitias of all the civilised nations of the ancient world, of Greece,of Syria, and of Egypt, made but a feeble resistance to the standingarmies of Rome.



939

The militias of some barbarous nations defended themselvesmuch better. The Scythian or Tartar militia, which Mithridatesdrew from the countries north of the Euxine and Caspian seas,were the most formidable enemies whom the Romans had toencounter after the second Carthaginian war. The Parthian andGerman militias, too, were always respectable, and upon severaloccasions gained very considerable advantages over the Romanarmies. In general, however, and when the Roman armies werewell commanded, they appear to have been very much superior;and if the Romans did not pursue the final conquest either ofParthia or Germany, it was probably because they judged that itwas not worth while to add those two barbarous countries to anempire which was already too large. The ancient Parthians appearto have been a nation of Scythian or Tartar extraction, and to havealways retained a good deal of the manners of their ancestors. Theancient Germans were, like the Scythians or Tartars, a nation ofwandering shepherds, who went to war under the same chiefswhom they were accustomed to follow in peace. Their militia wasexactly 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 theRoman armies. Its extreme severity was, perhaps, one of thosecauses. In the days of their grandeur, when no enemy appearedcapable of opposing them, their heavy armour was laid aside asunnecessarily burdensome, their laborious exercises wereneglected as unnecessarily toilsome. Under the Roman emperors,besides, the standing armies of Rome, those particularly whichguarded the German and Pannonian frontiers, became dangerousto their masters, against whom they used frequently to set up their



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own generals. In order to render them less formidable, accordingto some authors, Dioclesian, according to others, Constantine, firstwithdrew them from the frontier, where they had always beforebeen encamped in great bodies, generally of two or three legionseach, and dispersed them in small bodies through the differentprovincial towns, from whence they were scarce ever removed butwhen it became necessary to repel an invasion. Small bodies ofsoldiers quartered, in trading and manufacturing towns, andseldom removed from those quarters, became themselvestradesmen, artificers, and manufacturers. The civil came topredominate over the military character, and the standing armiesof Rome gradually degenerated into a corrupt, neglected, andundisciplined militia, incapable of resisting the attack of theGerman and Scythian militias, which soon afterwards invaded thewestern empire. It was only by hiring the militia of some of thosenations to oppose to that of others that the emperors were forsome time able to defend themselves. The fall of the westernempire is the third great revolution in the affairs of mankind ofwhich ancient history has preserved any distinct or circumstantialaccount. It was brought about by the irresistible superiority whichthe militia of a barbarous has over that of a civilised nation; whichthe militia of a nation of shepherds has over that of a nation ofhusbandmen, artificers, and manufacturers. The victories whichhave been gained by militias have generally been, not overstanding armies, but over other militias in exercise and disciplineinferior to themselves. Such were the victories which the Greekmilitia gained over that of the Persian empire; and such too werethose which in later times the Swiss militia gained over that of theAustrians and Burgundians.



941

The military force of the German and Scythian nations whoestablished themselves upon the ruins of the western empirecontinued for some time to be of the same kind in their newsettlements as it had been in their original country. It was a militiaof shepherds and husbandmen, which, in time of war, took thefield under the command of the same chieftains whom it wasaccustomed to obey in peace. It was, therefore, tolerably wellexercised, and tolerably well disciplined. As arts and industryadvanced, however, the authority of the chieftains graduallydecayed, and the great body of the people had less time to sparefor military exercises. Both the discipline and the exercise of thefeudal militia, therefore, went gradually to ruin, and standingarmies were gradually introduced to supply the place of it. Whenthe expedient of a standing army, besides, had once been adoptedby one civilised nation, it became necessary that all its neighboursshould follow their example. They soon found that their safetydepended upon their doing so, and that their own militia wasaltogether incapable of resisting the attack of such an army.

The soldiers of a standing army, though they may never haveseen an enemy, yet have frequently appeared to possess all thecourage of veteran troops and the very moment that they took thefield to have been fit to face the hardiest and most experiencedveterans. In 1756, when the Russian army marched into Poland,the valour of the Russian soldiers did not appear inferior to that ofthe Prussians, at that time supposed to be the hardiest and mostexperienced veterans in Europe. The Russian empire, however,had enjoyed a profound peace for near twenty years before, andcould at that time have very few soldiers who had ever seen anenemy. When the Spanish war broke out in 1739, England had



942

enjoyed a profound peace for about eight-and-twenty years. Thevalour of her soldiers, however, far from being corrupted by thatlong peace, was never more distinguished than in the attemptupon Carthagena, the first unfortunate exploit of that unfortunatewar. In a long peace the generals, perhaps, may sometimes forgettheir skill; but, where a well-regulated standing army has beenkept up, the soldiers seem never to forget their valour.

When a civilised nation depends for its defence upon a militia, itis at all times exposed to be conquered by any barbarous nationwhich happens to be in its neighbourhood. The frequentconquests of all the civilised countries in Asia by the Tartarssufficiently demonstrates the natural superiority which the militiaof a barbarous has over that of a civilised nation. A well-regulatedstanding army is superior to every militia. Such an army, as it canbest be maintained by an opulent and civilised nation, so it canalone defend such a nation against the invasion of a poor andbarbarous neighbour. It is only by means of a standing army,therefore, that the civilisation 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 acivilised country can be defended, so it is only by means of it that abarbarous country can be suddenly and tolerably civilised. Astanding army establishes, with an irresistible force, the law of thesovereign through the remotest provinces of the empire, andmaintains some degree of regular government in countries whichcould not otherwise admit of any. Whoever examines, withattention, the improvements which Peter the Great introducedinto the Russian empire, will find that they almost all resolvethemselves into the establishment of a well regulated standing



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army. It is the instrument which executes and maintains all hisother regulations. That degree of order and internal peace whichthat empire has ever since enjoyed is altogether owing to theinfluence of that army.

Men of republican principles have been jealous of a standingarmy as dangerous to liberty. It certainly is so wherever theinterest of the general and that of the principal officers are notnecessarily connected with the support of the constitution of thestate. The standing army of Caesar destroyed the Roman republic.The standing army of Cromwell turned the Long Parliament out ofdoors. But where the sovereign is himself the general, and theprincipal nobility and gentry of the country the chief officers of thearmy, where the military force is placed under the command ofthose who have the greatest interest in the support of the civilauthority, because they have themselves the greatest share of thatauthority, a standing army can never be dangerous to liberty. Onthe contrary, it may in some cases be favourable to liberty. Thesecurity which it gives to the sovereign renders unnecessary thattroublesome jealousy, which, in some modern republics, seems towatch over the minutest actions, and to be at all times ready todisturb the peace of every citizen. Where the security of themagistrate, though supported by the principal people of thecountry, is endangered by every popular discontent; where a smalltumult is capable of bringing about in a few hours a greatrevolution, the whole authority of government must be employedto suppress and punish every murmur and complaint against it.To a sovereign, on the contrary, who feels himself supported, notonly by the natural aristocracy of the country, but by a well-regulated standing army, the rudest, the most groundless, and the



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most licentious remonstrances can give little disturbance. He cansafely pardon or neglect them, and his consciousness of his ownsuperiority naturally disposes him to do so. That degree of libertywhich approaches to licentiousness can be tolerated only incountries where the sovereign is secured by a well-regulatedstanding army. It is in such countries only that the public safetydoes not require that the sovereign should be trusted with anydiscretionary power for suppressing even the impertinentwantonness of this licentious liberty.

The first duty of the sovereign, therefore, that of defending thesociety from the violence and injustice of other independentsocieties, grows gradually more and more expensive as the societyadvances in civilisation. The military force of the society, whichoriginally cost the sovereign no expense either in time of peace orin time of war, must, in the progress of improvement, first bemaintained by him in time of war, and afterwards even in time ofpeace.

The great change introduced into the art of war by theinvention of firearms has enhanced still further both the expenseof exercising and disciplining any particular number of soldiers intime of peace, and that of employing them in time of war. Boththeir arms and their ammunition are become more expensive. Amusket is a more expensive machine than a javelin or a bow andarrows; a cannon or a mortar than a balista or a catapulta. Thepowder which is spent in a modern review is lost irrecoverably,and occasions a very considerable expense. The javeline andarrows which were thrown or shot in an ancient one could easilybe picked up again, and were besides of very little value. Thecannon and the mortar are not only much dearer, but much



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heavier machines than the balista or catapulta, and require agreater expense, not only to prepare them for the field, but tocarry them to it. As the superiority of the modern artillery too overthat of the ancients is very great, it has become much moredifficult, and consequently much more expensive, to fortify a townso as to resist even for a few weeks the attack of that superiorartillery. In modern times many different causes contribute torender the defence of the society more expensive. Theunavoidable effects of the natural progress of improvement have,in this respect, been a good deal enhanced by a great revolution inthe art of war, to which a mere accident, the invention ofgunpowder, seems to have given occasion.

In modern war the great expense of firearms gives an evidentadvantage to the nation which can best afford that expense, andconsequently to an opulent and civilised over a poor andbarbarous nation. In ancient times the opulent and civilised foundit difficult to defend themselves against the poor and barbarousnations.

In modern times the poor and barbarous find it difficult todefend themselves against the opulent and civilised. The inventionof firearms, an invention which at first sight appears to be sopernicious, is certainly favourable both to the permanency and tothe extension of civilization.



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PART 2

Of the Expense of Justice

The second duty of the sovereign, that of protecting, as far aspossible, every member of the society from the injustice oroppression of every other member of it, or the duty of establishingan exact administration of justice, requires, too, very differentdegrees of expense in the different periods of society.

Among nations of hunters, as there is scarce any property, or atleast none that exceeds the value of two or three days’ labour, sothere is seldom any established magistrate or any regularadministration of justice. Men who have no property can injureone another only in their persons or reputations. But when oneman kills, wounds, beats, or defames another, though he to whomthe injury is done suffers, he who does it receives no benefit. It isotherwise with the injuries to property. The benefit of the personwho does the injury is often equal to the loss of him who suffers it.Envy, malice, or resentment are the only passions which canprompt one man to injure another in his person or reputation. Butthe greater part of men are not very frequently under theinfluence of those passions, and the very worst of men are so onlyoccasionally. As their gratification too, how agreeable soever itmay be to certain characters, is not attended with any real orpermanent advantage, it is in the greater part of men commonlyrestrained by prudential considerations. Men may live together insociety with some tolerable degree of security, though there is nocivil magistrate to protect them from the injustice of thosepassions. But avarice and ambition in the rich, in the poor the



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hatred of labour and the love of present ease and enjoyment, arethe passions which prompt to invade property, passions muchmore steady in their operation, and much more universal in theirinfluence.

Wherever there is great property there is great inequality. Forone very rich man there must be at least five hundred poor, andthe affluence of the few supposes the indigence of the many. Theaffluence of the rich excites the indignation of the poor, who areoften both driven by want, and prompted by envy, to invade hispossessions. It is only under the shelter of the civil magistrate thatthe owner of that valuable property, which is acquired by thelabour of many years, or perhaps of many successive generations,can sleep a single night in security. He is at all times surroundedby unknown enemies, whom, though he never provoked, he cannever appease, and from whose injustice he can be protected onlyby the powerful arm of the civil magistrate continually held up tochastise it. The acquisition of valuable and extensive property,therefore, necessarily requires the establishment of civilgovernment. Where there is no property, or at least none thatexceeds the value of two or three days’ labour, civil government isnot so necessary.

Civil government supposes a certain subordination. But as thenecessity of civil government gradually grows up with theacquisition of valuable property, so the principal causes whichnaturally introduce subordination gradually grow up with thegrowth of that valuable property.

The causes or circumstances which naturally introducesubordination, or which naturally, and antecedent to any civilinstitution, give some men some superiority over the greater part



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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; ofwisdom and virtue, of prudence, justice, fortitude, and moderationof mind. The qualifications of the body, unless supported by thoseof the mind, can give little authority in any period of society. He isa very strong man, who, by mere strength of body, can force twoweak ones to obey him. The qualifications of the mind can alonegive a very great authority. They are, however, invisible qualities;always disputable, and generally disputed. No society, whetherbarbarous or civilised, has ever found it convenient to settle therules of precedency of rank and subordination according to thoseinvisible qualities; but according to something that is more plainand palpable.

The second of those causes or circumstances is the superiorityof age. An old man, provided his age is not so far advanced as togive suspicion of dotage, is everywhere more respected than ayoung man of equal rank, fortune, and abilities. Among nations ofhunters, such as the native tribes of North America, age is the solefoundation of rank and precedency. Among them, father is theappellation of a superior; brother, of an equal; and son, of aninferior. In the most opulent and civilised nations, age regulatesrank among those who are in every other respect equal, andamong 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 everything whichcannot be divided, but must go entire to one person, such as a titleof honour, is in most cases given to the eldest. Age is a plain andpalpable quality which admits of no dispute.



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The third of those causes or circumstances is the superiority offortune. The authority of riches, however, though great in everyage of society, is perhaps greatest in the rudest age of societywhich admits of any considerable inequality of fortune. A Tartarchief, the increase of whose herds and stocks is sufficient tomaintain a thousand men, cannot well employ that increase in anyother way than in maintaining a thousand men. The rude state ofhis society does not afford him any manufactured produce, anytrinkets or baubles of any kind, for which he can exchange thatpart of his rude produce which is over and above his ownconsumption. The thousand men whom he thus maintains,depending entirely upon him for their subsistence, must both obeyhis orders in war, and submit to his jurisdiction in peace. He isnecessarily both their general and their judge, and hischieftainship is the necessary effect of the superiority of hisfortune. In an opulent and civilised society, a man may possess amuch greater fortune and yet not be able to command a dozenpeople. Though the produce of his estate may be sufficient tomaintain, and may perhaps actually maintain, more than athousand people, yet as those people pay for everything whichthey get from him, as he gives scarce anything to anybody but inexchange for an equivalent, there is scarce anybody who considershimself as entirely dependent upon him, and his authority extendsonly over a few menial servants. The authority of fortune,however, is very great even in an opulent and civilised society.That it is much greater than that either of age or of personalqualities has been the constant complaint of every period ofsociety which admitted of any considerable inequality of fortune.The first period of society, that of hunters, admits of no such



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inequality. Universal poverty establishes their universal equality,and the superiority either of age or of personal qualities are thefeeble but the sole foundations of authority and subordination.There is therefore little or no authority or subordination in thisperiod of society. The second period of society, that of shepherds,admits of very great inequalities of fortune, and there is no periodin which the superiority of fortune gives so great authority to thosewho possess it. There is no period accordingly in which authorityand subordination are more perfectly established. The authority ofan Arabian sherif is very great; that of a Tartar khan altogetherdespotical.

The fourth of those causes or circumstances is the superiority ofbirth. Superiority of birth supposes an ancient superiority offortune in the family of the person who claims it. All families areequally ancient; and the ancestors of the prince, though they maybe better known, cannot well be more numerous than those of thebeggar.

Antiquity of family means everywhere the antiquity either ofwealth, or of that greatness which is commonly either foundedupon wealth, or accompanied with it. Upstart greatness iseverywhere less respected than ancient greatness. The hatred ofusurpers, the love of the family of an ancient monarch, are, in agreat measure, founded upon the contempt which men naturallyhave for the former, and upon their veneration for the latter. As amilitary officer submits without reluctance to the authority of asuperior by whom he has always been commanded, but cannotbear that his inferior should be set over his head, so men easilysubmit to a family to whom they and their ancestors have alwayssubmitted; but are fired with indignation when another family, in



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whom they had never acknowledged any such superiority,assumes a dominion over them.

The distinction of birth, being subsequent to the inequality offortune, can have no place in nations of hunters, among whom allmen, being equal in fortune, must likewise be very nearly equal inbirth. The son of a wise and brave man may, indeed, even amongthem, be somewhat more respected than a man of equal merit whohas the misfortune to be the son of a fool or a coward. Thedifference, however, will not be very great; and there never was, Ibelieve, a great family in the world whose illustration was entirelyderived from the inheritance of wisdom and virtue.

The distinction of birth not only may, but always does takeplace among nations of shepherds. Such nations are alwaysstrangers to every sort of luxury, and great wealth can scarce everbe dissipated among them by improvident profusion. There are nonations accordingly who abound more in families revered andhonoured on account of their descent from a long race of great andillustrious ancestors, because there are no nations among whomwealth is likely to continue longer in the same families.

Birth and fortune are evidently the two circumstances whichprincipally set one man above another. They are the two greatsources of personal distinction, and are therefore the principalcauses which naturally establish authority and subordinationamong men. Among nations of shepherds both those causesoperate with their full force. The great shepherd or herdsman,respected on account of his great wealth, and of the great numberof those who depend upon him for subsistence, and revered onaccount of the nobleness of his birth, and of the immemorialantiquity of his illustrious family, has a natural authority over all



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the inferior shepherds or herdsmen of his horde or clan. He cancommand the united force of a greater number of people than anyof them. His military power is greater than that of any of them. Intime of war they are all of them naturally disposed to musterthemselves under his banner, rather than under that of any otherperson, and his birth and fortune thus naturally procure to himsome sort of executive power. By commanding, too, the unitedforce of a greater number of people than any of them, he is bestable to compel any one of them who may have injured another tocompensate the wrong. He is the person, therefore, to whom allthose who are too weak to defend themselves naturally look up forprotection. It is to him that they naturally complain of the injurieswhich they imagine have been done to them, and his interpositionin such cases is more easily submitted to, even by the personcomplained of, than that of any other person would be. His birthand fortune thus naturally procure him some sort of judicialauthority.

It is in the age of shepherds, in the second period of society,that the inequality of fortune first begins to take place, andintroduces among men a degree of authority and subordinationwhich could not possibly exist before. It thereby introduces somedegree of that civil government which is indispensably necessaryfor its own preservation: and it seems to do this naturally, andeven independent of the consideration of that necessity. Theconsideration of that necessity comes no doubt afterwards tocontribute very much to maintain and secure that authority andsubordination. The rich, in particular, are necessarily interested tosupport that order of things which can alone secure them in thepossession of their own advantages. Men of inferior wealth



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combine to defend those of superior wealth in the possession oftheir property, in order that men of superior wealth may combineto defend them in the possession of theirs. All the inferiorshepherds and herdsmen feel that the security of their own herdsand flocks depends upon the security of those of the greatshepherd or herdsman; that the maintenance of their lesserauthority depends upon that of his greater authority, and thatupon their subordination to him depends his power of keepingtheir inferiors in subordination to them. They constitute a sort oflittle nobility, who feel themselves interested to defend theproperty and to support the authority of their own little sovereignin order that he may be able to defend their property and tosupport their authority. Civil government, so far as it is institutedfor the security of property, is in reality instituted for the defenceof the rich against the poor, or of those who have some propertyagainst those who have none at all.

The judicial authority of such a sovereign, however, far frombeing a cause of expense, was for a long time a source of revenueto him. The persons who applied to him for justice were alwayswilling to pay for it, and a present never failed to accompany apetition.

After the authority of the sovereign, too, was thoroughlyestablished, the person found guilty, over and above thesatisfaction which he was obliged to make to the party, waslikewise forced to pay an amercement to the sovereign. He hadgiven trouble, he had disturbed, he had broke the peace of his lordthe king, and for those offences an amercement was thought due.In the Tartar governments of Asia, in the governments of Europewhich were founded by the German and Scythian nations who



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overturned the Roman empire, the administration of justice was aconsiderable source of revenue, both to the sovereign and to allthe lesser chiefs or lords who exercised under him any particularjurisdiction, either over some particular tribe or clan, or over someparticular territory or district. Originally both the sovereign andthe inferior chiefs used to exercise this jurisdiction in their ownpersons. Afterwards they universally found it convenient todelegate it to some substitute, bailiff, or judge. This substitute,however, was still obliged to account to his principal or constituentfor the profits of the jurisdiction.

Whoever reads the instructions1 which were given to the judgesof the circuit in the time of Henry II will see clearly that thosejudges were a sort of itinerant factors, sent round the country forthe purpose of levying certain branches of the king’s revenue. Inthose days the administration of justice not only afforded a certainrevenue to the sovereign, but to procure this revenue seems tohave been one of the principal advantages which he proposed toobtain by the administration of justice.

This scheme of making the administration of justicesubservient to the purposes of revenue could scarce fail to beproductive of several very gross abuses. The person who appliedfor justice with a large present in his hand was likely to getsomething more than justice; while he who applied for it with asmall one was likely to get something less. Justice, too, mightfrequently be delayed in order that this present might be repeated.The amercement, besides, of the person complained of, mightfrequently suggest a very strong reason for finding him in the

1They are to be found in Tyrrell’s History of England.



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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 exercised his judicial authority in

his own person, how much soever he might abuse it, it must havebeen scarce possible to get any redress, because there couldseldom be anybody powerful enough to call him to account. Whenhe exercised it by a bailiff, indeed, redress might sometimes behad. If it was for his own benefit only that the bailiff had beenguilty of any act of injustice, the sovereign himself might notalways be unwilling to punish him, or to oblige him to repair thewrong. But if it was for the benefit of his sovereign, if it was inorder to make court to the person who appointed him and whomight prefer him, that he had committed any act of oppression,redress would upon most occasions be as impossible as if thesovereign had committed it himself. In all barbarous governments,accordingly, in all those ancient governments of Europe inparticular which were founded upon the ruins of the Romanempire, the administration of justice appears for a long time tohave been extremely corrupt, far from being quite equal andimpartial even under the best monarchs, and altogether profligateunder the worst.

Among nations of shepherds, where the sovereign or chief isonly the greatest shepherd or herdsman of the horde or clan, he ismaintained in the same manner as any of his vassals or subjects,by the increase of his own herds or flocks. Among those nations ofhusbandmen who are but just come out of the shepherd state, andwho are not much advanced beyond that state, such as the Greektribes appear to have been about the time of the Trojan war, and



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our German and Scythian ancestors when they first settled uponthe ruins of the western empire, the sovereign or chief is, in thesame manner, only the greatest landlord of the country, and ismaintained, in the same manner as any other landlord, by arevenue derived from his own private estate, or from what, inmodern Europe, was called the demesne of the crown. Hissubjects, upon ordinary occasions, contributed nothing to hissupport, except when, in order to protect them from theoppression of some of their fellow-subjects, they stand in need ofhis authority. The presents which they make him upon suchoccasions constitute the whole ordinary revenue, the whole of theemoluments which, except perhaps upon some very extraordinaryemergencies, he derives from his dominion over them. WhenAgamemnon, in Homer, offers to Achilles for his friendship thesovereignty of seven Greek cities, the sole advantage which hementions as likely to be derived from it was that the people wouldhonour him with presents. As long as such presents, as long as theemoluments of justice, or what may be called the fees of court,constituted in this manner the whole ordinary revenue which thesovereign derived from his sovereignty, it could not well beexpected, it could not even decently be proposed, that he shouldgive them up altogether. It might, and it frequently was proposed,that he should regulate and ascertain them. But after they hadbeen so regulated and ascertained, how to hinder a person whowas all-powerful from extending them beyond those regulationswas still very difficult, not to say impossible. During thecontinuance of this state of things, therefore, the corruption ofjustice, naturally resulting from the arbitrary and uncertain natureof those presents, scarce admitted of any effectual remedy.



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But when from different causes, chiefly from the continuallyincreasing expenses of defending the nation against the invasionof other nations, the private estate of the sovereign had becomealtogether insufficient for defraying the expense of thesovereignty, and when it had become necessary that the peopleshould, for their own security, contribute towards this expense bytaxes of different kinds, it seems to have been very commonlystipulated that no present for the administration of justice should,under any pretence, be accepted either by the sovereign, or by hisbailiffs and substitutes, the judges. Those presents, it seems tohave been supposed, could more easily be abolished altogetherthan effectually regulated and ascertained. Fixed salaries wereappointed to the judges, which were supposed to compensate tothem the loss of whatever might have been their share of theancient emoluments of justice, as the taxes more thancompensated to the sovereign the loss of his. Justice was then saidto be administered gratis.

Justice, however, never was in reality administered gratis inany country. Lawyers and attorneys, at least, must always be paidby the parties; and, if they were not, they would perform their dutystill worse than they actually perform it. The fees annually paid tolawyers and attorneys amount, in every court, to a much greatersum than the salaries of the judges. The circumstance of thosesalaries being paid by the crown can nowhere much diminish thenecessary expense of a law-suit. But it was not so much todiminish the expense, as to prevent the corruption of justice, thatthe judges were prohibited from receiving any present or fee fromthe parties.

The office of judge is in itself so very honourable that men are



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willing to accept of it, though accompanied with very smallemoluments. The inferior office of justice of peace, thoughattended with a good deal of trouble, and in most cases with noemoluments at all, is an object of ambition to the greater part ofour country gentlemen. The salaries of all the different judges,high and low, together with the whole expense of theadministration and execution of justice, even where it is notmanaged with very good economy, makes, in any civilised country,but a very inconsiderable part of the whole expense ofgovernment.

The whole expense of justice, too, might easily be defrayed bythe fees of court; and, without exposing the administration ofjustice to any real hazard of corruption, the public revenue mightthus be discharged from a certain, though, perhaps, but a smallincumbrance. It is difficult to regulate the fees of court effectuallywhere a person so powerful as the sovereign is to share in them,and to derive any considerable part of his revenue from them. It isvery easy where the judge is the principal person who can reapany benefit from them. The law can very easily oblige the judge torespect the regulation, though it might not always be able to makethe sovereign respect it. Where the fees of court are preciselyregulated and ascertained, where they are paid all at once, at acertain period of every process, into the hands of a cashier orreceiver, to be by him distributed in certain known proportionsamong the different judges after the process is decided, and not tillit is decided, there seems to be no more danger of corruption thanwhere such fees are prohibited altogether. Those fees, withoutoccasioning any considerable increase in the expense of a lawsuit,might be rendered fully sufficient for defraying the whole expense



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of justice. By not being paid to the judges till the process wasdetermined, they might be some incitement to the diligence of thecourt in examining and deciding it. In courts which consisted of aconsiderable number of judges, by proportioning the share of eachjudge to the number of hours and days which he had employed inexamining the process, either in the court or in a committee byorder of the court, those fees might give some encouragement tothe diligence of each particular judge. Public services are neverbetter performed than when their reward comes only inconsequence of their being performed, and is proportioned to thediligence employed in performing them. In the differentparliaments of France, the fees of court (called épices andvacations) constitute the far greater part of the emoluments of thejudges. After all deductions are made, the net salary paid by thecrown to a counsellor or judge in the Parliament of Toulouse, inrank and dignity the second parliament of the kingdom, amountsonly to a hundred and fifty livres, about six pounds eleven shillingssterling a year. About seven years ago that sum was in the sameplace the ordinary yearly wages of a common footman. Thedistribution of those épices, too, is according to the diligence of thejudges. 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 veryconvenient 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 principalsupport of the different courts of justice in England. Each courtendeavoured to draw to itself as much business as it could, andwas, upon that account, willing to take cognisance of many suits



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which were not originally intended to fall under its jurisdiction.The Court of King’s Bench, instituted for the trial of criminalcauses only, took cognisance of civil suits; the plaintiff pretendingthat the defendant, in not doing him justice, had been guilty ofsome trespass or misdemeanour. The Court of Exchequer,instituted for the levying of the king’s revenue, and for enforcingthe payment of such debts only as were due to the king, tookcognisance of all other contract debts; the plaintiff alleging that hecould not pay the king because the defendant would not pay him.In consequence of such fictions it came, in many cases, to dependaltogether upon the parties before what court they would chooseto have their cause tried; and each court endeavoured, by superiordispatch and impartiality, to draw to itself as many causes as itcould. The present admirable constitution of the courts of justicein England was, perhaps, originally in a great measure formed bythis emulation which anciently took place between their respectivejudges; each judge endeavouring to give, in his own court, thespeediest and most effectual remedy which the law would admitfor every sort of injustice. Originally the courts of law gavedamages only for breach of contract. The Court of Chancery, as acourt of conscience, first took upon it to enforce the specificperformance of agreements. When the breach of contractconsisted in the non-payment of money, the damage sustainedcould 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 wassufficient. It was not so in others. When the tenant sued his lordfor having unjustly outed him of his lease, the damages which herecovered were by no means equivalent to the possession of the



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land. Such causes, therefore, for some time, went all to the Courtof Chancery, to the no small loss of the courts of law. It was todraw back such causes to themselves that the courts of law aresaid to have invented the artificial and fictitious Writ of Ejectment,the most effectual remedy for an unjust outer or dispossession ofland.

A stamp-duty upon the law proceedings of each particularcourt, to be levied by that court, and applied towards themaintenance of the judges and other officers belonging to it,might, in the same manner, afford revenue sufficient for defrayingthe expense of the administration of justice, without bringing anyburden upon the general revenue of the society. The judgesindeed might, in this case, be under the temptation of multiplyingunnecessarily the proceedings upon every cause, in order toincrease, as much as possible, the produce of such a stamp-duty. Ithas been the custom in modern Europe to regulate, upon mostoccasions, the payment of the attorneys and clerks of courtaccording to the number of pages which they had occasion towrite; the court, however, requiring that each page should containso many lines, and each line so many words. In order to increasetheir payment, the attorneys and clerks have contrived to multiplywords beyond all necessity, to the corruption of the law languageof, I believe, every court of justice in Europe. A like temptationmight perhaps occasion a like corruption in the form of lawproceedings.

But whether the administration of justice be so contrived as todefray its own expense, or whether the judges be maintained byfixed salaries paid to them from some other fund, it does not seemnecessary that the person or persons entrusted with the executive



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power should be charged with the management of that fund, orwith the payment of those salaries. That fund might arise from therent of landed estates, the management of each estate beingentrusted 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 entrustedto the court which was to be maintained by it. A part, thoughindeed but a small part, of the salary of the judges of the Court ofSession in Scotland arises from the interest of a sum of money.The necessary instability of such a fund seems, however, to renderit an improper one for the maintenance of an institution whichought to last for ever.

The separation of the judicial from the executive power seemsoriginally to have arisen from the increasing business of thesociety, in consequence of its increasing improvement. Theadministration of justice became so laborious and so complicated aduty as to require the undivided attention of the persons to whomit was entrusted. The person entrusted with the executive powernot having leisure to attend to the decision of private causeshimself, a deputy was appointed to decide them in his stead. In theprogress of the Roman greatness, the consul was too muchoccupied with the political affairs of the state to attend to theadministration of justice. A praetor, therefore, was appointed toadminister it in his stead. In the progress of the Europeanmonarchies which were founded upon the ruins of the Romanempire, the sovereigns and the great lords came universally toconsider the administration of justice as an office both toolaborious and too ignoble for them to execute in their ownpersons. They universally, therefore, discharged themselves of it



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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 isvulgarly called polities. The persons entrusted with the greatinterests of the state may, even without any corrupt views,sometimes imagine it necessary to sacrifice to those interests therights of a private man. But upon the impartial administration ofjustice depends the liberty of every individual, the sense which hehas of his own security. In order to make every individual feelhimself perfectly secure in the possession of every right whichbelongs to him, it is not only necessary that the judicial should beseparated from the executive power, but that it should berendered as much as possible independent of that power. Thejudge should not be liable to be removed from his office accordingto the caprice of that power. The regular the good-will or evenupon the good economy payment of his salary should not dependupon of that power.

PART 3

Of the Expense of Public Works and Public Institutions

The third and last duty of the sovereign or commonwealth is thatof erecting and maintaining those public institutions and thosepublic works, which, though they may be in the highest degreeadvantageous to a great society, are, however, of such a naturethat the profit could never repay the expense to any individual orsmall number of individuals, and which it therefore cannot beexpected that any individual or small number of individualsshould erect or maintain. The performance of this duty requires,



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too, very different degrees of expense in the different periods ofsociety.

After the public institutions and public works necessary for thedefence of the society, and for the administration of justice, both ofwhich have already been mentioned, the other works andinstitutions of this kind are chiefly those for facilitating thecommerce of the society, and those for promoting the instructionof the people. The institutions for instruction are of two kinds:those for the education of youth, and those for the instruction ofpeople of all ages. The consideration of the manner in which theexpense of those different sorts of public, works and institutionsmay be most properly defrayed will divide this third part of thepresent chapter into three different articles.

ARTICLE 1

Of the Public Works and Institutions for facilitating theCommerce of the Society And, first, of those which are

necessary for facilitating Commerce in general.

That the erection and maintenance of the public works whichfacilitate the commerce of any country, such as good roads,bridges, navigable canals, harbours, etc., must require verydifferent degrees of expense in the different periods of society isevident without any proof. The expense of making andmaintaining the public roads of any country must evidentlyincrease with the annual produce of the land and labour of thatcountry, or with the quantity and weight of the goods which itbecomes necessary to fetch and carry upon those roads. The



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strength of a bridge must be suited to the number and weight ofthe carriages which are likely to pass over it. The depth and thesupply of water for a navigable canal must be proportioned to thenumber and tonnage of the lighters which are likely to carry goodsupon it; the extent of a harbour to the number of the shippingwhich are likely to take shelter in it.

It does not seem necessary that the expense of those publicworks should be defrayed from that public revenue, as it iscommonly called, of which the collection and application is inmost countries assigned to the executive power. The greater partof such public works may easily be so managed as to afford aparticular revenue sufficient for defraying their own expense,without bringing any burden upon the general revenue of thesociety.

A highway, a bridge, a navigable canal, for example, may inmost cases be both made and maintained by a small toll upon thecarriages 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, inmany countries, not only defrays its own expense, but affords asmall revenue or seignorage to the sovereign. The post-office,another institution for the same purpose, over and abovedefraying its own expense, affords in almost all countries a veryconsiderable revenue to the sovereign.

When the carriages which pass over a highway or a bridge, andthe lighters which sail upon a navigable canal, pay toll inproportion to their weight or their tonnage, they pay for themaintenance of those public works exactly in proportion to thewear and tear which they occasion of them. It seems scarce



966

possible to invent a more equitable way of maintaining suchworks. This tax or toll too, though it is advanced by the carrier, isfinally paid by the consumer, to whom it must always be chargedin the price of the goods. As the expense of carriage, however, isvery much reduced by means of such public works, the goods,notwithstanding the toll, come cheaper to the consumer than the;could otherwise have done; their price not being so much raisedby the toll as it is lowered by the cheapness of the carriage. Theperson who finally pays this tax, therefore, gains by theapplication more than he loses by the payment of it. His paymentis exactly in proportion to his gain. It is in reality no more than apart of that gain which he is obliged to give up in order to get therest. It seems impossible to imagine a more equitable method ofraising a tax.

When the toll upon carriages of luxury upon coaches, post-chaises, etc., is made somewhat higher in proportion to theirweight than upon carriages of necessary use, such as carts,waggons, etc., the indolence and vanity of the rich is made tocontribute in a very easy manner to the relief of the poor, byrendering cheaper the transportation of heavy goods to all thedifferent parts of the country.

When high roads, bridges, canals, etc., are in this manner madeand supported by the commerce which is carried on by means ofthem, they can be made only where that commerce requires them,and consequently where it is proper to make them. Their expensestoo, their grandeur and magnificence, must be suited to what thatcommerce can afford to pay. They must be made consequently asit is proper to make them. A magnificent high road cannot bemade through a desert country where there is little or no



967

commerce, or merely because it happens to lead to the countryvilla of the intendant of the province, or to that of some great lordto whom the intendant finds it convenient to make his court. Agreat bridge cannot be thrown over a river at a place wherenobody passes, or merely to embellish the view from the windowsof a neighbouring palace: things which sometimes happen incountries where works of this kind are carried on by any otherrevenue than that which they themselves are capable of affording.

In several different parts of Europe the ton or lock-duty upon acanal is the property of private persons, whose private interestobliges them to keep up the canal. If it is not kept in tolerableorder, the navigation necessarily ceases altogether, and along withit the whole profit which they can make by the tolls. If those tollswere put under the management of commissioners, who hadthemselves no interest in them, they might be less attentive to themaintenance of the works which produced them. The canal ofLanguedoc cost the King of France and the province upwards ofthirteen millions of livres, which (at twenty-eight livres the markof 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 wasfound, of keeping it in constant repair was to make a present of thetolls to Riquet the engineer, who planned and conducted the work.Those tolls constitute at present a very large estate to the differentbranches of the family of that gentleman, who have, therefore, agreat interest to keep the work in constant repair. But had thosetolls been put under the management of commissioners, who hadno such interest, they might perhaps have been dissipated inornamental and unnecessary expenses, while the most essential



968

parts of the work were allowed to go to ruin.The tolls for the maintenance of a high road 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 yetcontinue to levy very nearly the same tolls. It is proper, therefore,that the tolls for the maintenance of such a work should be putunder the management of commissioners or trustees.

In Great Britain, the abuses which the trustees have committedin the management of those tolls have in many cases been veryjustly complained of. At many turnpikes, it has been said, themoney levied is more than double of what is necessary forexecuting, in the completest manner, the work which is oftenexecuted in very slovenly manner, and sometimes not executed atall. The system of repairing the high roads by tolls of this kind, itmust be observed, is not of very long standing. We should notwonder, therefore, if it has not yet been brought to that degree ofperfection of which it seems capable. If mean and improperpersons are frequently appointed trustees, and if proper courts ofinspection and account have not yet been established forcontrolling their conduct, and for reducing the tolls to what isbarely sufficient for executing the work to be done by them, therecency of the institution both accounts and apologizes for thosedefects, of which, by the wisdom of Parliament, the greater partmay in due time be gradually remedied.

The money levied at the different turnpikes in Great Britain issupposed to exceed so much what is necessary for repairing theroads, that the savings, which, with proper economy, might be



969

made from it, have been considered, even by some ministers, as avery great resource which might at some time or another beapplied to the exigencies of the state. Government, it has beensaid, by taking the management of the turnpikes into its ownhands, and by employing the soldiers, who would work for a verysmall addition to their pay, could keep the roads in good order at amuch less expense than it can be done by trustees, who have noother workmen to employ but such as derive their wholesubsistence from their wages. A great revenue, half a millionperhaps,1 it has been pretended, might in this manner be gainedwithout laying any new burden upon the people; and the turnpikeroads might be made to contribute to the general expense of thestate, in the same manner as the post office does at present.

That a considerable revenue might be gained in this manner Ihave no doubt, though probably not near so much as theprojectors 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 everbe considered as one of the resources for supplying the exigenciesof the state, they would certainly be augmented as thoseexigencies were supposed to require. According to the policy ofGreat Britain, therefore, they would probably be augmented veryfast. The facility with which a great revenue could be drawn from

1Since 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 net 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.



970

them would probably encourage administration to recur veryfrequently to this resource. Though it may, perhaps, be more thandoubtful whether half a million could by any economy be savedout of the present tolls, it can scarce be doubted but that a millionmight be saved out of them if they were doubled: and perhaps twomillions if they were tripled.1 This great revenue, too, might belevied without the appointment of a single new officer to collectand receive it. But the turnpike tolls being continually augmentedin this manner, instead of facilitating the inland commerce of thecountry as at present, would soon become a very greatincumbrance upon it. The expense of transporting all heavy goodsfrom one part of the country to another would soon be so muchincreased, the market for all such goods, consequently, would soonbe so much narrowed, that their production would be in a greatmeasure discouraged, and the most important branches of thedomestic 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 ofrepairing the roads, is a very unequal one when applied to anyother purpose, or to supply the common exigencies of the state.When it is applied to the sole purpose above mentioned, eachcarriage is supposed to pay exactly for the wear and tear whichthat carriage occasions of the roads. But when it is applied to anyother purpose, each carriage is supposed to pay for more than thatwear and tear, and contributes to the supply of some otherexigency of the state. But as the turnpike toll raises the price of

1I have now good reasons to believe that all these conjectural sums are by

much too large.



971

goods in proportion to their weight, and not to their value, it ischiefly paid by the consumers of coarse and bulky, not by those ofprecious and light, commodities. Whatever exigency of the statetherefore this tax might be intended to supply, that exigencywould be chiefly supplied at the expense of the poor, not the rich;at the expense of those who are least able to supply it, not of thosewho are most able.

Thirdly, if government should at any time neglect thereparation of the high roads, it would be still more difficult than itis at present to compel the proper application of any part of theturnpike tolls. A large revenue might thus be levied upon thepeople without any part of it being applied to the only purpose towhich a revenue levied in this manner ought ever to be applied. Ifthe meanness and poverty of the trustees of turnpike roads renderit sometimes difficult at present to oblige them to repair theirwrong, their wealth and greatness would render it ten times moreso in the case which is here supposed.

In France, the funds destined for the reparation of high roadsare under the immediate direction of the executive power. Thosefunds consist partly in a certain number of days’ labour which thecountry people are in most parts of Europe obliged to give to thereparation of the highways, and partly in such a portion of thegeneral revenue of the state as the king chooses to spare from hisother expenses.

By the ancient law of France, as well as by that of most otherparts of Europe, the labour of the country people was under thedirection of a local or provincial magistracy, which had noimmediate dependency upon the king’s council. But by thepresent practice both the labour of the people, and whatever other



972

fund the king may choose to assign for the reparation of the highroads in any particular province or generality, are entirely underthe management of the intendant; an officer who is appointed andremoved by the king’s council, and who receives his orders from it,and is in constant correspondence with it. In the progress ofdespotism the authority of the executive power gradually absorbsthat of every other power in the state, and assumes to itself themanagement of every branch of revenue which is destined for anypublic purpose. In France, however, the great post-roads, theroads which make the communication between the principaltowns of the kingdom, are in general kept in good order, and insome provinces are even a good deal superior to the greater partof 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 entirelyneglected, and are in many places absolutely impassable for anyheavy carriage. In some places it is even dangerous to travel onhorseback, and mules are the only conveyances which can safelybe trusted. The proud minister of an ostentatious court mayfrequently take pleasure in executing a work of splendour andmagnificence, such as a great highway, which is frequently seenby the principal nobility, whose applauses not only flatter hisvanity, but even contribute to support his interest at court. But toexecute a great number of little works, in which nothing that canbe done can make any great appearance, or excite the smallestdegree of admiration in any traveller, and which, in short, havenothing to recommend them but their extreme utility, is abusiness which appears in every respect too mean and paltry tomerit the attention of so great a magistrate. Under such anadministration, therefore, such works are almost always entirely



973

neglected.In China, and in several other governments of Asia, the

executive power charges itself both with the reparation of the highroads and with the maintenance of the navigable canals. In theinstructions which are given to the governor of each province,those objects, it is said, are constantly recommended to him, andthe judgment which the court forms of his conduct is very muchregulated by the attention which he appears to have paid to thispart of his instructions. This branch of public police accordingly issaid to be very much attended to in all those countries, butparticularly in China, where the high roads, and still more thenavigable canals, it is pretended, exceed very much everything ofthe same kind which is known in Europe. The accounts of thoseworks, however, which have been transmitted to Europe, havegenerally 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 theaccounts of them had been reported by more faithful witnesses,they would not, perhaps, appear to be so wonderful. The accountwhich Bernier gives of some works of this kind in Indostan fallsvery much short of what had been reported of them by othertravellers, more disposed to the marvellous than he was. It maytoo, perhaps, be in those countries, as in France, where the greatroads, the great communications which are likely to be thesubjects of conversation at the court and in the capital, areattended to, and all the rest neglected. In China, besides, inIndostan, and in several other governments of Asia, the revenue ofthe 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



974

the land. The great interest of the sovereign, therefore, hisrevenue, is in such countries necessarily and immediatelyconnected with the cultivation of the land, with the greatness of itsproduce, and with the value of its produce. But in order to renderthat produce both as great and as valuable as possible, it isnecessary to procure to it as extensive a market as possible, andconsequently to establish the freest, the easiest, and the leastexpensive communication between all the different parts of thecountry; which can be done only by means of the best roads andthe best navigable canals. But the revenue of the sovereign doesnot, in any part of Europe, arise chiefly from a land tax or landrent. In all the great kingdoms of Europe, perhaps, the greaterpart of it may ultimately depend upon the produce of the land: butthat dependency is neither so immediate, nor so evident. InEurope, therefore, the sovereign does not feel himself so directlycalled upon to promote the increase, both in quantity and value, ofthe produce of the land, or, by maintaining good roads and canals,to provide the most extensive market for that produce. Though itshould be true, therefore, what I apprehend is not a little doubtful,that in some parts of Asia this department of the public police isvery properly managed by the executive power, there is not theleast probability that, during the present state of things, it could betolerably managed by that power in any part of Europe.

Even those public works which are of such a nature that theycannot afford any revenue for maintaining themselves, but ofwhich the conveniency is nearly confined to some particular placeor district, are always better maintained by a local or provincialrevenue, under the management of a local or provincialadministration, than by the general revenue of the state, of which



975

the executive power must always have the management. Were thestreets of London to be lighted and paved at the expense of thetreasury, is there any probability that they would be so welllighted and paved as they are at present, or even at so small anexpense? The expense, besides, instead of being raised by a localtax upon the inhabitants of each particular street, parish, ordistrict in London, would, in this case, be defrayed out of thegeneral revenue of the state, and would consequently be raised bya tax upon all the inhabitants of the kingdom, of whom the greaterpart derive no sort of benefit from the lighting and paving of thestreets of London.

The abuses which sometimes creep into the local and provincialadministration of a local and provincial revenue, how enormoussoever they may appear, are in reality, however, almost alwaysvery trifling in comparison of those which commonly take place inthe administration and expenditure of the revenue of a greatempire.

They are, besides, much more easily corrected. Under the localor provincial administration of the justices of the peace in GreatBritain, the six days’ labour which the country people are obligedto give to the reparation of the highways is not always perhapsvery judiciously applied, but it is scarce ever exacted with anycircumstances of cruelty or oppression. In France, under theadministration of the intendants, the application is not alwaysmore judicious, and the exaction is frequently the most cruel andoppressive. Such Corvées, as they are called, make one of theprincipal instruments of tyranny by which those officers chastiseany parish or communauté which has had the misfortune to fallunder their displeasure.



976

Of the Public Works and Institutions which are necessary forfacilitating particular Branches of Commerce.

The object of the public works and institutions above mentioned isto facilitate commerce in general. But in order to facilitate someparticular branches of it, particular institutions are necessary,which again require a particular and extraordinary expense.

Some particular branches of commerce, which are carried onwith barbarous and uncivilised nations, require extraordinaryprotection. An ordinary store or counting-house could give littlesecurity to the goods of the merchants who trade to the westerncoast of Africa.

To defend them from the barbarous natives, it is necessary thatthe place where they are deposited should be, in some measure,fortified. The disorders in the government of Indostan have beensupposed to render a like precaution necessary even among thatmild and gentle people; and it was under pretence of securingtheir persons and property from violence that both the Englishand French East India Companies were allowed to erect the firstforts which they possessed in that country. Among other nations,whose vigorous government will suffer no strangers to possess anyfortified place within their territory, it may be necessary tomaintain some ambassador, minister, or counsel, who may bothdecide, according to their own customs, the differences arisingamong his own countrymen, and, in their disputes with thenatives, may, by means of his public character, interfere with moreauthority, and afford them a more powerful protection, than theycould expect from any private man. The interests of commerce



977

have frequently made it necessary to maintain ministers in foreigncountries where the purposes, either of war or alliance, would nothave required any. The commerce of the Turkey Company firstoccasioned the establishment of an ordinary ambassador atConstantinople. The first English embassies to Russia arosealtogether from commercial interests. The constant interferencewhich those interests necessarily occasioned between the subjectsof the different states of Europe, has probably introduced thecustom of keeping, in all neighbouring countries, ambassadors orministers constantly resident even in the time of peace. Thiscustom, unknown to ancient times, seems not to be older than theend of the fifteenth or beginning of the sixteenth century; that is,than the time when commerce first began to extend itself to thegreater part of the nations of Europe, and when they first began toattend to its interests.

It seems not unreasonable that the extraordinary expensewhich the protection of any particular branch of commerce mayoccasion should be defrayed by a moderate tax upon thatparticular branch; by a moderate fine, for example, to be paid bythe traders when they first enter into it, or, what is more equal, bya particular duty of so much per cent upon the goods which theyeither import into, or export out of, the particular countries withwhich it is carried on.

The protection of trade in general, from pirates andfreebooters, is said to have given occasion to the first institution ofthe duties of customs. But, if it was thought reasonable to lay ageneral tax upon trade, in order to defray the expense ofprotecting trade in general, it should seem equally reasonable tolay a particular tax upon a particular branch of trade, in order to



978

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 thataccount, a necessary part of the duty of the executive power. Thecollection and application of the general duties of customs,therefore, have always been left to that power. But the protectionof any particular branch of trade is a part of the general protectionof trade; a part, therefore, of the duty of that power; and if nationsalways acted consistently, the particular duties levied for thepurposes of such particular protection should always have beenleft equally to its disposal. But in this respect, as well as in manyothers, nations have not always acted consistently; and in thegreater part of the commercial states of Europe, particularcompanies of merchants have had the address to persuade thelegislature to entrust to them the performance of this part of theduty of the sovereign, together with all the powers which arenecessarily connected with it.

These companies, though they may, perhaps, have been usefulfor the first introduction of some branches of commerce, bymaking, at their own expense, an experiment which the statemight not think it prudent to make, have in the long run proved,universally, either burdensome or useless, and have eithermismanaged or confined the trade.

When those companies do not trade upon a joint stock, but areobliged to admit any person, properly qualified, upon paying acertain fine, and agreeing to submit to the regulations of thecompany, each member trading upon his own stock, and at hisown risk, they are called regulated companies. When they tradeupon a joint stock, each member sharing in the common profit or



979

loss in proportion to his share in this stock, they are called jointstock companies. Such companies, whether regulated or jointstock, sometimes have, and sometimes have not, exclusiveprivileges.

Regulated companies resemble, in every respect, thecorporations of trades so common in the cities and towns of all thedifferent countries of Europe, and are a sort of enlargedmonopolies of the same kind. As no inhabitant of a town canexercise an incorporated trade without first obtaining his freedomin the corporation, so in most cases no subject of the state canlawfully carry on any branch of foreign trade, for which aregulated company is established, without first becoming amember of that company. The monopoly is more or less strictaccording as the terms of admission are more or less difficult; andaccording as the directors of the company have more or lessauthority, or have it more or less in their power to manage in sucha manner as to confine the greater part of the trade to themselvesand their particular friends. In the most ancient regulatedcompanies the privileges of apprenticeship were the same as inother corporations, and entitled the person who had served histime to a member of the company to become himself a member,either without paying any fine, or upon paying a much smaller onethan what was exacted of other people. The usual corporationspirit, wherever the law does not restrain it, prevails in allregulated companies. When they have been allowed to actaccording to their natural genius, they have always, in order toconfine the competition to as small a number of persons aspossible, endeavoured to subject the trade to many burden someregulations. When the law has restrained them from doing this,



980

they have become altogether useless and insignificant.The regulated companies for foreign commerce which at

present subsist in Great Britain are the ancient merchantadventurers’ company, now commonly called the HamburgCompany, the Russia Company, the Eastland Company, theTurkey Company, and the African Company.

The terms of admission into the Hamburg Company are nowsaid to be quite easy, and the directors either have it not theirpower to subject the trade to any burdensome restraint orregulations, or, at least, have not of late exercised that power. Ithas not always been so. About the middle of the last century, thefine for admission was fifty, and at one time one hundred pounds,and the conduct of the company was said to be extremelyoppressive. In 1643, in 1645, and in 1661, the clothiers and freetraders of the West of England complained of them to Parliamentas of monopolists who confined the trade and oppressed themanufactures of the country. Though those complaints producedan Act of Parliament, they had probably intimidated the companyso far as to oblige them to reform their conduct. Since that time, atleast, there has been no complaints against them. By the 10th and11th of William III, c. 6, the fine for admission into the RussiaCompany was reduced to five pounds; and by the 25th of CharlesII, c. 7, that for admission into the Eastland Company to fortyshillings, while, at the same time, Sweden, Denmark, and Norway,all the countries on the north side of the Baltic, were exemptedfrom their exclusive charter. The conduct of those companies hadprobably given occasion to those two Acts of Parliament. Beforethat time, Sir Josiah Child had represented both these and theHamburg Company as extremely oppressive, and imputed to their



981

bad management the low state of the trade which we at that timecarried on to the countries comprehended within their respectivecharters. But though such companies may not, in the presenttimes, be very oppressive, they are certainly altogether useless. Tobe merely useless, indeed, is perhaps the highest eulogy which canever justly be bestowed upon a regulated company; and all thethree companies above mentioned seem, in their present state, todeserve this eulogy.

The fine for admission into the Turkey Company was formerlytwenty-five pounds for all persons under twenty-six years of age,and fifty pounds for all persons above that age. Nobody but meremerchants could be admitted; a restriction which excluded allshopkeepers and retailers. By a bye-law, no British manufacturescould be exported to Turkey but in the general ships of thecompany; and as those ships sailed always from the port ofLondon, this restriction confined the trade to that expensive port,and the traders to those who lived in London and in itsneighbourhood. By another bye-law, no person living withintwenty miles of London, and not free of the city, could be admitteda member; another restriction which, joined to the foregoing,necessarily excluded all but the freemen of London. As the timefor the loading and sailing of those general ships dependedaltogether upon the directors, they could easily fill them with theirown goods and those of their particular friends, to the exclusion ofothers, who, they might pretend, had made their proposals toolate. In this state of things, therefore, this company was in everyrespect a strict and oppressive monopoly. Those abuses gaveoccasion to the act of the 26th of George II, c. 18, reducing the finefor admission to twenty pounds for all persons, without any



982

distinction of ages, or any restriction, either to mere merchants, orto the freemen of London; and granting to all such persons theliberty of exporting, from all the ports of Great Britain to any portin Turkey, all British goods of which the exportation was notprohibited; and of importing from thence all Turkish goods ofwhich the importation was not prohibited, upon paying both thegeneral duties of customs, and the particular duties assessed fordefraying the necessary expenses of the company; and submitting,at the same time, to the lawful authority of the British ambassadorand consuls resident in Turkey, and to the bye-laws of thecompany duly enacted.

To prevent any oppression by those bye-laws, it was by thesame act ordained, that if any seven members of the companyconceived themselves aggrieved by any bye-law which should beenacted after the passing of this act, they might appeal to theBoard of Trade and Plantations (to the authority of which acommittee of the Privy Council has now succeeded), providedsuch appeal was brought within twelve months after the bye-lawwas enacted; and that if any seven members conceived themselvesaggrieved by any bye-law which had been enacted before thepassing of this act, they might bring a like appeal, provided it waswithin twelve months after the day on which this act was to takeplace. The experience of one year, however, may not always besufficient to discover to all the members of a great company, thepernicious tendency of a particular bye-law; and if several of themshould afterwards discover it, neither the Board of Trade, nor thecommittee of council, can afford them any redress.

The object, besides, of the greater part of the bye-laws of allregulated companies, as well as of all other corporations, is not so



983

much to oppress those who are already members, as to discourageothers from becoming so; which may be done, not only by a highfine, but by many other contrivances. The constant view of suchcompanies is always to raise the rate of their own profit as high asthey can; to keep the market, both for the goods which theyexport, and for those which they import, as much understocked asthey 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 perhapsbe sufficient to discourage any man from entering into the Turkeytrade with an intention to continue in it, may be enough todiscourage a speculative merchant from hazarding a singleadventure in it. In all trades, the regular established traders, eventhough not incorporated, naturally combine to raise profits, whichare noway so likely to be kept, at all times, down to their properlevel, as by the occasional competition of speculative adventure.The Turkey trade, though in some measure laid open by this Actof Parliament, is still considered by many people as very far frombeing altogether free. The Turkey Company contribute tomaintain an ambassador and two or three consuls, who, like otherpublic ministers, ought to be maintained altogether by the state,and the trade laid open to all his Majesty’s subjects. The differenttaxes levied by the company, for this and other corporationpurposes, might afford avenue much more than sufficient toenable the state to maintain such ministers.

Regulated companies, it was observed by Sir Josiah Child,though they had frequently supported public ministers, had nevermaintained any forts or garrisons in the countries to which theytraded; whereas joint stock companies frequently had. And in



984

reality the former seem to be much more unfit for this sort ofservice than the latter.

First, the directors of a regulated company have no particularinterest in the prosperity of the general trade of the company forthe sake of which such forts and garrisons are maintained. Thedecay of that general trade may even frequently contribute to theadvantage of their own private trade; as by diminishing thenumber of their competitors it may enable them both to buycheaper, and to sell dearer. The directors of a joint stock company,on the contrary, having only their share in the profits which aremade upon the common stock committed to their management,have no private trade of their own of which the interest can beseparated from that of the general trade of the company. Theirprivate interest is connected with the prosperity of the generaltrade of the company, and with the maintenance of the forts andgarrisons which are necessary for its defence. They are morelikely, therefore, to have that continual and careful attentionwhich that maintenance necessarily requires.

Secondly, the directors of a joint stock company have alwaysthe management of a large capital, the joint stock of the company,a part of which they may frequently employ, with propriety, inbuilding, repairing, and maintaining such necessary forts andgarrisons. But the directors of a regulated company, having themanagement of no common capital, have no other fund to employin this way but the casual revenue arising from the admissionfines, and from the corporation duties imposed upon the trade ofthe company. Though they had the same interest, therefore, toattend to the maintenance of such forts and garrisons, they canseldom have the same ability to render that attention effectual.



985

The maintenance of a public minister requiring scarce anyattention, and but a moderate and limited expense, is a businessmuch more suitable both to the temper and abilities of a regulatedcompany.

Long after the time of Sir Josiah Child, however, in 1750, aregulated company was established, the present company ofmerchants trading to Africa, which was expressly charged at firstwith the maintenance of all the British forts and garrisons that liebetween Cape Blanc and the Cape of Good Hope, and afterwardswith that of those only which lie between Cape Rouge and theCape of Good Hope. The act which establishes this company (the23rd of George II, c. 3) seems to have had two distinct objects inview; first, to restrain effectually the oppressive and monopolizingspirit which is natural to the directors of a regulated company; andsecondly, to force them, as much as possible, to give an attention,which is not natural to them, towards the maintenance of forts andgarrisons.

For the first of these purposes the fine for admission is limitedto forty shillings. The company is prohibited from trading in theircorporate capacity, or upon a joint stock; from borrowing moneyupon common seal, or from laying any restraints upon the tradewhich may be carried on freely from all places, and by all personsbeing British subjects, and paying the fine. The government is in acommittee of nine persons who meet at London, but who arechosen annually by the freemen of the company at London,Bristol, and Liverpool; three from each place. No committee-mancan be continued in office for more than three years together. Anycommittee-man might be removed by the Board of Trade andPlantations, now by a committee council, after being heard in his



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own defence. The committee are forbid to export negroes fromAfrica, or to import any African goods into Great Britain. But asthey are charged with the maintenance of forts and garrisons, theymay, for that purpose, export from Great Britain to Africa goodsand stores of different kinds. Out of the monies which they shallreceive from the company, they are allowed a sum not exceedingeight hundred pounds for the salaries of their clerks and agents atLondon, Bristol, and Liverpool, the house rent of their office atLondon, and all other expenses of management, commission, andagency in England. What remains of this sum, after defrayingthese different expenses, they may divide among themselves, ascompensation for their trouble, in what manner they think proper.By this constitution, it might have been expected that the spirit ofmonopoly would have been effectually restrained, and the first ofthese purposes sufficiently answered. It would seem, however,that it had not. Though by the 4th of George III, c. 20, the fort ofSenegal, with all its dependencies, had been vested in thecompany of merchants trading to Africa, yet in the year following(by the 5th of George III, c. 44) not only Senegal and itsdependencies, but the whole coast from the port of Sallee, in southBarbary, to Cape Rouge, was exempted from the jurisdiction ofthat company, was vested in the crown, and the trade to itdeclared free to all his Majesty’s subjects. The company had beensuspected of restraining the trade, and of establishing some sort ofimproper monopoly. It is not, however, very easy to conceive how,under the regulations of the 23rd of George II, they could do so. Inthe printed debates of the House of Commons, not always the mostauthentic records of truth, I observe, however, that they have beenaccused of this. The members of the committee of nine, being all



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merchants, and the governors and factors, in their different fortsand settlements, being all dependent upon them, it is not unlikelythat the latter might have given peculiar attention to theconsignments and commissions of the former which wouldestablish a real monopoly.

For the second of these purposes, the maintenance of the fortsand garrisons, an annual sum has been allotted to them byParliament, generally about £13,000. For the proper application ofthis sum, the committee is obliged to account annually to theCursitor Baron of Exchequer; which account is afterwards to belaid before Parliament. But Parliament, which gives so littleattention to the application of millions, is not likely to give much tothat of £13,000 a year; and the Cursitor Baron of Exchequer, fromhis profession and education, is not likely to be profoundly skilledin the proper expense of forts and garrisons. The captains of hisMajesty’s navy, indeed, or any other commissioned officersappointed by the Board of Admiralty, may inquire into thecondition of the forts and garrisons, and report their observationsto that board. But that board seems to have no direct jurisdictionover the committee, nor any authority to correct those whoseconduct it may thus inquire into; and the captains of his Majesty’snavy, besides, are not supposed to be always deeply learned in thescience of fortification. Removal from an office which can beenjoyed only for the term of three years, and of which the lawfulemoluments, even during that term, are so very small, seems to bethe utmost punishment to which any committee-man is liable forany fault, except direct malversation, or embezzlement, either ofthe public money, or of that of the company; and the fear of thatpunishment can never be a motive of sufficient weight to force a



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continual and careful attention to a business to which he has noother interest to attend. The committee are accused of having sentout bricks and stones from England for the reparation of CapeCoast Castle on the coast of Guinea, a business for whichParliament had several times granted an extraordinary sum ofmoney. These bricks and stones too, which had thus been sentupon so long a voyage, were said to have been of so bad a qualitythat it was necessary to rebuild from the foundation the wallswhich had been repaired with them. The forts and garrisonswhich lie north of Cape Rouge are not only maintained at theexpense of the state, but are under the immediate government ofthe executive power; and why those which lie south of that Cape,and which are, in part at least, maintained at the expense of thestate, should be under a different government, it seems not veryeasy even to imagine a good reason. The protection of theMediterranean trade was the original purpose of pretence of thegarrisons of Gibraltar and Minorca, and the maintenance andgovernment of those garrisons has always been, very properly,committed, not to the Turkey Company, but to the executivepower. 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 failin attention to what is necessary for the defence of that dominion.The garrisons at Gibraltar and Minorca, accordingly, have neverbeen neglected; though Minorca has been twice taken, and is nowprobably lost for ever, that disaster was never even imputed to anyneglect in the executive power. I would not, however, beunderstood to insinuate that either of those expensive garrisonswas ever, even in the smallest degree, necessary for the purposefor which they were originally dismembered from the Spanish



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monarchy. That dismemberment, perhaps, never served any otherreal purpose than to alienate from England her natural ally theKing of Spain, and to unite the two principal branches of thehouse of Bourbon in a much stricter and more permanent alliancethan the ties of blood could ever have united them.

Joint stock companies, established by Royal Charter or by Actof Parliament, differ in several respects, not only from regulatedcompanies, but from private copartneries.

First, in a private copartnery, no partner, without the consentof the company, can transfer his share to another person, orintroduce a new member into the company. Each member,however, may, upon proper warning, withdraw from thecopartnery, and demand payment from them of his share of thecommon stock. In a joint stock company, on the contrary, nomember can demand payment of his share from the company; buteach member can, without their consent, transfer his share toanother person, and thereby introduce a new member. The valueof a share in a joint stock is always the price which it will bring inthe market; and this may be either greater or less, in anyproportion, than the sum which its owner stands credited for inthe stock of the company.

Secondly, in a private copartnery, each partner is bound for thedebts contracted by the company to the whole extent of hisfortune. In a joint stock company, on the contrary, each partner isbound only to the extent of his share.

The trade of a joint stock company is always managed by acourt of directors. This court, indeed, is frequently subject, inmany respects, to the control of a general court of proprietors. Butthe greater part of those proprietors seldom pretend to



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understand anything of the business of the company, and whenthe spirit of faction happens not to prevail among them, givethemselves no trouble about it, but receive contentedly such half-yearly or yearly dividend as the directors think proper to make tothem. This total exemption from trouble and from risk, beyond alimited sum, encourages many people to become adventurers injoint stock companies, who would, upon no account, hazard theirfortunes in any private copartnery. Such companies, therefore,commonly draw to themselves much greater stocks than anyprivate copartnery can boast of. The trading stock of the SouthSea Company, at one time, amounted to upwards of thirty-threemillions eight hundred thousand pounds. The divided capital ofthe Bank of England amounts, at present, to ten millions sevenhundred and eighty thousand pounds. The directors of suchcompanies, however, being the managers rather of other people’smoney than of their own, it cannot well be expected that theyshould watch over it with the same anxious vigilance with whichthe partners in a private copartnery frequently watch over theirown. Like the stewards of a rich man, they are apt to considerattention to small matters as not for their master’s honour, andvery easily give themselves a dispensation from having it.Negligence and profusion, therefore, must always prevail, more orless, in the management of the affairs of such a company. It isupon this account that joint stock companies for foreign tradehave seldom been able to maintain the competition against privateadventurers. They have, accordingly, very seldom succeededwithout an exclusive privilege, and frequently have not succeededwith one. Without an exclusive privilege they have commonlymismanaged the trade. With an exclusive privilege they have both



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mismanaged and confined it.The Royal African Company, the predecessors of the present

African Company, had an exclusive privilege by charter, but asthat charter had not been confirmed by Act of Parliament, thetrade, in consequence of the Declaration of Rights, was, soon afterthe revolution, laid open to all his Majesty’s subjects. TheHudson’s Bay Company are, as to their legal rights, in the samesituation as the Royal African Company. Their exclusive charterhas not been confirmed by Act of Parliament. The South SeaCompany, as long as they continued to be a trading company, hadan exclusive privilege confirmed by Act of Parliament; as havelikewise the present United Company of Merchants trading to theEast Indies.

The Royal African Company soon found that they could notmaintain the competition against private adventurers, whom,notwithstanding the Declaration of Rights, they continued forsome time to call interlopers, and to persecute as such. In 1698,however, the private adventurers were subjected to a duty of tenper cent upon almost all the different branches of their trade, to beemployed by the company in the maintenance of their forts andgarrisons But, notwithstanding this heavy tax, the company werestill unable to maintain the competition. Their stock and creditgradually declined. In 1712, their debts had become so great that aparticular Act of Parliament was thought necessary, both for theirsecurity and for that of their creditors. It was enacted that theresolution of two-thirds of these creditors in number and valueshould bind the rest, both with regard to the time which should beallowed to the company for the payment of their debts, and withregard to any other agreement which it might be thought proper



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to make with them concerning those debts. In 1730, their affairswere in so great disorder that they were altogether incapable ofmaintaining their forts and garrisons, the sole purpose and pretextof their institution. From that year, till their final dissolution, theParliament judged it necessary to allow the annual sum of tenthousand pounds for that purpose. In 1732, after having been formany years losers by the trade of carrying negroes to the WestIndies, they at last resolved to give it up altogether; to sell to theprivate traders to America the negroes which they purchasedupon the coast; and to employ their servants in a trade to theinland parts of Africa for gold dust, elephants’ teeth, dyeing drugs,etc. But their success in this more confined trade was not greaterthan in their former extensive one. Their affairs continued to gogradually to decline, till at last, being in every respect a bankruptcompany, they were dissolved by Act of Parliament, and their fortsand garrisons vested in the present regulated company ofmerchants trading to Africa.

Before the erection of the Royal African Company, there hadbeen three other joint stock companies successively established,one after another, for the African trade. They were all equallyunsuccessful. They all, however, had exclusive charters, which,though not confirmed by Act of Parliament, were in those dayssupposed to convey a real exclusive privilege.

The Hudson’s Bay Company, before their misfortunes in thelate war, had been much more fortunate than the Royal AfricanCompany. Their necessary expense is much smaller. The wholenumber of people whom they maintain in their differentsettlements and habitations, which they have honoured with thename of forts, is said not to exceed a hundred and twenty persons.



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This number, however, is sufficient to prepare beforehand thecargo of furs and other goods necessary for loading their ships,which, on account of the ice, can seldom remain above six or eightweeks in those seas. This advantage of having a cargo readyprepared could not for several years be acquired by privateadventurers, and without it there seems to be no possibility oftrading to Hudson’s Bay. The moderate capital of the company,which, it is said, does not exceed one hundred and ten thousandpounds, may besides be sufficient to enable them to engross thewhole, or almost the whole, trade and surplus produce of themiserable, though extensive country, comprehended within theircharter. No private adventurers, accordingly, have ever attemptedto trade to that country in competition with them. This company,therefore, have always enjoyed an exclusive trade in fact, thoughthey may have no right to it in law. Over and above all this, themoderate capital of this company is said to be divided among avery small number of proprietors. But a joint stock company,consisting of a small number of proprietors, with a moderatecapital, approaches very nearly to the nature of a privatecopartnery, and may be capable of nearly the same degree ofvigilance and attention. It is not to be wondered at, therefore, if, inconsequence of these different advantages, the Hudson’s BayCompany had, before the late war, been able to carry on theirtrade with a considerable degree of success. It does not seemprobable, however, that their profits ever approached to what thelate Mr. Dobbs imagined them. A much more sober and judiciouswriter, Mr. Anderson, author of The Historical and ChronologicalDeduction of Commerce, very justly observes that, upon examiningthe accounts of which Mr. Dobbs himself was given for several



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years together of their exports and imports, and upon makingproper allowances for their extraordinary risk and expense, it doesnot appear that their profits deserve to be envied, or that they canmuch, if at all, exceed the ordinary profits of trade.

The South Sea Company never had any forts or garrisons tomaintain, and therefore were entirely exempted from one greatexpense to which other joint stock companies for foreign trade aresubject. But they had an immense capital divided among animmense number of proprietors. It was naturally to be expected,therefore, that folly, negligence, and profusion should prevail inthe whole management of their affairs. The knavery andextravagance of their stock-jobbing projects are sufficientlyknown, and the explication of them would be foreign to thepresent subject. Their mercantile projects were not much betterconducted. The first trade which they engaged in was that ofsupplying the Spanish West Indies with negroes, of which (inconsequence of what was called the Assiento contract grantedthem by the Treaty of Utrecht) they had the exclusive privilege.But as it was not expected that much profit could be made by thistrade, both the Portuguese and French companies, who hadenjoyed it upon the same terms before them, having been ruinedby it, they were allowed, as compensation, to send annually a shipof a certain burden to trade directly to the Spanish West Indies. Ofthe ten voyages which this annual ship was allowed to make, theyare said to have gained considerably by one, that of the RoyalCaroline in 1731, and to have been losers, more or less, by almostall the rest.

Their ill success was imputed, by their factors and agents, tothe extortion and oppression of the Spanish government; but was,



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perhaps, principally owing to the profusion and depredations ofthose very factors and agents, some of whom are said to haveacquired great fortunes even in one year. In 1734, the companypetitioned the king that they might be allowed to dispose of thetrade and tonnage of their annual ship, on account of the littleprofit which they made by it, and to accept such equivalent as theycould obtain from the of Spain.

In 1724, this company had undertaken the whale-fishery. Ofthis, indeed, they had no monopoly; but as long as they carried iton, no other British subjects appear to have engaged in it. Of theeight voyages which their ships made to Greenland, they weregainers by one, and losers by all the rest. After their eighth andlast voyage, when they had sold their ships, stores, and utensils,they found that their whole loss, upon this branch, capital andinterest included, amounted to upwards of two hundred andthirty-seven thousand pounds.

In 1722, this company petitioned the Parliament to be allowedto divide their immense capital of more than thirty-three millionseight hundred thousand pounds, the whole of which had been lentto government, into two equal parts: The one half, or upwards ofsixteen millions nine hundred thousand pounds, to be put uponthe same footing with other government annuities, and not to besubject to the debts contracted, or losses incurred, by the directorsof the company in the prosecution of their mercantile projects; theother half to remain, as before, a trading stock, and to be subject tothose debts and losses. The petition was too reasonable not to begranted.

In 1733, they again petitioned the Parliament that three-fourthsof their trading stock might be turned into annuity stock, and only



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one-fourth remain as trading stock, or exposed to the hazardsarising from the bad management of their directors. Both theirannuity and trading stocks had, by this time, been reduced morethan two millions each by several different payments fromgovernment; so that this fourth amounted only to £3,662,784 8s. 6d.In 1748, all the demands of the company upon the King of Spain,in consequence of the Assiento contract, were, by the Treaty ofAix-la-Chapelle, given up for what was supposed an equivalent. Anend was put to their trade with the Spanish West Indies, theremainder 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 SeaCompany carried on by means of their annual ship, the only tradeby which it ever was expected that they could make anyconsiderable profit, they were not without competitors, either inthe foreign or in the home market. At Carthagena, Porto Bello,and La Vera Cruz, they had to encounter the competition of theSpanish merchants, who brought from Cadiz, to those markets,European goods of the same kind with the outward cargo of theirship; and in England they had to encounter that of the Englishmerchants, who imported from Cadiz goods of the Spanish WestIndies of the same kind with the inward cargo. The goods both ofthe 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 hadprobably been a tax much heavier than all those duties. That ajoint stock company should be able to carry on successfully anybranch of foreign trade, when private adventurers can come intoany sort of open and fair competition with them, seems contrary to



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all experience.The old English East India Company was established in 1600 by

a charter from Queen Elizabeth. In the first twelve voyages whichthey fitted out for India, they appear to have traded as a regulatedcompany, with separate stocks, though only in the general ships ofthe company. In 1612, they united into a joint stock. Their charterwas 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 byinterlopers. Their capital, which never exceeded seven hundredand forty-four thousand pounds, and of which fifty pounds was ashare, was not so exorbitant, nor their dealings so extensive, as toafford either a pretext for gross negligence and profusion, or acover to gross malversation. Notwithstanding some extraordinarylosses, occasioned partly by the malice of the Dutch East IndiaCompany, and partly by other accidents, they carried on for manyyears a successful trade. But in process of time, when theprinciples of liberty were better understood, it became every daymore and more doubtful how far a Royal Charter, not confirmedby Act of Parliament, could convey an exclusive privilege.

Upon this question the decisions of the courts of justice werenot uniform, but varied with the authority of government and thehumours of the times. Interlopers multiplied upon them, andtowards the end of the reign of Charles II, through the whole ofthat of James II and during a part of that of William III, reducedthem to great distress. In 1698, a proposal was made to Parliamentof advancing two millions to government at eight per cent,provided the subscribers were erected into a new East IndiaCompany with exclusive privileges. The old East India Company



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offered seven hundred thousand pounds, nearly the amount oftheir capital, at four per cent upon the same conditions. But suchwas at that time the state of public credit, that it was moreconvenient for government to borrow two millions at eight percent than seven hundred thousand pounds at four. The proposalof the new subscribers was accepted, and a new East IndiaCompany established in consequence. The old East IndiaCompany, 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 thousandpounds into the stock of the new. By a negligence in theexpression of the Act of Parliament which vested the East Indiatrade in the subscribers to this loan of two millions, it did notappear evident that they were all obliged to unite into a jointstock. A few private traders, whose subscriptions amounted onlyto seven thousand two hundred pounds, insisted upon theprivilege of trading separately upon their own stocks and at theirown risk. The old East India Company had a right to a separatetrade upon their old stock till 1701; and they had likewise, bothbefore and after that period, a right, like that of other privatetraders, to a separate trade upon the three hundred and fifteenthousand pounds which they had subscribed into the stock of thenew company. The competition of the two companies with theprivate traders, and with one another, is said to have well-nighruined both. Upon a subsequent occasion, in 1730, when aproposal was made to Parliament for putting the trade under themanagement of a regulated company, and thereby laying it insome measure open, the East India Company, in opposition to thisproposal, represented in very strong terms what had been, at this



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time, the miserable effects, as they thought them, of thiscompetition. In India, they said, it raised the price of goods so highthat they were not worth the buying; and in England, byoverstocking the market, it sunk their price so low that no profitcould be made by them. That by a more plentiful supply, to thegreat advantage and conveniency of the public, it must havereduced, very much, the price of Indian goods in the Englishmarket, cannot well be doubted; but that it should have raisedvery much their price in the Indian market seems not veryprobable, as all the extraordinary demand which that competitioncould occasion must have been but as a drop of water in theimmense ocean of Indian Commerce.

The increase of demand, besides, though in the beginning itmay sometimes raise the price of goods, never fails to lower it inthe run. It encourages production, and thereby increases thecompetition of the producers, who, in order to undersell oneanother, have recourse to new divisions of labour and newimprovements of art which might never otherwise have beenthought of. The miserable effects of which the companycomplained were the cheapness of consumption and theencouragement given to production, precisely the two effectswhich it is the great business of political economy to promote. Thecompetition, however, of which they gave this doleful account, hadnot been allowed to be of long continuance. In 1702, the twocompanies were, in some measure, united by an indenturetripartite, to which the queen was the third party; and in 1708,they were, by Act of Parliament, perfectly consolidated into onecompany by their present name of The United Company ofMerchants trading to the East Indies. Into this act it was thought



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worth while to insert a clause allowing the separate traders tocontinue their trade till Michaelmas 1711, but at the same timeempowering the directors, upon three years’ notice, to redeemtheir little capital of seven thousand two hundred pounds, andthereby to convert the whole stock of the company into a jointstock. By the same act, the capital of the company, in consequenceof a new loan to government, was augmented from two millions tothree millions two hundred thousand pounds. In 1743, thecompany 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 notaugment the stock upon which the proprietors could claim adividend. It augmented, however, their trading stock, it beingequally liable with the other three millions two hundred thousandpounds to the losses sustained, and debts contracted, by thecompany in prosecution of their mercantile projects. From 1708, orat least from 1711, this company, being delivered from allcompetitors, and fully established in the monopoly of the Englishcommerce to the East Indies, carried on a successful trade, andfrom their profits made annually a moderate dividend to theirproprietors. During the French war, which began in 1741, theambition of Mr. Dupleix, the French governor of Pondicherry,involved them in the wars of the Carnatic, and in the politics of theIndian princes. After many signal successes, and equally signallosses, they at last lost Madras, at that time their principalsettlement in India. It was restored to them by the Treaty of Aix-la-Chapelle; and about this time the spirit of war and conquestseems to have taken possession of their servants in India, andnever since to have left them. During the French war, which



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began in 1755, their arms partook of the general good fortune ofthose of Great Britain. They defended Madras, took Pondicherry,recovered Calcutta, and acquired the revenues of a rich andextensive territory, amounting, it was then said, to upwards ofthree millions a year. They remained for several years in quietpossession of this revenue: but in 1767, administration laid claimto their territorial acquisitions, and the revenue arising from them,as of right belonging to the crown; and the company, incompensation for this claim, agreed to pay the government fourhundred thousand pounds a year. They had before this graduallyaugmented their dividend from about six to ten per cent; that is,upon their capital of three millions two hundred thousand poundsthey had increased it by a hundred and twenty-eight thousandpounds, or had raised it from one hundred and ninety-twothousand to three hundred and twenty thousand pounds a year.They were attempting about this time to raise it still further, totwelve and a half per cent, which would have made their annualpayments to their proprietors equal to what they had agreed topay annually to government, or to four hundred thousand poundsa year.

But during the two years in which their agreement withgovernment was to take place, they were restrained from anyfurther increase of dividend by two successive Acts of Parliament,of which the object was to enable them to make a speedierprogress in the payment of their debts, which were at this timeestimated at upwards of six or seven millions sterling. In 1769,they renewed their agreement with government for five yearsmore, and stipulated that during the course of that period theyshould be allowed gradually to increase their dividend to twelve



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and a half per cent; never increasing it, however, more than oneper cent in one year. This increase of dividend, therefore, when ithad risen to its utmost height, could augment their annualpayments, to their proprietors and government together, but bysix hundred and eight thousand pounds beyond what they hadbeen before their late territorial acquisitions. What the grossrevenue of those territorial acquisitions was supposed to amountto has already been mentioned; and by an account brought by theCruttenden East Indiaman in 1768, the net revenue, clear of alldeductions and military charges, was stated at two millions forty-eight thousand seven hundred and forty-seven pounds. They weresaid at the same time to possess another revenue, arising partlyfrom lands, but chiefly from the customs established at theirdifferent settlements, amounting to four hundred and thirty-ninethousand pounds. The profits of their trade too, according to theevidence of their chairman before the House of Commons,amounted at this time to at least four hundred thousand pounds ayear, according to that of their accountant, to at least five hundredthousand; according to the lowest account, at least equal to thehighest dividend that was to be paid to their proprietors. So greata revenue might certainly have afforded an augmentation of sixhundred and eight thousand pounds in their annual payments,and at the same time have left a large sinking fund sufficient forthe speedy reduction of their debts.

In 1773, however, their debts, instead of being reduced, wereaugmented by an arrear to the treasury in the payment of the fourhundred thousand pounds, by another to the custom-house forduties unpaid, by a large debt to the bank for money borrowed,and by a fourth for bills drawn upon them from India, and



1003

wantonly accepted, to the amount of upwards of twelve hundredthousand pounds. The distress which these accumulated claimsbrought upon them, obliged them not only to reduce all at oncetheir dividend to six per cent, but to throw themselves upon themercy of government, and to supplicate, first, a release fromfurther payment of the stipulated four hundred thousand poundsa year; and, secondly, a loan of fourteen hundred thousand, to savethem from immediate bankruptcy. The great increase of theirfortune had, it seems, only served to furnish their servants with apretext for greater profusion, and a cover for greater malversation,than in proportion even to that increase of fortune. The conduct oftheir servants in India, and the general state of their affairs both inIndia and in Europe, became the subject of a Parliamentaryinquiry, in consequence of which several very importantalternations were made in the constitution of their government,both at home and abroad.

In India their principal settlements of Madras, Bombay, andCalcutta, which had before been altogether independent of oneanother, were subjected to a governor-general, assisted by acouncil of four assessors, Parliament assuming to itself the firstnomination of this governor and council who were to reside atCalcutta; that city having now become, what Madras was before,the most important of the English settlements in India. The Courtof the Mayor of Calcutta, originally instituted for the trial ofmercantile causes which arose in city and neighbourhood, hadgradually extended its jurisdiction with the extension of theempire. It was now reduced and confined to the original purposeof its institution. Instead of it a new supreme court of judicaturewas established, consisting of a chief justice and three judges to be



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appointed by the crown. In Europe, the qualification necessary toentitle a proprietor to vote at their general courts was raised fromfive hundred pounds, the original price of a share in the stock ofthe company, to a thousand pounds. In order to vote upon thisqualification too, it was declared necessary that he should havepossessed it, if acquired by his own purchase, and not byinheritance, for at least one year, instead of six months, the termrequisite before. The court of twenty-four directors had beforebeen chosen annually; but it was now enacted that each directorshould, for the future, be chosen for four years; six of them,however, to go out of office by rotation every year, and not to becapable of being re-chosen at the election of the six new directorsfor the ensuing year. In consequence of these alterations, thecourts, both of the proprietors and directors, it was expected,would be likely to act with more dignity and steadiness than theyhad usually done before.

But it seems impossible, by any alterations, to render thosecourts, in any respect, fit to govern, or even to share in thegovernment of a great empire; because the greater part of theirmembers must always have too little interest in the prosperity ofthat 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 stockmerely for the influence which he expects to acquire by a vote inthe court of proprietors. It gives him a share, though not in theplunder, yet in the appointment of the plunderers of India; thecourt of directors, though they make that appointment, beingnecessarily more or less under the influence of the proprietors,who not only elect those directors, but sometimes overrule the



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appointments of their servants in India. Provided he can enjoy thisinfluence for a few years, and thereby provide for a certainnumber of his friends, he frequently cares little about thedividend, or even about the value of the stock upon which his voteis founded. About the prosperity of the great empire, in thegovernment of which that vote gives him a share, he seldom caresat all. No other sovereigns ever were, or, from the nature of things,ever could be, so perfectly indifferent about the happiness ormisery of their subjects, the improvement or waste of theirdominions, the glory or disgrace of their administration, as, fromirresistible moral causes, the greater part of the proprietors ofsuch a mercantile company are, and necessarily must be.

This indifference, too, was more likely to be increased thandiminished by some of the new regulations which were made inconsequence of the Parliamentary inquiry. By a resolution of theHouse of Commons, for example, it was declared, that when thefourteen hundred thousand pounds lent to the company bygovernment should be paid, and their bond-debts be reduced tofifteen hundred thousand pounds, they might then, and not tillthen, divide eight per cent upon their capital; and that whateverremained of their revenues and net profits at home should bedivided into four parts; three of them to be paid into theexchequer for the use of the public, and the fourth to be reservedas a fund either for the further reduction of their bond-debts, orfor the discharge of other contingent exigencies which thecompany might labour under.

But if the company were bad stewards, and bad sovereigns,when the whole of their net revenue and profits belonged tothemselves, and were at their own disposal, they were surely not



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likely to be better when three-fourths of them were to belong toother people, and the other fourth, though to be laid out for thebenefit of the company, yet to be so under the inspection and withthe approbation of other people.

It might be more agreeable to the company that their ownservants and dependants should have either the pleasure ofwasting or the profit of embezzling whatever surplus mightremain after paying the proposed dividend of eight per cent thanthat it should come into the hands of a set of people with whomthose resolutions could scarce fail to set them, in some measure, atvariance. The interest of those servants and dependants might sofar predominate in the court of proprietors as sometimes todispose it to support the authors of depredations which had beencommitted in direct violation of its own authority. With themajority of proprietors, the support even of the authority of theirown court might sometimes be a matter of less consequence thanthe support of those who had set that authority at defiance.

The regulations of 1773, accordingly, did not put an end to thedisorders of the company’s government in India. Notwithstandingthat, during a momentary fit of good conduct, they had at one timecollected into the treasury of Calcutta more than three millionssterling; notwithstanding that they had afterwards extended,either their dominion, or their depredations, over a vast accessionof some of the richest and most fertile countries in India, all waswasted and destroyed. They found themselves altogetherunprepared to stop or resist the incursion of Hyder Ali; and, inconsequence of those disorders, the company is now (1784) ingreater distress than ever; and, in order to prevent immediatebankruptcy, is once more reduced to supplicate the assistance of



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government. Different plans have been proposed by the differentparties in Parliament for the better management of its affairs. Andall those plans seem to agree in supposing, what was indeedalways abundantly evident, that it is altogether unfit to govern itsterritorial possessions. Even the company itself seems to beconvinced of its own incapacity so far, and seems, upon thataccount, willing to give them up to government.

With the right of possessing forts and garrisons in distant andbarbarous countries is necessarily connected the right of makingpeace and war in those countries. The joint stock companieswhich have had the one right have constantly exercised the other,and have frequently had it expressly conferred upon them. Howunjustly, how capriciously, how cruelly they have commonlyexercised it, is too well known from recent experience.

When a company of merchants undertake, at their own risk andexpense, to establish a new trade with some remote and barbarousnation, it may not be unreasonable to incorporate them into a jointstock company, and to grant them, in case of their success, amonopoly of the trade for a certain number of years. It is theeasiest and most natural way in which the state can recompensethem for hazarding a dangerous and expensive experiment, ofwhich the public is afterwards to reap the benefit. A temporarymonopoly of this kind may be vindicated upon the same principlesupon which a like monopoly of a new machine is granted to itsinventor, and that of a new book to its author. But upon theexpiration 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 tothe company, and the trade to be laid open to all the subjects of



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the state. By a perpetual monopoly, all the other subjects of thestate are taxed very absurdly in two different ways: first, by thehigh price of goods, which, in the case of a free trade, they couldbuy much cheaper; and, secondly, by their total exclusion from abranch of business which it might be both convenient andprofitable for many of them to carry on. It is for the most worthlessof all purposes, too, that they are taxed in this manner. It is merelyto enable the company to support the negligence, profusion, andmalversation of their own servants, whose disorderly conductseldom allows the dividend of the company to exceed the ordinaryrate of profit in trades which are altogether free, and veryfrequently makes it fall even a good deal short of that rate.

Without a monopoly, however, a joint stock company, it wouldappear from experience, cannot long carry on any branch offoreign trade. To buy in one market, in order to sell, with profit, inanother, when there are many competitors in both, to watch over,not only the occasional variations in the demand, but the muchgreater and more frequent variations in the competition, or in thesupply which that demand is likely to get from other people, andto suit with dexterity and judgment both the quantity and qualityof each assortment of goods to all these circumstances, is a speciesof warfare of which the operations are continually changing, andwhich can scarce ever be conducted successfully without such anunremitting exertion of vigilance and attention as cannot long beexpected from the directors of a joint stock company. The EastIndia Company, upon the redemption of their funds, and theexpiration of their exclusive privilege, have right, by Act ofParliament, to continue a corporation with a joint stock, and totrade in their corporate capacity to the East Indies in common



1009

with the rest of their fellow-subjects. But in this situation, thesuperior vigilance and attention of private adventurers would, inall probability, soon make them weary of the trade.

An eminent French author, of great knowledge in matters ofpolitical economy, the Abbé Morellet, gives a list of fifty-five jointstock companies for foreign trade which have been established indifferent parts of Europe since the year 1600, and which,according to him, have all failed from mismanagement,notwithstanding they had exclusive privileges. He has beenmisinformed with regard to the history of two or three of them,which were not joint stock companies and have not failed. But, incompensation, there have been several joint stock companieswhich have failed, and which he has omitted.

The only trades which it seems possible for a joint stockcompany to carry on successfully without an exclusive privilegeare those of which all the operations are capable of being reducedto what is called a Routine, or to such a uniformity of method asadmits of little or no variation. Of this kind is, first, the bankingtrade; secondly, the trade of insurance from fire, and from sea riskand capture in time of war; thirdly, the trade of making andmaintaining a navigable cut or canal; and, fourthly, the similartrade of bringing water for the supply of a great city.

Though the principles of the banking trade may appearsomewhat abstruse, the practice is capable of being reduced tostrict rules. To depart upon any occasion from those rules, inconsequence of some flattering speculation of extraordinary gain,is almost always extremely dangerous, and frequently fatal, to thebanking company which attempts it. But the constitution of jointstock companies renders them in general more tenacious of



1010

established rules than any private copartnery. Such companies,therefore, seem extremely well fitted for this trade. The principalbanking companies in Europe, accordingly, are joint stockcompanies, many of which manage their trade very successfullywithout any exclusive privilege. The Bank of England has no otherexclusive privilege except that no other banking company inEngland shall consist of more than six persons. The two banks ofEdinburgh are joint stock companies without any exclusiveprivilege.

The value of the risk, either from fire, or from loss by sea, or bycapture, though it cannot, perhaps, be calculated very exactly,admits, however, of such a gross estimation as renders it, in somedegree, reducible to strict rule and method. The trade ofinsurance, therefore, may be carried on successfully by a jointstock company without any exclusive privilege. Neither theLondon Assurance nor the Royal Exchange Assurance companieshave any such privilege.

When a navigable cut or canal has been once made, themanagement of it becomes quite simple and easy, and it isreducible to strict rule and method. Even the making of it is so asit may be contracted for with undertakers at so much a mile, andso much a lock. The same thing may be said of a canal, anaqueduct, or a great pipe for bringing water to supply a great city.Such undertakings, therefore, may be, and accordingly frequentlyare, very successfully managed by joint stock companies withoutany exclusive privilege.

To establish a joint stock company, however, for anyundertaking, merely because such a company might be capable ofmanaging it successfully; or to exempt a particular set of dealers



1011

from some of the general laws which take place with regard to alltheir neighbours, merely because they might be capable ofthriving if they had such an exemption, would certainly not bereasonable. 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 appearwith the clearest evidence that the undertaking is of greater andmore general utility than the greater part of common trades; andsecondly, that it requires a greater capital than can easily becollected into a private copartnery. If a moderate capital weresufficient, the great utility of the undertaking would not be asufficient reason for establishing a joint stock company; because,in this case, the demand for what it was to produce would readilyand easily be supplied by private adventures. In the four tradesabove mentioned, both those circumstances concur.

The great and general utility of the banking trade whenprudently managed has been fully explained in the second, bookof this Inquiry. But a public bank which is to support public credit,and upon particular emergencies to advance to government thewhole produce of a tax, to the amount, perhaps, of several millions,a year or two before it comes in, requires a greater capital thancan easily be collected into any private copartnery.

The trade of insurance gives great security to the fortunes ofprivate people, and by dividing among a great many that losswhich would ruin an individual, makes it fall light and easy uponthe whole society. In order to give this security, however, it isnecessary that the insurers should have a very large capital.Before the establishment of the two joint stock companies forinsurance in London, a list, it is said, was laid before the attorney-



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general of one hundred and fifty private insurers who had failed inthe course of a few years.

That navigable cuts and canals, and the works which aresometimes necessary for supplying a great city with water, are ofgreat and general utility, while at the same time they frequentlyrequire a greater expense than suits the fortunes of private people,is sufficiently obvious.

Except the four trades above mentioned, I have not been able torecollect any other in which all the three circumstances requisitefor rendering reasonable the establishment of a joint stockcompany concur. The English copper company of London, thelead smelting company, the glass grinding company, have not eventhe pretext of any great or singular utility in the object which theypursue; nor does the pursuit of that object seem to require anyexpense unsuitable to the fortunes of many private men. Whetherthe trade which those companies carry on is reducible to suchstrict rule and method as to render it fit for the management of ajoint stock company, or whether they have any reason to boast oftheir extraordinary profits, I do not pretend to know. The mine-adventurers’ company has been long ago bankrupt. A share in thestock of the British Linen Company of Edinburgh sells, at present,very much below par, though less so that it did some years ago.The joint stock companies which are established for the public-spirited purpose of promoting some particular manufacture, overand above managing their own affairs ill, to the dimunition of thegeneral stock of the society, can in other respects scarce ever failto do more harm than good. Notwithstanding the most uprightintentions, the unavoidable partiality of their directors toparticular branches of the manufacture of which the undertakers



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mislead and impose upon them is a real discouragement to therest, and necessarily breaks, more or less, that natural proportionwhich would otherwise establish itself between judicious industryand profit, and which, to the general industry of the country, is ofall encouragements the greatest and the most effectual.

ARTICLE II

Of the Expense of the Institutions for the Education of Youth

The institutions for the education of the youth may, in the samemanner, furnish a revenue sufficient for defraying their ownexpense. The fee or honorary which the scholar pays to the masternaturally constitutes a revenue of this kind.

Even where the reward of the master does not arise altogetherfrom this natural revenue, it still is not necessary that it should bederived from that general revenue of the society, of which thecollection and application is, in most countries, assigned to theexecutive power. Through the greater part of Europe, accordingly,the endowment of schools and colleges makes either no chargeupon that general revenue, or but a very small one. It everywherearises chiefly from some local or provincial revenue, from the rentof some landed estate, or from the interest of some sum of moneyallotted and put under the management of trustees for thisparticular purpose, sometimes by the sovereign himself, andsometimes by some private donor.

Have those public endowments contributed in general topromote the end of their institution? Have they contributed toencourage the diligence and to improve the abilities of the



1014

teachers? Have they directed the course of education towardsobjects more useful, both to the individual and to the public, thanthose to which it would naturally have gone of its own accord? Itshould not seem very difficult to give at least a probable answer toeach of those questions.

In every profession, the exertion of the greater part of thosewho exercise it is always in proportion to the necessity they areunder of making that exertion. This necessity is greatest withthose to whom the emoluments of their profession are the onlysource from which they expect their fortune, or even theirordinary 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, wherethe competition is free, the rivalship of competitors, who are allendeavouring to justle one another out of employment, obligesevery man to endeavour to execute his work with a certain degreeof exactness. The greatness of the objects which are to be acquiredby success in some particular professions may, no doubt,sometimes animate the exertion of a few men of extraordinaryspirit and ambition. Great objects, however, are evidently notnecessary in order to occasion the greatest exertions. Rivalshipand emulation render excellency, even in mean professions, anobject of ambition, and frequently occasion the very greatestexertions. Great objects, on the contrary, alone and unsupportedby the necessity of application, have seldom been sufficient tooccasion any considerable exertion. In England, success in theprofession of the law leads to some very great objects of ambition;and yet how few men, born to easy fortunes, have ever in thiscountry been eminent in that profession!



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The endowments of schools and colleges have necessarilydiminished more or less the necessity of application in theteachers. Their subsistence, so far as it arises from their salaries, isevidently derived from a fund altogether independent of theirsuccess and reputation in their particular professions.

In some universities the salary makes but a part, and frequentlybut a small part, of the emoluments of the teacher, of which thegreater part arises from the honoraries or fees of his pupils. Thenecessity of application, though always more or less diminished, isnot in this case entirely taken away. Reputation in his profession isstill of some importance to him, and he still has some dependencyupon the affection, gratitude, and favourable report of those whohave attended upon his instructions; and these favourablesentiments he is likely to gain in no way so well as by deservingthem, that is, by the abilities and diligence with which hedischarges every part of his duty.

In other universities the teacher is prohibited from receivingany honorary or fee from his pupils, and his salary constitutes thewhole of the revenue which he derives from his office. His interestis, in this case, set as directly in opposition to his duty as it ispossible to set it. It is the interest of every man to live as much athis ease as he can; and if his emoluments are to be precisely thesame, whether he does or does not perform some very laboriousduty, it is certainly his interest, at least as interest is vulgarlyunderstood, either to neglect it altogether, or, if he is subject tosome authority which will not suffer him to do this, to perform it inas careless and slovenly a manner as that authority will permit. Ifhe is naturally active and a lover of labour, it is his interest toemploy that activity in any way from which he can derive some



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advantage, rather than in the performance of his duty, from whichhe can derive none.

If the authority to which he is subject resides in the bodycorporate, the college, or university, of which he himself is amember, and which the greater part of the other members are,like himself, persons who either are or ought to be teachers, theyare likely to make a common cause, to be all very indulgent to oneanother, and every man to consent that his neighbour may neglecthis duty, provided he himself is allowed to neglect his own. In theuniversity of Oxford, the greater part of the public professors have,for these many years, given up altogether even the pretence ofteaching.

If the authority to which he is subject resides, not so much inthe body corporate of which he is a member, as in some otherextraneous persons—in the bishop of the diocese, for example; inthe governor of the province; or, perhaps, in some minister ofstate—it is not indeed in this case very likely that he will besuffered to neglect his duty altogether. All that such superiors,however, can force him to do, is to attend upon his pupils a certainnumber of hours, that is, to give a certain number of lectures inthe week or in the year. What those lectures shall be must stilldepend upon the diligence of the teacher; and that diligence islikely to be proportioned to the motives which he has for exertingit. An extraneous jurisdiction of this kind, besides, is liable to beexercised both ignorantly and capriciously. In its nature it isarbitrary and discretionary, and the persons who exercise it,neither attending upon the lectures of the teacher themselves, norperhaps understanding the sciences which it is his business toteach, are seldom capable of exercising it with judgment. From the



1017

insolence of office, too, they are frequently indifferent how theyexercise it, and are very apt to censure or deprive him of his officewantonly, and without any just cause. The person subject to suchjurisdiction is necessarily degraded by it, and, instead of being oneof the most respectable, is rendered one of the meanest and mostcontemptible persons in the society. It is by powerful protectiononly that he can effectually guard himself against the bad usage towhich he is at all times exposed; and this protection he is mostlikely to gain, not by ability or diligence in his profession, but byobsequiousness to the will of his superiors, and by being ready, atall times, to sacrifice to that will the rights, the interest, and thehonour of the body corporate of which he is a member. Whoeverhas attended for any considerable time to the administration of aFrench university must have had occasion to remark the effectswhich naturally result from an arbitrary and extraneousjurisdiction of this kind.

Whatever forces a certain number of students to any college oruniversity, independent of the merit or reputation of the teachers,tends more or less to diminish the necessity of that merit orreputation.

The privileges of graduates in arts, in law, physic, and divinity,when they can be obtained only by residing a certain number ofyears in certain universities, necessarily force a certain number ofstudents to such universities, independent of the merit orreputation of the teachers. The privileges of graduates are a sort ofstatutes of apprenticeship, which have contributed to theimprovement of education, just as the other statutes ofapprenticeship have to that of arts, and manufactures.

The charitable foundations of scholarships, exhibitions,



1018

bursaries, etc., necessarily attach a certain number of students tocertain colleges, independent altogether of the merit of thoseparticular colleges. Were the students upon such charitablefoundations left free to choose what college they liked best, suchliberty might perhaps contribute to excite some emulation amongdifferent colleges. A regulation, on the contrary, which prohibitedeven the independent members of every particular college fromleaving it and going to any other, without leave first asked andobtained of that which they meant to abandon, would tend verymuch to extinguish that emulation.

If in each college the tutor or teacher, who was to instruct eachstudent in all arts and sciences, should not be voluntarily chosenby the student, but appointed by the head of the college; and if, incase of neglect, inability, or bad usage, the student should not beallowed to change him for another, without leave first asked andobtained, such a regulation would not only tend very much toextinguish all emulation among the different tutors of the samecollege, but to diminish very much in all of them the necessity ofdiligence and of attention to their respective pupils. Suchteachers, though very well paid by their students, might be asmuch disposed to neglect them as those who are not paid by themat all, or who have no other recompense but their salary.

If the teacher happens to be a man of sense, it must be anunpleasant thing to him to be conscious, while he is lecturing hisstudents, that he is either speaking or reading nonsense, or what isvery little better than nonsense. It must, too, be unpleasant to himto 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



1019

number of lectures, these motives alone, without any otherinterest, might dispose him to take some pains to give tolerablygood ones. Several different expedients, however, may be fallenupon which will effectually blunt the edge of all those incitementsto diligence. The teacher, instead of explaining to his pupilshimself the science in which he proposes to instruct them, mayread some book upon it; and if this book is written in a foreign anddead language, by interpreting it to them into their own; or, whatwould give him still less trouble, by making them interpret it tohim, and by now and then making an occasional remark upon it,he may flatter himself that he is giving a lecture. The slightestdegree of knowledge and application will enable him to do thiswithout exposing himself to contempt or derision, or sayinganything that is really foolish, absurd, or ridiculous. The disciplineof the college, at the same time, may enable him to force all hispupils to the most regular attendance upon this sham lecture, andto maintain the most decent and respectful behaviour during thewhole time of the performance.

The discipline of colleges and universities is in generalcontrived, not for the benefit of the students, but for the interest,or more properly speaking, for the ease of the masters. Its objectis, in all cases, to maintain the authority of the master, andwhether he neglects or performs his duty, to oblige the students inall cases to behave to him, as if he performed it with the greatestdiligence and ability. It seems to presume perfect wisdom andvirtue in the one order, and the greatest weakness and folly in theother. Where the masters, however, really perform their duty,there are no examples, I believe, that the greater part of thestudents ever neglect theirs. No discipline is ever requisite to force



1020

attendance upon lectures which are really worth the attending, asis well known wherever any such lectures are given. Force andrestraint may, no doubt, be in some degree requisite in order tooblige children, or very young boys, to attend to those parts ofeducation which it is thought necessary for them to acquire duringthat early period of life; but after twelve or thirteen years of age,provided the master does his duty, force or restraint can scarceever be necessary to carry on any part of education. Such is thegenerosity of the greater part of young men, that, so far from beingdisposed to neglect or despise the instructions of their master,provided he shows some serious intention of being of use to them,they are generally inclined to pardon a great deal of incorrectnessin the performance of his duty, and sometimes even to concealfrom the public a good deal of gross negligence.

Those parts of education, it is to be observed, for the teaching ofwhich there are no public institutions, are generally the besttaught. 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; buthe seldom fails of learning to fence or to dance. The good effects ofthe riding school are not commonly so evident. The expense of ariding school is so great, that in most places it is a publicinstitution.

The three most essential parts of literary education, to read,write, and account, it still continues to be more common to acquirein private than in public schools; and it very seldom happens thatanybody fails of acquiring them to the degree in which it isnecessary to acquire them.

In England the public schools are much less corrupted than theuniversities. In the schools the youth are taught, or at least may be



1021

taught, Greek and Latin; that is, everything which the masterspretend to teach, or which, it is expected, they should teach. In theuniversities the youth neither are taught, nor always can find anyproper means of being taught, the sciences which it is the businessof those incorporated bodies to teach. The reward of theschoolmaster in most cases depends principally, in some casesalmost entirely, upon the fees or honoraries of his scholars.Schools have no exclusive privileges. In order to obtain thehonours of graduation, it is not necessary that a person shouldbring a certificate of his having studied a certain number of yearsat a public school. If upon examination he appears to understandwhat is taught there, no questions are asked about the place wherehe learnt it.

The parts of education which are commonly taught inuniversities, it may, perhaps, be said are not very well taught. Buthad it not been for those institutions they would not have beencommonly taught at all, and both the individual and the publicwould have suffered a good deal from the want of those importantparts of education.

The present universities of Europe were originally, the greaterpart of them, ecclesiastical corporations, instituted for theeducation of churchmen. They were founded by the authority ofthe Pope, and were so entirely under his immediate protection,that their members, whether masters or students, had all of themwhat was then called the benefit of clergy, that is, were exemptedfrom the civil jurisdiction of the countries in which their respectiveuniversities were situated, and were amenable only to theecclesiastical tribunals. What was taught in the greater part ofthose universities was suitable to the end of their institution,



1022

either theology, or something that was merely preparatory totheology.

When Christianity was first established by law, a corruptedLatin had become the common language of all the western parts ofEurope. The service of the church accordingly, and the translationof the Bible which was read in churches, were both in thatcorrupted Latin; that is, in the common language of the country.After the irruption of the barbarous nations who overturned theRoman empire, Latin gradually ceased to be the language of anypart of Europe. But the reverence of the people naturallypreserves the established forms and ceremonies of religion longafter the circumstances which first introduced and rendered themreasonable are no more. Though Latin, therefore, was no longerunderstood anywhere by the great body of the people, the wholeservice of the church still continued to be performed in thatlanguage. Two different languages were thus established inEurope, in the same manner as in ancient Egypt; a language of thepriests, and a language of the people; a sacred and a profane; alearned and an unlearned language. But it was necessary that thepriests should understand something of that sacred and learnedlanguage in which they were to officiate; and the study of the Latinlanguage therefore made, from the beginning, an essential part ofuniversity education.

It was not so with that either of the Greek or of the Hebrewlanguage. The infallible decrees of the church had pronounced theLatin translation of the Bible, commonly called the Latin Vulgate,to have been equally dictated by divine inspiration, and thereforeof equal authority with the Greek and Hebrew originals. Theknowledge of those two languages, therefore, not being



1023

indispensably requisite to a churchman, the study of them did notfor a long time make a necessary part of the common course ofuniversity education.

There are some Spanish universities, I am assured, in whichthe study of the Greek language has never yet made any part ofthat course. The first reformers found the Greek text of the NewTestament, and even the Hebrew text of the Old, more favourableto their opinions than the Vulgate translation, which, as mightnaturally be supposed, had been gradually accommodated tosupport the doctrines of the Catholic Church. They set themselves,therefore, to expose the many errors of that translation, which theRoman Catholic clergy were thus put under the necessity ofdefending or explaining. But this could not well be done withoutsome knowledge of the original languages, of which the study wastherefore gradually introduced into the greater part ofuniversities, both of those which embraced, and of those whichrejected, the doctrines of the Reformation. The Greek languagewas 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 thedoctrines of the Reformation were set on foot. In the greater partof universities, therefore, that language was taught previous to thestudy of philosophy, and as soon as the student had made someprogress in the Latin. The Hebrew language having no connectionwith classical learning, and, except the Holy Scriptures, being thelanguage of not a single book in any esteem, the study of it did notcommonly commence till after that of philosophy, and when thestudent had entered upon the study of theology.

Originally the first rudiments both of the Greek and Latin



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languages were taught in universities, and in some universitiesthey still continue to be so. In others it is expected that the studentshould have previously acquired at least the rudiments of one orboth of those languages, of which the study continues to makeeverywhere a very considerable part of university education.

The ancient Greek philosophy was divided into three greatbranches; physics, or natural philosophy; ethics, or moralphilosophy; and logic. This general division seems perfectlyagreeable to the nature of things.

The great phenomena of nature—the revolutions of theheavenly bodies, eclipses, comets; thunder, lightning, and otherextraordinary meteors; the generation, the life, growth, anddissolution of plants and animals—are objects which, as theynecessarily excite the wonder, so they naturally call forth thecuriosity, of mankind to inquire into their causes. Superstitionfirst attempted to satisfy this curiosity, by referring all thosewonderful appearances to the immediate agency of the gods.Philosophy afterwards endeavoured to account for them frommore familiar causes, or from such as mankind were betteracquainted with, than the agency of the gods. As those greatphenomena are the first objects of human curiosity, so the sciencewhich pretends to explain them must naturally have been the firstbranch of philosophy that was cultivated. The first philosophers,accordingly, of whom history has preserved any account, appearto have been natural philosophers.

In every age and country of the world men must have attendedto the characters, designs, and actions of one another, and manyreputable rules and maxims for the conduct of human life musthave been laid down and approved of by common consent. As



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soon as writing came into fashion, wise men, or those who fanciedthemselves such, would naturally endeavour to increase thenumber of those established and respected maxims, and toexpress their own sense of what was either proper or improperconduct, sometimes in the more artificial form of apologues, likewhat are called the fables of Æsop; and sometimes in the moresimple one of apophthegms, or wise sayings, like the Proverbs ofSolomon, the verses of Theognis and Phocyllides, and some part ofthe works of Hesiod. They might continue in this manner for along time merely to multiply the number of those maxims ofprudence and morality, without even attempting to arrange themin any very distinct or methodical order, much less to connectthem together by one or more general principles from which theywere all deducible, like effects from their natural causes. Thebeauty of a systematical arrangement of different observationsconnected by a few common principles was first seen in the rudeessays of those ancient times towards a system of naturalphilosophy.

Something of the same kind was afterwards attempted inmorals. The maxims of common life were arranged in somemethodical order, and connected together by a few commonprinciples, in the same manner as they had attempted to arrangeand connect the phenomena of nature. The science whichpretends to investigate and explain those connecting principles iswhat is properly called moral philosophy.

Different authors gave different systems both of natural andmoral philosophy. But the arguments by which they supportedthose different systems, for from being always demonstrations,were frequently at best but very slender probabilities, and



1026

sometimes mere sophisms, which had no other foundation but theinaccuracy and ambiguity of common language. Speculativesystems have in all ages of the world been adopted for reasons toofrivolous to have determined the judgment of any man of commonsense in a matter of the smallest pecuniary interest. Grosssophistry has scarce ever had any influence upon the opinions ofmankind, except in matters of philosophy and speculation; and inthese it has frequently had the greatest. The patrons of eachsystem of natural and moral philosophy naturally endeavoured toexpose the weakness of the arguments adduced to support thesystems which were opposite to their own. In examining thosearguments, they were necessarily led to consider the differencebetween a probable and a demonstrative argument, between afallacious and a conclusive one: and Logic, or the science of thegeneral principles of good and bad reasoning, necessarily aroseout of the observations which a scrutiny of this kind gave occasionto. Though in its origin posterior both to physics and to ethics, itwas commonly taught, not indeed in all, but in the greater part ofthe ancient schools of philosophy, previously to either of thosesciences. The student, it seems to have been thought, tounderstand well the difference between good and bad reasoningbefore he was led to reason upon subjects of so great importance.

This ancient division of philosophy into three parts was in thegreater part of the universities of Europe changed for another intofive.

In the ancient philosophy, whatever was taught concerning thenature either of the human mind or of the Deity, made a part ofthe system of physics. Those beings, in whatever their essencemight be supposed to consist, were parts of the great system of the



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universe, and parts, too, productive of the most important effects.Whatever human reason could either conclude or conjectureconcerning them, made, as it were, two chapters, though no doubttwo very important ones, of the science which pretended to givean account of the origin and revolutions of the great system of theuniverse. But in the universities of Europe, where philosophy wastaught only as subservient to theology, it was natural to dwelllonger upon these two chapters than upon any other of thescience. They were gradually more and more extended, and weredivided into many inferior chapters, till at last the doctrine ofspirits, of which so little can be known, came to take up as muchroom in the system of philosophy as the doctrine of bodies, ofwhich so much can be known. The doctrines concerning those twosubjects were considered as making two distinct sciences. Whatare called Metaphysics or Pneumatics were set in opposition toPhysics, and were cultivated not only as the more sublime, but, forthe purposes of a particular profession, as the more useful scienceof the two. The proper subject of experiment and observation, asubject in which a careful attention is capable of making so manyuseful discoveries, was almost entirely neglected. The subject inwhich, after a few very simple and almost obvious truths, the mostcareful attention can discover nothing but obscurity anduncertainty, and can consequently produce nothing but subtletiesand sophisms, was greatly cultivated.

When those two sciences had thus been set in opposition to oneanother, the comparison between them naturally gave birth to athird, to what was called Ontology, or the science which treated ofthe qualities and attributes which were common to both thesubjects of the other two sciences. But if subtleties and sophisms



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composed the greater part of the Metaphysics or Pneumatics ofthe schools, they composed the whole of this cobweb science ofOntology, 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 afamily, of a state, and of the great society of mankind, was theobject which the ancient moral philosophy proposed toinvestigate. In that philosophy the duties of human life weretreated as subservient to the happiness and perfection of humanlife. But when moral, as well as natural philosophy, came to betaught only as subservient to theology, the duties of human lifewere treated of as chiefly subservient to the happiness of a life tocome. In the ancient philosophy the perfection of virtue wasrepresented as necessarily productive, to the person whopossessed it, of the most perfect happiness in this life. In themodern philosophy it was frequently represented as generally, orrather as almost always, inconsistent with any degree of happinessin this life; and heaven was to be earned only by penance andmortification, by the austerities and abasement of a monk; not bythe liberal, generous, and spirited conduct of a man. Casuistry andan ascetic morality made up, in most cases, the greater part of themoral philosophy of the schools. By far the most important of allthe different branches of philosophy became in this manner by farthe most corrupted.

Such, therefore, was the common course of philosophicaleducation in the greater part of the universities in Europe. Logicwas taught first: Ontology came in the second place:Pneumatology, comprehending the doctrine concerning thenature of the human soul and of the Deity, in the third: in the



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fourth followed a debased system of moral philosophy which wasconsidered as immediately connected with the doctrines ofPneumatology, with the immortality of the human soul, and withthe rewards and punishments which, from the justice of the Deity,were to be expected in a life to come: a short and superficialsystem of Physics usually concluded the course.

The alterations which the universities of Europe thusintroduced into the ancient course of philosophy were all meantfor the education of ecclesiastics, and to render it a more properintroduction to the study of theology. But the additional quantityof subtlety and sophistry, the casuistry and the ascetic moralitywhich those alterations introduced into it, certainly did not renderit more proper for the education of gentlemen or men of the world,or more likely either to improve the understanding, or to mend theheart.

This course of philosophy is what still continues to be taught inthe greater part of the universities of Europe, with more or lessdiligence, according as the constitution of each particularuniversity happens to render diligence more or less necessary tothe teachers. In some of the richest and best endowed universities,the tutors content themselves with teaching a few unconnectedshreds and parcels of this corrupted course; and even these theycommonly teach very negligently and superficially.

The improvements which, in modern times, have been made inseveral different branches of philosophy have not, the greater partof them, been made in universities, though some no doubt have.The greater part of universities have not even been very forwardto adopt those improvements after they were made; and several ofthose learned societies have chosen to remain, for a long time, the



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sanctuaries in which exploded systems and obsolete prejudicesfound shelter and protection after they had been hunted out ofevery other corner of the world. In general, the richest and bestendowed universities have been the slowest in adopting thoseimprovements, and the most averse to permit any considerablechange in the established plan of education. Those improvementswere more easily introduced into some of the poorer universities,in which the teachers, depending upon their reputation for thegreater part of their subsistence, were obliged to pay moreattention to the current opinions of the world.

But though the public schools and universities of Europe wereoriginally intended only for the education of a particularprofession, that of churchmen; and though they were not alwaysvery diligent in instructing their pupils even in the sciences whichwere supposed necessary for that profession, yet they graduallydrew to themselves the education of almost all other people,particularly of almost all gentlemen and men of fortune. No bettermethod, it seems, could be fallen upon of spending, with anyadvantage, the long interval between infancy and that period oflife at which men begin to apply in good earnest to the realbusiness of the world, the business which is to employ themduring the remainder of their days. The greater part of what istaught in schools and universities, however, does not seem to bethe most proper preparation for that business.

In England it becomes every day more and more the custom tosend young people to travel in foreign countries immediately upontheir leaving school, and without sending them to any university.Our young people, it is said, generally return home muchimproved by their travels. A young man who goes abroad at



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seventeen or eighteen, and returns home at one and twenty,returns three or four years older than he was when he wentabroad; and at that age it is very difficult not to improve a gooddeal in three or four years. In the course of his travels he generallyacquires some knowledge of one or two foreign languages; aknowledge, however, which is seldom sufficient to enable himeither to speak or write them with propriety. In other respects hecommonly returns home more conceited, more unprincipled, moredissipated, and more incapable of any serious application either tostudy or to business than he could well have become in so short atime had he lived at home. By travelling so very young, byspending in the most frivolous dissipation the most precious yearsof his life, at a distance from the inspection and control of hisparents and relations, every useful habit which the earlier parts ofhis education might have had some tendency to form in him,instead of being riveted and confirmed, is almost necessarilyeither weakened or effaced. Nothing but the discredit into whichthe universities are allowing themselves to fall could ever havebrought into repute so very absurd a practice as that of travellingat this early period of life. By sending his son abroad, a fatherdelivers himself at least for some time, from so disagreeable anobject as that of a son unemployed, neglected, and going to ruinbefore his eyes.

Such have been the effects of some of the modern institutionsfor education.

Different plans and different institutions for education seem tohave taken place in other ages and nations.

In the republics of ancient Greece, every free citizen wasinstructed, under the direction of the public magistrate, in



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gymnastic exercises and in music. By gymnastic exercises it wasintended to harden his body, to sharpen his courage, and toprepare him for the fatigues and dangers of war; and as the Greekmilitia was, by all accounts, one of the best that ever was in theworld, this part of their public education must have answeredcompletely the purpose for which it was intended. By the otherpart, music, it was proposed, at least by the philosophers andhistorians who have given us an account of those institutions, tohumanize the mind, to soften the temper, and to dispose it forperforming all the social and moral duties both of public andprivate life.

In ancient Rome the exercises of the Campus Martius answeredthe purpose as those of the Gymnasium in ancient Greece, andthey seem to have answered it equally well. But among theRomans there was nothing which corresponded to the musicaleducation of the Greeks. The morals of the Romans, however, bothin private and public life, seem to have been not only equal, but,upon the whole, a good deal superior to those of the Greeks. Thatthey were superior in private life, we have the express testimonyof Polybius and of Dionysius of Halicarnassus, two authors wellacquainted with both nations; and the whole tenor if the Greekand Roman history bears witness to the superiority of the publicmorals of the Romans. The good temper and moderation ofcontending factions seems to be the most essential circumstancesin the public morals of a free people. But the factions of the Greekswere almost always violent and sanguinary; whereas, till the timeof the Gracchi, no blood had ever been shed in any Roman faction;and from the time of the Gracchi the Roman republic may beconsidered as in reality dissolved. Notwithstanding, therefore, the



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very respectable authority of Plato, Aristotle, and Polybius, andnotwithstanding the very ingenious reasons by which Mr.Montesquieu endeavours to support that authority, it seemsprobable that the musical education of the Greeks had no greateffect in mending their morals, since, without any such education,those of the Romans were upon the whole superior. The respect ofthose ancient sages for the institutions of their ancestors hadprobably disposed them to find much political wisdom in whatwas, perhaps, merely an ancient custom, continued withoutinterruption from the earliest period of those societies to the timesin which they had arrived at a considerable degree of refinement.Music and dancing are the great amusements of almost allbarbarous nations, and the great accomplishments which aresupposed to fit any man for entertaining his society. It is so at thisday among the negroes on the coast of Africa. It was so among theancient Celts, among the ancient Scandinavians, and, as we maylearn from Homer, among the ancient Greeks in the timespreceding the Trojan war. When the Greek tribes had formedthemselves into little republics, it was natural that the study ofthose accomplishments should, for a long time, make a part of thepublic and common education of the people.

The masters who instructed the young people, either in musicor in military exercises, do not seem to have been paid, or evenappointed by the state, either in Rome or even in Athens, theGreek republic of whose laws and customs we are the bestinformed. The state required that every free citizen should fithimself for defending it in war, and should, upon that account,learn his military exercises. But it left him to learn them of suchmasters as he could find, and it seems to have advanced nothing



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for this purpose but a public field or place of exercise in which heshould practise and perform them.

In the early ages both of the Greek and Roman republics, theother parts of education seem to have consisted in learning toread, write, and account according to the arithmetic of the times.These accomplishments the richer citizens seem frequently tohave acquired at home by the assistance of some domesticpedagogue, who was generally either a slave or a freed-man; andthe poorer citizens, in the schools of such masters as made a tradeof teaching for hire. Such parts of education, however, wereabandoned altogether to the care of the parents or guardians ofeach individual. It does not appear that the state ever assumed anyinspection or direction of them. By a law of Solon, indeed, thechildren were acquitted from maintaining those parents in theirold age who had neglected to instruct them in some profitabletrade or business.

In the progress of refinement, when philosophy and rhetoriccame into fashion, the better sort of people used to send theirchildren to the schools of philosophers and rhetoricians, in orderto be instructed in these fashionable sciences. But those schoolswere not supported by the public. They were for a long time barelytolerated by it. The demand for philosophy and rhetoric was for along time so small that the first professed teachers of either couldnot find constant employment in any one city, but were obliged totravel about from place to place. In this manner lived Zeno of Elea,Protagoras, Gorgias, Hippias, and many others. As the demandincreased, the schools both of philosophy and rhetoric becamestationary; first in Athens, and afterwards in several other cities.

The state, however, seems never to have encouraged them



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further than by assigning some of them a particular place to teachin, which was sometimes done, too, by private donors. The stateseems to have assigned the Academy to Plato, the Lyceum toAristotle, and the Portico to Zeno of Citta, the founder of theStoics. But Epicurus bequeathed his gardens to his own school.Till about the time of Marcus Antonius, however, no teacherappears to have had any salary from the public, or to have had anyother emoluments but what arose from the honoraries or fees ofhis scholars. The bounty which that philosophical emperor, as welearn from Lucian, bestowed upon one of the teachers ofphilosophy, probably lasted no longer than his own life. There wasnothing equivalent to the privileges of graduation, and to haveattended any of those schools was not necessary, in order to bepermitted to practise any particular trade or profession. If theopinion of their own utility could not draw scholars to them, thelaw neither forced anybody to go to them nor rewarded anybodyfor having gone to them. The teachers had no jurisdiction overtheir pupils, nor any other authority besides that naturalauthority, which superior virtue and abilities never fail to procurefrom young people towards those who are entrusted with any partof 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 particularfamilies. The young people, however, who wished to acquireknowledge in the law, had no public school to go to, and had noother method of studying it than by frequenting the company ofsuch of their relations and friends as were supposed to understandit. It is perhaps worth while to remark, that though the Laws of theTwelve Tables were, many of them, copied from those of some



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ancient Greek republics, yet law never seems to have grown up tobe a science in any republic of ancient Greece. In Rome it becamea science very early, and gave a considerable degree of illustrationto those citizens who had the reputation of understanding it. Inthe republics of ancient Greece, particularly in Athens, theordinary courts of justice consisted of numerous, and thereforedisorderly, bodies of people, who frequently decided almost atrandom, or as clamour, faction, and party spirit happened todetermine. The ignominy of an unjust decision, when it was to bedivided among five hundred, a thousand, or fifteen hundredpeople (for some of their courts were so very numerous), could notfall very heavy upon any individual. At Rome, on the contrary, theprincipal courts of justice consisted either of a single judge or of asmall number of judges, whose characters, especially as theydeliberated always in public, could not fail to be very muchaffected by any rash or unjust decision. In doubtful cases suchcourts, from their anxiety to avoid blame, would naturallyendeavour to shelter themselves under the example or precedentof the judges who had sat before them, either in the same or insome other court. This attention to practice and precedentnecessarily formed the Roman law into that regular and orderlysystem in which it has been delivered down to us; and the likeattention has had the like effects upon the laws of every othercountry where such attention has taken place.

The superiority of character in the Romans over that of theGreeks, so much remarked by Polybius and Dionysius ofHalicarnassus, was probably more owing to the better constitutionof their courts of justice than to any of the circumstances to whichthose authors ascribe it. The Romans are said to have been



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particularly distinguished for their superior respect to an oath.But the people who were accustomed to make oath only beforesome diligent and well-informed court of justice would naturallybe much more attentive to what they swore than they who wereaccustomed to do the same thing before mobbish and disorderlyassemblies.

The abilities, both civil and military, of the Greeks and Romanswill readily be allowed to have been at least equal to those of anymodern nation. Our prejudice is perhaps rather to overrate them.But except in what related to military exercises, the state seems tohave been at no pains to form those great abilities, for I cannot beinduced to believe that the musical education of the Greeks couldbe of much consequence in forming them. Masters, however, hadbeen found, it seems, for instructing the better sort of peopleamong those nations in every art and science in which thecircumstances of their society rendered it necessary or convenientfor them to be instructed.

The demand for such instruction produced what it alwaysproduces—the talent for giving it; and the emulation which anunrestrained competition never fails to excite, appears to havebrought that talent to a very high degree of perfection. In theattention which the ancient philosophers excited, in the empirewhich they acquired over the opinions and principles of theirauditors, in the faculty which they possessed of giving a certaintone and character to the conduct and conversation of thoseauditors, they appear to have been much superior to any modernteachers. In modern times, the diligence of public teachers is moreor less corrupted by the circumstances which render them moreor less independent of their success and reputation in their



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particular professions. Their salaries, too, put the private teacher,who would pretend to come into competition with them, in thesame state with a merchant who attempts to trade without abounty in competition with those who trade with a considerableone. If he sells his goods at nearly the same price, he cannot havethe same profit, and at least, if not bankruptcy and ruin, willinfallibly be his lot. If he attempts to sell them much dearer, he islikely to have so few customers that his circumstances will not bemuch mended. The privileges of graduation, besides, are in manycountries necessary, or at least extremely convenient, to most menof learned professions, that is, to the far greater part of those whohave occasion for a learned education. But those privileges can beobtained only by attending the lectures of the public teachers. Themost careful attendance upon the ablest instructions of anyprivate teacher cannot always give any title to demand them. It isfrom these different causes that the private teacher of any of thesciences which are commonly taught in universities is in moderntimes generally considered as in the very lowest order of men ofletters. A man of real abilities can scarce find out a morehumiliating or a more unprofitable employment to turn them to.The endowment of schools and colleges have, in this manner, notonly corrupted the diligence of public teachers, but have renderedit almost impossible to have any good private ones.

Were there no public institutions for education, no system, noscience would be taught for which there was not some demand, orwhich the circumstances of the times did not render it eithernecessary, or convenient, or at least fashionable, to learn. Aprivate teacher could never find his account in teaching either anexploded and antiquated system of a science acknowledged to be



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useful, or a science universally believed to be a mere useless andpedantic heap of sophistry and nonsense. Such systems, suchsciences, can subsist nowhere, but in those incorporated societiesfor education whose prosperity and revenue are in a greatmeasure independent of their reputation and altogetherindependent of their industry. Were there no public institutionsfor education, a gentleman, after going through with applicationand abilities the most complete course of education which thecircumstances of the times were supposed to afford, could notcome into the world completely ignorant of everything which isthe common subject of conversation among gentlemen and men ofthe world.

There are no public institutions for the education of women,and there is accordingly nothing useless, absurd, or fantastical inthe common course of their education. They are taught what theirparents or guardians judge it necessary or useful for them to learn,and they are taught nothing else. Every part of their educationtends evidently to some useful purpose; either to improve thenatural attractions of their person, or to form their mind toreserve, to modesty, to chastity, and to economy; to render themboth likely to become the mistresses of a family, and to behaveproperly when they have become such. In every part of her life awoman feels some conveniency or advantage from every part ofher education. It seldom happens that a man, in any part of hislife, derives any conveniency or advantage from some of the mostlaborious and troublesome parts of his education.

Ought the public, therefore, to give no attention, it may beasked, 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



1040

to in the different orders of the people? and in what manner oughtit to attend to them?

In some cases the state of the society necessarily places thegreater part of individuals in such situations as naturally form inthem, without any attention of government, almost all the abilitiesand virtues which that state requires, or perhaps can admit of. Inother cases the state of the society does not place the part ofindividuals in such situations, and some attention of governmentis necessary in order to prevent the almost entire corruption anddegeneracy of the great body of the people.

In the progress of the division of labour, the employment of thefar greater part of those who live by labour, that is, of the greatbody of the people, comes to be confined to a few very simpleoperations, frequently to one or two. But the understandings ofthe greater part of men are necessarily formed by their ordinaryemployments. The man whose whole life is spent in performing afew simple operations, of which the effects are perhaps always thesame, or very nearly the same, has no occasion to exert hisunderstanding or to exercise his invention in finding outexpedients for removing difficulties which never occur. Henaturally loses, therefore, the habit of such exertion, and generallybecomes as stupid and ignorant as it is possible for a humancreature to become. The torpor of his mind renders him not onlyincapable of relishing or bearing a part in any rationalconversation, but of conceiving any generous, noble, or tendersentiment, and consequently of forming any just judgmentconcerning many even of the ordinary duties of private life. Of thegreat and extensive interests of his country he is altogetherincapable of judging, and unless very particular pains have been



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taken to render him otherwise, he is equally incapable ofdefending his country in war. The uniformity of his stationary lifenaturally corrupts the courage of his mind, and makes him regardwith abhorrence the irregular, uncertain, and adventurous life of asoldier. It corrupts even the activity of his body, and renders himincapable of exerting his strength with vigour and perseverance inany other employment than that to which he has been bred. Hisdexterity at his own particular trade seems, in this manner, to beacquired at the expense of his intellectual, social, and martialvirtues. But in every improved and civilised society this is the stateinto which the labouring poor, that is, the great body of the people,must necessarily fall, unless government takes some pains toprevent it.

It is otherwise in the barbarous societies, as they are commonlycalled, of hunters, of shepherds, and even of husbandmen in thatrude state of husbandry which precedes the improvement ofmanufactures and the extension of foreign commerce. In suchsocieties the varied occupations of every man oblige every man toexert his capacity and to invent expedients for removingdifficulties which are continually occurring. Invention is keptalive, and the mind is not suffered to fall into that drowsy stupiditywhich, in a civilised society, seems to benumb the understandingof almost all the inferior ranks of people.

In those barbarous societies, as they are called, every man, ithas already been observed, is a warrior. Every man, too, is in somemeasure a statesman, and can form a tolerable judgmentconcerning the interest of the society and the conduct of thosewho govern it. How far their chiefs are good judges in peace, orgood leaders in war, is obvious to the observation of almost every



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single man among them.In such a society, indeed, no man can well acquire that

improved and refined understanding which a few men sometimespossess in a more civilised state. Though in a rude society there isa good deal of variety in the occupations of every individual, thereis not a great deal in those of the whole society. Every man does,or is capable of doing, almost every thing which any other mandoes, or is capable of doing. Every man has a considerable degreeof knowledge, ingenuity, and invention: but scarce any man has agreat degree. The degree, however, which is commonly possessed,is generally sufficient for conducting the whole simple business ofthe society. In a civilised state, on the contrary, though there islittle 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 ofobjects to the contemplation of those few, who, being attached tono particular occupation themselves, have leisure and inclinationto examine the occupations of other people. The contemplation ofso great a variety of objects necessarily exercises their minds inendless comparisons and combinations, and renders theirunderstandings, in an extraordinary degree, both acute andcomprehensive. Unless those few, however, happen to be placed insome very particular situations, their great abilities, thoughhonourable to themselves, may contribute very little to the goodgovernment or happiness of their society. Notwithstanding thegreat abilities of those few, all the nobler parts of the humancharacter may be, in a great measure, obliterated andextinguished in the great body of the people.

The education of the common people requires, perhaps, in a



1043

civilised and commercial society the attention of the public morethan that of people of some rank and fortune. People of some rankand fortune are generally eighteen or nineteen years of age beforethey enter upon that particular business, profession, or trade, bywhich they propose to distinguish themselves in the world. Theyhave before that full time to acquire, or at least to fit themselvesfor afterwards acquiring, every accomplishment which canrecommend them to the public esteem, or render them worthy ofit. Their parents or guardians are generally sufficiently anxiousthat they should be so accomplished, and are, in most cases,willing enough to lay out the expense which is necessary for thatpurpose. If they are not always properly educated, it is seldomfrom the want of expense laid out upon their education, but fromthe improper application of that expense. It is seldom from thewant of masters, but from the negligence and incapacity of themasters who are to be had, and from the difficulty, or rather fromthe impossibility, which there is in the present state of things offinding any better. The employments, too, in which people of somerank or fortune spend the greater part of their lives are not, likethose of the common people, simple and uniform. They are almostall of them extremely complicated, and such as exercise the headmore than the hands. The understandings of those who areengaged in such employments can seldom grow torpid for want ofexercise. 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 mayperfect themselves in every branch either of useful or ornamentalknowledge of which they may have laid the foundation, or forwhich they may have acquired some taste in the earlier part of life.



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It is otherwise with the common people. They have little time tospare for education. Their parents can scarce afford to maintainthem even in infancy. As soon as they are able to work they mustapply to some trade by which they can earn their subsistence.That trade, too, is generally so simple and uniform as to give littleexercise to the understanding, while, at the same time, theirlabour is both so constant and so severe, that it leaves them littleleisure and less inclination to apply to, or even to think of,anything else.

But though the common people cannot, in any civilised society,be so well instructed as people of some rank and fortune, the mostessential parts of education, however, to read, write, and account,can be acquired at so early a period of life that the greater parteven of those who are to be bred to the lowest occupations havetime to acquire them before they can be employed in thoseoccupations. For a very small expense the public can facilitate, canencourage, and can even impose upon almost the whole body ofthe people the necessity of acquiring those most essential parts ofeducation.

The public can facilitate this acquisition by establishing inevery parish or district a little school, where children may betaught for a reward so moderate that even a common labourermay afford it; the master being partly, but not wholly, paid by thepublic, because, if he was wholly, or even principally, paid by it, hewould soon learn to neglect his business. In Scotland theestablishment of such parish schools has taught almost the wholecommon people to read, and a very great proportion of them towrite and account. In England the establishment of charity schoolshas had an effect of the same kind, though not so universally,



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because the establishment is not so universal. If in those littleschools the books, by which the children are taught to read, were alittle more instructive than they commonly are, and if, instead of alittle smattering of Latin, which the children of the commonpeople are sometimes taught there, and which can scarce ever beof any use to them, they were instructed in the elementary parts ofgeometry and mechanics, the literary education of this rank ofpeople would perhaps be as complete as it can be. There is scarcea common trade which does not afford some opportunities ofapplying to it the principles of geometry and mechanics, andwhich would not therefore gradually exercise and improve thecommon people in those principles, the necessary introduction tothe most sublime as well as to the most useful sciences.

The public can encourage the acquisition of those mostessential parts of education by giving small premiums, and littlebadges of distinction, to the children of the common people whoexcel in them.

The public can impose upon almost the whole body of thepeople the necessity of acquiring those most essential parts ofeducation, by obliging every man to undergo an examination orprobation in them before he can obtain the freedom in anycorporation, or be allowed to set up any trade either in a village ortown corporate.

It was in this manner, by facilitating the acquisition of theirmilitary and gymnastic exercises, by encouraging it, and even byimposing upon the whole body of the people the necessity oflearning those exercises, that the Greek and Roman republicsmaintained the martial spirit of their respective citizens. Theyfacilitated the acquisition of those exercises by appointing a



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certain place for learning and practising them, and by granting tocertain masters the privilege of teaching in that place. Thosemasters do not appear to have had either salaries or exclusiveprivileges of any kind. Their reward consisted altogether in whatthey got from their scholars; and a citizen who had learnt hisexercises in the public gymnasia had no sort of legal advantageover one who had learnt them privately, provided the latter hadlearnt them equally well. Those republics encouraged theacquisition of those exercises by bestowing little premiums andbadges of distinction upon those who excelled in them. To havegained a prize in the Olympic, Isthmian, or Nemæan games, gaveillustration, not only to the person who gained it, but to his wholefamily and kindred. The obligation which every citizen was underto serve a certain number of years, if called upon, in the armies ofthe republic, sufficiently imposed the necessity of learning thoseexercises, without which he could not be fit for that service.

That in the progress of improvement the practice of militaryexercises, unless government takes proper pains to support it,goes gradually to decay, and, together with it, the martial spirit ofthe great body of the people, the example of modern Europesufficiently demonstrates. But the security of every society mustalways depend, more or less, upon the martial spirit of the greatbody of the people.

In the present times, indeed, that martial spirit alone, andunsupported by a well-disciplined standing army, would notperhaps be sufficient for the defence and security of any society.But where every citizen had the spirit of a soldier, a smallerstanding army would surely be requisite. That spirit, besides,would necessarily diminish very much the dangers to liberty,



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whether real or imaginary, which are commonly apprehendedfrom a standing army. As it would very much facilitate theoperations of that army against a foreign invader, so it wouldobstruct them as much if, unfortunately, they should ever bedirected against the constitution of the state.

The ancient institutions of Greece and Rome seem to have beenmuch more effectual for maintaining the martial spirit of the greatbody of the people than the establishment of what are called themilitias of modern times. They were much more simple. Whenthey were once established they executed themselves, and itrequired little or no attention from government to maintain themin the most perfect vigour.

Whereas to maintain, even in tolerable execution, the complexregulations of any modern militia, requires the continual andpainful attention of government, without which they areconstantly falling into total neglect and disuse. The influence,besides, of the ancient institutions was much more universal. Bymeans of them the whole body of the people was completelyinstructed in the use of arms.

Whereas it is but a very small part of them who can ever be soinstructed by the regulations of any modern militia, except,perhaps, that of Switzerland. But a coward, a man incapableeither of defending or of revenging himself, evidently wants one ofthe most essential parts of the character of a man. He is as muchmutilated and deformed in his mind as another is in his body, whois either deprived of some of its most essential members, or haslost the use of them. He is evidently the more wretched andmiserable of the two; because happiness and misery, which residealtogether in the mind, must necessarily depend more upon the



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healthful or unhealthful, the mutilated or entire state of the mind,than upon that of the body. Even though the martial spirit of thepeople were of no use towards the defence of the society, yet toprevent that sort of mental mutilation, deformity, andwretchedness, which cowardice necessarily involves in it, fromspreading themselves through the great body of the people, wouldstill deserve the most serious attention of government, in the samemanner as it would deserve its most serious attention to prevent aleprosy or any other loathsome and offensive disease, thoughneither mortal nor dangerous, from spreading itself among them,though perhaps no other public good might result from suchattention besides the prevention of so great a public evil.

The same thing may be said of the gross ignorance andstupidity which, in a civilised society, seem so frequently tobenumb the understandings of all the inferior ranks of people. Aman without the proper use of the intellectual faculties of a man,is, if possible, more contemptible than even a coward, and seemsto be mutilated and deformed in a still more essential part of thecharacter of human nature. Though the state was to derive noadvantage from the instruction of the inferior ranks of people, itwould still deserve its attention that they should not be altogetheruninstructed.

The state, however, derives no inconsiderable advantage fromtheir instruction. The more they are instructed the less liable theyare to the delusions of enthusiasm and superstition, which, amongignorant nations, frequently occasion the most dreadful disorders.An instructed and intelligent people, besides, are always moredecent and orderly than an ignorant and stupid one. They feelthemselves, each individually, more respectable and more likely to



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obtain the respect of their lawful superiors, and they are thereforemore disposed to respect those superiors. They are more disposedto examine, and more capable of seeing through, the interestedcomplaints of faction and sedition, and they are, upon thataccount, less apt to be misled into any wanton or unnecessaryopposition to the measures of government. In free countries,where the safety of government depends very much upon thefavourable judgment which the people may form of its conduct, itmust surely be of the highest importance that they should not bedisposed to judge rashly or capriciously concerning it.

ARTICLE III

Of the Expense of the Institutions for the Instruction of Peopleof all Ages

The institutions for the instruction of people of all ages are chieflythose for religious instruction. This is a species of instruction ofwhich the object is not so much to render the people good citizensin this world, as to prepare them for another and a better world ina life to come. The teachers of the doctrine which contains thisinstruction, in the same manner as other teachers, may eitherdepend altogether for their subsistence upon the voluntarycontributions of their hearers, or they may derive it from someother fund to which the law of their country may entitle them;such as a landed estate, a tithe or land tax, an established salary orstipend. Their exertion, their zeal and industry, are likely to bemuch greater in the former situation than in the latter.

In this respect the teachers of new religions have always had a



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considerable advantage in attacking those ancient and establishedsystems of which the clergy, reposing themselves upon theirbenefices, had neglected to keep up the fervour of faith anddevotion in the great body of the people, and having giventhemselves up to indolence, were become altogether incapable ofmaking any vigorous exertion in defence even of their ownestablishment. The clergy of an established and well-endowedreligion frequently become men of learning and elegance, whopossess all the virtues of gentlemen, or which can recommendthem to the esteem of gentlemen: but they are apt gradually to losethe qualities, both good and bad, which gave them authority andinfluence with the inferior ranks of people, and which had perhapsbeen the original causes of the success and establishment of theirreligion. Such a clergy, when attacked by a set of popular andbold, though perhaps stupid and ignorant enthusiasts, feelthemselves as perfectly defenceless as the indolent, effeminate,and full-fed nations of the southern parts of Asia when they wereinvaded by the active, hardy, and hungry Tartars of the North.Such a clergy, upon such an emergency, have commonly no otherresource than to call upon the civil magistrate to persecute,destroy or drive out their adversaries, as disturbers of the publicpeace.

It was thus that the Roman Catholic clergy called upon the civilmagistrates to persecute the Protestants, and the Church ofEngland to persecute the Dissenters; and that in general everyreligious sect, when it has once enjoyed for a century or two thesecurity of a legal establishment, has found itself incapable ofmaking any vigorous defence against any new sect which chose toattack its doctrine or discipline. Upon such occasions the



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advantage in point of learning and good writing may sometimes beon the side of the established church. But the arts of popularity, allthe arts of gaining proselytes, are constantly on the side of itsadversaries. In England those arts have been long neglected bythe well-endowed clergy of the established church, and are atpresent chiefly cultivated by the Dissenters and by the Methodists.The independent provisions, however, which in many places havebeen made for dissenting teachers by means of voluntarysubscriptions, of trust rights, and other evasions of the law, seemvery much to have abated the zeal and activity of those teachers.They have many of them become very learned, ingenious, andrespectable men; but they have in general ceased to be verypopular preachers. The Methodists, without half the learning ofthe Dissenters, are much more in vogue.

In the Church of Rome, the industry and zeal of the inferiorclergy are kept more alive by the powerful motive of self-interestthan perhaps in any established Protestant church. The parochialclergy derive, many of them, a very considerable part of theirsubsistence from the voluntary oblations of the people; a source ofrevenue which confession gives them many opportunities ofimproving.

The mendicant orders derive their whole subsistence from suchoblations. It is with them as with the hussars and light infantry ofsome armies; no plunder, no pay. The parochial clergy are likethose teachers whose reward depends partly upon their salary,and partly upon the fees or honoraries which they get from theirpupils, and these must always depend more or less upon theirindustry and reputation. The mendicant orders are like thoseteachers whose subsistence depends altogether upon the industry.



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They are obliged, therefore, to use every art which can animatethe devotion of the common people. The establishment of the twogreat mendicant orders of St. Dominic and St. Francis, it isobserved by Machiavel, revived, in the thirteenth and fourteenthcenturies, the languishing faith and devotion of the CatholicChurch. In Roman Catholic countries the spirit of devotion issupported altogether by the monks and by the poorer parochialclergy. The great dignitaries of the church, with all theaccomplishments of gentlemen and men of the world, andsometimes with those of men of learning, are careful enough tomaintain the necessary discipline over their inferiors, but seldomgive themselves any trouble about the instruction of the people.

“Most of the arts and professions in a state,” says by far themost illustrious philosopher and historian of the present age, “areof such a nature that, while they promote the interests of thesociety, they are also useful or agreeable to some individuals; andin that case, the constant rule of the magistrate, except perhaps onthe first introduction of any art, is to leave the profession to itself,and trust its encouragement to the individuals who reap thebenefit of it. The artisans, finding their profits to rise by the favourof their customers, increase as much as possible their skill andindustry; and as matters are not disturbed by any injudicioustampering, the commodity is always sure to be at all times nearlyproportioned to the demand.

“But there are also some callings, which, though useful andeven necessary in a state, bring no advantage or pleasure to anyindividual, and the supreme power is obliged to alter its conductwith regard to the retainers of those professions. It must give thempublic encouragement in order to their subsistence, and it must



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provide against that negligence to which they will naturally besubject, either by annexing particular honours to the profession,by establishing a long subordination of ranks and a strictdependence, or by some other expedient. The persons employedin the finances, fleets, and magistracy, are instances of this orderof men.

“It may naturally be thought, at first sight, that the ecclesiasticsbelong to the first class, and that their encouragement, as well asthat of lawyers and physicians, may safely be entrusted to theliberality of individuals, who are attached to their doctrines, andwho find benefit or consolation from their spiritual ministry andassistance. Their industry and vigilance will, no doubt, be whettedby such an additional motive; and their skill in the profession, aswell as their address in governing the minds of the people, mustreceive daily increase from their increasing practice, study, andattention.

“But if we consider the matter more closely, we shall find thatthis interested diligence of the clergy is what every wise legislatorwill study to prevent; because in every religion except the true it ishighly pernicious, and it has even a natural tendency to pervertthe true, by infusing into it a strong mixture of superstition, folly,and delusion. Each ghostly practitioner, in order to render himselfmore precious and sacred in the eyes of his retainers, will inspirethem with the most violent abhorrence of all other sects, andcontinually endeavour, by some novelty, to excite the languiddevotion of his audience. No regard will be paid to truth, morals,or decency in the doctrines inculcated. Every tenet will be adoptedthat best suits the disorderly affections of the human frame.Customers will be drawn to each conventicle by new industry and



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address in practising on the passions and credulity of thepopulace. And in the end, the civil magistrate will find that he hasdearly paid for his pretended frugality, in saving a fixedestablishment for the priests; and that in reality the most decentand advantageous composition which he can make with thespiritual guides, is to bribe their indolence by assigning statedsalaries to their profession, and rendering it superfluous for themto be farther active than merely to prevent their flock fromstraying in quest of new pastures. And in this mannerecclesiastical establishments, though commonly they arose at firstfrom religious views, prove in the end advantageous to thepolitical interests of society.”

But whatever may have been the good or bad effects of theindependent provision of the clergy, it has, perhaps, been veryseldom bestowed upon them from any view to those effects. Timesof violent religious controversy have generally been times ofequally violent political faction. Upon such occasions, eachpolitical party has either found it, or imagined it, for its interest toleague itself with some one or other of the contending religioussects. But this could be done only by adopting, or at least byfavouring, the tenets of that particular sect. The sect which hadthe good fortune to be leagued with the conquering partynecessarily shared in the victory of its ally, by whose favour andprotection it was soon enabled in some degree to silence andsubdue all its adversaries. Those adversaries had generallyleagued themselves with the enemies of the conquering party, andwere therefore the enemies of that party. The clergy of thisparticular sect having thus become complete masters of the field,and their influence and authority with the great body of the people



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being in its highest vigour, they were powerful enough to overawethe chiefs and leaders of their own party, and to oblige the civilmagistrate to respect their opinions and inclinations. Their firstdemand was generally that he should silence and subdue an theiradversaries: and their second, that he should bestow anindependent provision on themselves. As they had generallycontributed a good deal to the victory, it seemed not unreasonablethat they should have some share in the spoil. They were weary,besides, of humouring the people, and of depending upon theircaprice for a subsistence. In making this demand, therefore, theyconsulted their own ease and comfort, without troublingthemselves about the effect which it might have in future timesupon the influence and authority of their order. The civilmagistrate, who could comply with this demand only by givingthem 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, thoughfrequently not till after many delays, evasions, and affectedexcuses.

But if politics had never called in the aid of religion, had theconquering party never adopted the tenets of one sect more thanthose of another when it had gained the victory, it would probablyhave dealt equally and impartially with all the different sects, andhave allowed every man to choose his own priest and his ownreligion as he thought proper. There would in this case, no doubt,have been a great multitude of religious sects. Almost everydifferent congregation might probably have made a little sect byitself, or have entertained some peculiar tenets of its own. Eachteacher would no doubt have felt himself under the necessity of



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making the utmost exertion and of using every art both topreserve and to increase the number of his disciples. But as everyother teacher would have felt himself under the same necessity,the success of no one teacher, or sect of teachers, could have beenvery great. The interested and active zeal of religious teachers canbe dangerous and troublesome only where there is either but onesect tolerated in the society, or where the whole of a large societyis divided into two or three great sects; the teachers of each actingby concert, and under a regular discipline and subordination. Butthat zeal must be altogether innocent where the society is dividedinto two or three hundred, or perhaps into as many thousandsmall sects, of which no one could be considerable enough todisturb the public tranquillity. The teachers of each sect, seeingthemselves surrounded on all sides with more adversaries thanfriends, would be obliged to learn that candour and moderationwhich is so seldom to be found among the teachers of those greatsects whose tenets, being supported by the civil magistrate, areheld in veneration by almost all the inhabitants of extensivekingdoms and empires, and who therefore see nothing roundthem but followers, disciples, and humble admirers. The teachersof each little sect, finding themselves almost alone, would beobliged to respect those of almost every other sect, and theconcessions which they would mutually find it both convenientand agreeable to make to one another, might in time probablyreduce the doctrine of the greater part of them to that pure andrational religion, free from every mixture of absurdity, imposture,or fanaticism, such as wise men have in all ages of the worldwished to see established; but such as positive law has perhapsnever yet established, and probably never will establish, in any



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country: because, with regard to religion, positive law always hasbeen, and probably always will be, more or less influenced bypopular superstition and enthusiasm. This plan of ecclesiasticalgovernment, or more properly of no ecclesiastical government,was what the sect called Independents, a sect no doubt of verywild enthusiasts, proposed to establish in England towards theend of the civil war. If it had been established, though of a veryunphilosophical origin, it would probably by this time have beenproductive of the most philosophical good temper and moderationwith regard to every sort of religious principle. It has beenestablished in Pennsylvania, where, though the Quakers happento be the most numerous, the law in reality favours no one sectmore than another, and it is there said to have been productive ofthis philosophical good temper and moderation.

But though this equality of treatment should not be productiveof this good temper and moderation in all, or even in the greaterpart of the religious sects of a particular country, yet providedthose sects were sufficiently numerous, and each of themconsequently too small to disturb the public tranquillity, theexcessive zeal of each for its particular tenets could not well beproductive of any very harmful effects, but, on the contrary, ofseveral good ones: and if the government was perfectly decidedboth to let them all alone, and to oblige them all to let alone oneanother, there is little danger that they would not of their ownaccord subdivide themselves fast enough so as soon to becomesufficiently numerous.

In every civilised society, in every society where the distinctionof ranks has once been completely established, there have beenalways two different schemes or systems of morality current at the



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same time; of which the one may be called the strict or austere; theother the liberal, or, if you will, the loose system. The former isgenerally admired and revered by the common people: the latter iscommonly more esteemed and adopted by what are called peopleof fashion. The degree of disapprobation with which we ought tomark the vices of levity, the vices which are apt to arise from greatprosperity, and from the excess of gaiety and good humour, seemsto constitute the principal distinction between those two oppositeschemes or systems.

In the liberal or loose system, luxury, wanton and evendisorderly mirth, the pursuit of pleasure to some degree ofintemperance, the breach of chastity, at least in one of the twosexes, etc., provided they are not accompanied with grossindecency, and do not lead to falsehood or injustice, are generallytreated with a good deal of indulgence, and are easily eitherexcused or pardoned altogether.

In the austere system, on the contrary, those excesses areregarded with the utmost abhorrence and detestation. The vices oflevity are always ruinous to the common people, and a singleweek’s thoughtlessness and dissipation is often sufficient to undo apoor workman for ever, and to drive him through despair uponcommitting the most enormous crimes. The wiser and better sortof the common people, therefore, have always the utmostabhorrence and detestation of such excesses, which theirexperience tells them are so immediately fatal to people of theircondition. The disorder and extravagance of several years, on thecontrary, will not always ruin a man of fashion, and people of thatrank are very apt to consider the power of indulging in somedegree of excess as one of the advantages of their fortune, and the



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liberty of doing so without censure or reproach as one of theprivileges which belong to their station. In people of their ownstation, therefore, they regard such excesses with but a smalldegree of disapprobation, and censure them either very slightly ornot at all.

Almost all religious sects have begun among the commonpeople, from whom they have generally drawn their earliest aswell as their most numerous proselytes. The austere system ofmorality has, accordingly, been adopted by those sects almostconstantly, or with very few exceptions; for there have been some.It was the system by which they could best recommendthemselves to that order of people to whom they first proposedtheir plan of reformation upon what had been before established.Many of them, perhaps the greater part of them, have evenendeavoured to gain credit by refining upon this austere system,and by carrying it to some degree of folly and extravagance; andthis excessive rigour has frequently recommended them morethan anything else to the respect and veneration of the commonpeople.

A man of rank and fortune is by his station the distinguishedmember 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 therespect which this society bears to him. He dare not do anythingwhich would disgrace or discredit him in it, and he is obliged to avery strict observation of that species of morals, whether liberal oraustere, which the general consent of this society prescribes topersons of his rank and fortune. A man of low condition, on thecontrary, is far from being a distinguished member of any great



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society. While he remains in a country village his conduct may beattended to, and he may be obliged to attend to it himself. In thissituation, and in this situation only, he may have what is called acharacter to lose. But as soon as he comes into a great city he issunk in obscurity and darkness. His conduct is observed andattended to by nobody, and he is therefore very likely to neglect ithimself, and to abandon himself to every sort of low profligacy andvice. He never emerges so effectually from this obscurity, hisconduct never excites so much the attention of any respectablesociety, as by his becoming the member of a small religious sect.He from that moment acquires a degree of consideration which henever had before. All his brother sectaries are, for the credit of thesect, interested to observe his conduct, and if he gives occasion toany scandal, if he deviates very much from those austere moralswhich they almost always require of one another, to punish him bywhat is always a very severe punishment, even where no civileffects attend it, expulsion or excommunication from the sect. Inlittle religious sects, accordingly, the morals of the common peoplehave been almost always remarkably regular and orderly;generally much more so than in the established church. Themorals of those little sects, indeed, have frequently been ratherdisagreeably rigorous and unsocial.

There are two very easy and effectual remedies, however, bywhose joint operation the state might, without violence, correctwhatever was unsocial or disagreeably rigorous in the morals of allthe little sects into which the country was divided.

The first of those remedies is the study of science andphilosophy, which the state might render almost universal amongall people of middling or more than middling rank and fortune;



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not by giving salaries to teachers in order to make them negligentand idle, but by instituting some sort of probation, even in thehigher and more difficult sciences, to be undergone by everyperson before he was permitted to exercise any liberal profession,or before he could be received as a candidate for any honourableoffice of trust or profit. If the state imposed upon this order of menthe necessity of learning, it would have no occasion to give itselfany trouble about providing them with proper teachers. Theywould soon find better teachers for themselves than any whom thestate could provide for them. Science is the great antidote to thepoison of enthusiasm and superstition; and where all the superiorranks of people were secured from it, the inferior ranks could notbe much exposed to it.

The second of those remedies is the frequency and gaiety ofpublic diversions. The state, by encouraging, that is by givingentire liberty to all those who for their own interest would attemptwithout scandal or indecency, to amuse and divert the people bypainting, poetry, music, dancing; by all sorts of dramaticrepresentations and exhibitions, would easily dissipate, in thegreater part of them, that melancholy and gloomy humour whichis almost always the nurse of popular superstition and enthusiasm.Public diversions have always been the objects of dread andhatred to all the fanatical promoters of those popular frenzies. Thegaiety and good humour which those diversions inspire werealtogether inconsistent with that temper of mind which was fittestfor their purpose, or which they could best work upon. Dramaticrepresentations, besides, frequently exposing their artifices topublic ridicule, and sometimes even to public execration, wereupon that account, more than all other diversions, the objects of



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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 thatany of them should have any particular or immediate dependencyupon the sovereign or executive power; or that he should haveanything to do either in appointing or in dismissing them fromtheir offices. In such a situation he would have no occasion to givehimself any concern about them, further than to keep the peaceamong them in the same manner as among the rest of his subjects;that is, to hinder them from persecuting, abusing, or oppressingone another. But it is quite otherwise in countries where there isan established or governing religion. The sovereign can in thiscase never be secure unless he has the means of influencing in aconsiderable degree the greater part of the teachers of thatreligion.

The clergy of every established church constitute a greatincorporation. They can act in concert, and pursue their interestupon one plan and with one spirit, as much as if they were underthe direction of one man; and they are frequently, too, under suchdirection. Their interest as an incorporated body is never the samewith 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 andimportance of the whole doctrine which they inculcate, and uponthe supposed necessity of adopting every part of it with the mostimplicit faith, in order to avoid eternal misery. Should thesovereign have the imprudence to appear either to deride or doubthimself of the most trifling part of their doctrine, or from humanityattempt to protect those who did either the one or the other, the



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punctilious honour of a clergy who have no sort of dependencyupon him is immediately provoked to proscribe him as a profaneperson, and to employ all the terrors of religion in order to obligethe people to transfer their allegiance to some more orthodox andobedient prince. Should he oppose any of their pretensions orusurpations, the danger is equally great. The princes who havedared in this manner to rebel against the church, over and abovethis crime of rebellion have generally been charged, too, with theadditional crime of heresy, notwithstanding their solemnprotestations of their faith and humble submission to every tenetwhich she thought proper to prescribe to them. But the authorityof religion is superior to every other authority. The fears which itsuggests conquer all other fears. When the authorized teachers ofreligion propagate through the great body of the people doctrinessubversive of the authority of the sovereign, it is by violence only,or by the force of a standing army, that he can maintain hisauthority. Even a standing army cannot in this case give him anylasting security; because if the soldiers are not foreigners, whichcan seldom be the case, but drawn from the great body of thepeople, which must almost always be the case, they are likely to besoon corrupted by those very doctrines. The revolutions which theturbulence of the Greek clergy was continually occasioning atConstantinople, as long as the eastern empire subsisted; theconvulsions which, during the course of several centuries, theturbulence of the Roman clergy was continually occasioning inevery part of Europe, sufficiently demonstrate how precarious andinsecure must always be the situation of the sovereign who has noproper means of influencing the clergy of the established andgoverning religion of his country.



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Articles of faith, as well as all other spiritual matters, it isevident enough, are not within the proper department of atemporal sovereign, who, though he may be very well qualified forprotecting, is seldom supposed to be so for instructing the people.With regard to such matters, therefore, his authority can seldombe sufficient to counterbalance the united authority of the clergyof the established church. The public tranquillity, however, andhis own security, may frequently depend upon the doctrines whichthey may think proper to propagate concerning such matters. Ashe can seldom directly oppose their decision, therefore, withproper weight and authority, it is necessary that he should be ableto influence it; and be can influence it only by the fears andexpectations which he may excite in the greater part of theindividuals of the order. Those fears and expectations may consistin the fear of deprivation or other punishment, and in theexpectation of further preferment.

In all Christian churches the benefices of the clergy are a sort offreeholds which they enjoy, not during pleasure, but during life orgood behaviour. If they held them by a more precarious tenure,and were liable to be turned out upon every slight disobligationeither of the sovereign or of his ministers, it would perhaps beimpossible for them to maintain their authority with the people,who would then consider them as mercenary dependants upon thecourt, in the security of whose instructions they could no longerhave any confidence. But should the sovereign attempt irregularly,and by violence, to deprive any number of clergymen of theirfreeholds, on account, perhaps, of their having propagated, withmore than ordinary zeal, some factious or seditious doctrine, hewould only render, by such persecution, both them and their



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doctrine ten times more popular, and therefore ten times moretroublesome and dangerous, than they had been before. Fear is inalmost all cases a wretched instrument of government, and oughtin particular never to be employed against any order of men whohave the smallest pretensions to independency. To attempt toterrify them serves only to irritate their bad humour, and toconfirm them in an opposition which more gentle usage perhapsmight easily induce them either to soften or to lay aside altogether.The violence which the French government usually employed inorder to oblige all their parliaments, or sovereign courts of justice,to enregister any unpopular edict, very seldom succeeded. Themeans commonly employed, however, the imprisonment of all therefractory members, one would think were forcible enough.

The princes of the house of Stewart sometimes employed thelike means in order to influence some of the members of theParliament of England; and they generally found them equallyintractable. The Parliament of England is now managed inanother manner; and a very small experiment which the Duke ofChoiseul made about twelve years ago upon the Parliament ofParis, demonstrated sufficiently that all the parliaments of Francemight have been managed still more easily in the same manner.That experiment was not pursued. For though management andpersuasion are always the easiest and the safest instruments ofgovernments, as force and violence are the worst and the mostdangerous, yet such, it seems, is the natural insolence of man thathe almost always disdains to use the good instrument, exceptwhen he cannot or dare not use the bad one. The Frenchgovernment could and durst use force, and therefore disdained touse management and persuasion. But there is no order of men, it



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appears, I believe, from the experience of all ages, upon whom it isso dangerous, or rather so perfectly ruinous, to employ force andviolence, as upon the respected clergy of any established church.The rights, the privileges, the personal liberty of every individualecclesiastic who is upon good terms with his own order are, evenin the most despotic governments, more respected than those ofany other person of nearly equal rank and fortune. It is so in everygradation of despotism, from that of the gentle and mildgovernment of Paris to that of the violent and furious governmentof Constantinople. But though this order of men can scarce everbe forced, they may be managed as easily as any other; and thesecurity of the sovereign, as well as the public tranquillity, seemsto depend very much upon the means which he has of managingthem; and those means seem to consist altogether in thepreferment which he has to bestow upon them.

In the ancient constitution of the Christian church, the bishopof each diocese was elected by the joint votes of the clergy and ofthe people of the episcopal city. The people did not long retaintheir right of election; and while they did retain it, they almostalways acted under the influence of the clergy, who in suchspiritual matters appeared to be their natural guides. The clergy,however, soon grew weary of the trouble of managing them, andfound it easier to elect their own bishops themselves. The abbot, inthe same manner, was elected by the monks of the monastery, atleast in the greater part of the abbacies. All the inferiorecclesiastical benefices comprehended within the diocese werecollated by the bishop, who bestowed them upon such ecclesiasticsas he thought proper. All church preferments were in this mannerin the disposal of the church. The sovereign, though he might have



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some indirect influence in those elections, and though it wassometimes usual to ask both his consent to elect and hisapprobation of the election, yet had no direct or sufficient meansof managing the clergy. The ambition of every clergyman naturallyled him to pay court not so much to his sovereign as to his ownorder, from which only he could expect preferment.

Through the greater part of Europe the Pope gradually drew tohimself first the collation of almost all bishoprics and abbacies, orof what were called Consistorial benefices, and afterwards, byvarious machinations and pretences, of the greater part of inferiorbenefices comprehended within each diocese; little more being leftto the bishop than what was barely necessary to give him a decentauthority with his own clergy. By this arrangement the conditionof the sovereign was still worse than it had been before. The clergyof all the different countries of Europe were thus formed into asort of spiritual army, dispersed in different quarters, indeed, butof which all the movements and operations could now be directedby one head, and conducted upon one uniform plan. The clergy ofeach particular country might be considered as a particulardetachment of that army, or which the operations could easily besupported and seconded by all the other detachments quartered inthe different countries round about. Each detachment was notonly independent of the sovereign of the country in which it wasquartered, and by which it was maintained, but dependent upon aforeign sovereign, who could at any time turn its arms against thesovereign of that particular country, and support them by thearms of all the other detachments.

Those arms were the most formidable that can well beimagined. In the ancient state of Europe, before the establishment



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of arts and manufactures, the wealth of the clergy gave them thesame sort of influence over the common people which that of thegreat barons gave them over their respective vassals, tenants, andretainers. In the great landed estates which the mistaken pietyboth of princes and private persons had bestowed upon thechurch, jurisdictions were established of the same kind with thoseof the great barons, and for the same reason. In those great landedestates, the clergy, or their bailiffs, could easily keep the peacewithout the support or assistance either of the king or of any otherperson; and neither the king nor any other person could keep thepeace there without the support and assistance of the clergy. Thejurisdictions of the clergy, therefore, in their particular baronies ormanors, were equally independent, and equally exclusive of theauthority 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 immediatelords, and therefore liable to be called out at pleasure in order tofight in any quarrel in which the clergy might think proper toengage them. Over and above the rents of those estates, the clergypossessed in the tithes, a very large portion of the rents of all theother estates in every kingdom of Europe. The revenues arisingfrom both those species of rents were, the greater part of them,paid in kind, in corn, wine, cattle poultry, etc. The quantityexceeded greatly what the clergy could themselves consume; andthere were neither arts nor manufactures for the produce of whichthey could exchange the surplus. The clergy could deriveadvantage from this immense surplus in no other way than byemploying it, as the great barons employed the like surplus oftheir revenues, in the most profuse hospitality, and in the most



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extensive charity. Both the hospitality and the charity of theancient clergy, accordingly, are said to have been very great.

They not only maintained almost the whole poor of everykingdom, but many knights and gentlemen had frequently noother means of subsistence than by travelling about frommonastery to monastery, under pretence of devotion, but in realityto enjoy the hospitality of the clergy. The retainers of someparticular prelates were often as numerous as those of the greatestlay-lords; and the retainers of all the clergy taken together were,perhaps, more numerous than those of all the lay-lords. There wasalways much more union among the clergy than among the lay-lords. The former were under a regular discipline andsubordination to the papal authority. The latter were under noregular discipline or subordination, but almost always equallyjealous of one another, and of the king. Though the tenants andretainers of the clergy, therefore, had both together been lessnumerous than those of the great lay-lords, and their tenants wereprobably much less numerous, yet their union would haverendered them more formidable. The hospitality and charity of theclergy, too, not only gave them the command of a great temporalforce, but increased very much the weight of their spiritualweapons. Those virtues procured them the highest respect andveneration among all the inferior ranks of people, of whom manywere constantly, and almost all occasionally, fed by them.Everything belonging or related to so popular an order, itspossessions, its privileges, its doctrines, necessarily appearedsacred in the eyes of the common people, and every violation ofthem, whether real or pretended, the highest act of sacrilegiouswickedness and profaneness. In this state of things, if the



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sovereign frequently found it difficult to resist the confederacy of afew of the great nobility, we cannot wonder that he should find itstill more so to resist the united force of the clergy of his owndominions, supported by that of the clergy of all the neighbouringdominions. In such circumstances the wonder is, not that he wassometimes obliged to yield, but that he ever was able to resist.

The privilege of the clergy in those ancient times (which to uswho live in the present times appear the most absurd), their totalexemption from the secular jurisdiction, for example, or what inEngland was called the benefit of the clergy, were the natural orrather the necessary consequences of this state of things. Howdangerous must it have been for the sovereign to attempt topunish a clergyman for any crime whatever, if his own order weredisposed to protect him, and to represent either the proof asinsufficient for convicting so holy a man, or the punishment as toosevere to be inflicted upon one whose person had been renderedsacred by religion? The sovereign could, in such circumstances, dono 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 committingenormous crimes, or even from giving occasion to such grossscandal as might disgust the minds of the people.

In the state in which things were through the greater part ofEurope during the tenth, eleventh, twelfth, and thirteenthcenturies, and for some time both before and after that period, theconstitution of the Church of Rome may be considered as the mostformidable combination that ever was formed against theauthority and security of civil government, as well as against theliberty, reason, and happiness of mankind, which can flourish only



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where civil government is able to protect them. In thatconstitution the grossest delusions of superstition were supportedin such a manner by the private interests of so great a number ofpeople as put them out of all danger from any assault of humanreason: because though human reason might perhaps have beenable to unveil, even to the eyes of the common people, some of thedelusions of superstition, it could never have dissolved the ties ofprivate interest. Had this constitution been attacked by no otherenemies but the feeble efforts of human reason, it must haveendured for ever. But that immense and well-built fabric, whichall the wisdom and virtue of man could never have shaken, muchless have overturned, was by the natural course of things, firstweakened, and afterwards in part destroyed, and is now likely, inthe course of a few centuries more, perhaps, to crumble into ruinsaltogether.

The gradual improvements of arts, manufactures, andcommerce, the same causes which destroyed the power of thegreat barons, destroyed in the same manner, through the greaterpart of Europe, the whole temporal power of the clergy. In theproduce of arts, manufactures, and commerce, the clergy, like thegreat barons, found something for which they could exchangetheir rude produce, and thereby discovered the means of spendingtheir whole revenues upon their own persons, without giving anyconsiderable share of them to other people. Their charity becamegradually less extensive, their hospitality less liberal or lessprofuse. Their retainers became consequently less numerous, andby degrees dwindled away altogether. The clergy too, like thegreat barons, wished to get a better rent from their landed estates,in order to spend it, in the same manner, upon the gratification of



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their own private vanity and folly. But this increase of rent couldbe got only by granting leases to their tenants, who therebybecame in a great measure independent of them.

The ties of interest which bound the inferior ranks of people tothe clergy were in this manner gradually broken and dissolved.They were even broken and dissolved sooner than those whichbound the same ranks of people to the great barons: because thebenefices of the church being, the greater part of them, muchsmaller than the estates of the great barons, the possessor of eachbenefice was much sooner able to spend the whole of its revenueupon his own person. During the greater part of the fourteenthand fifteenth centuries the power of the great barons was, throughthe greater part of Europe, in full vigour. But the temporal powerof the clergy, the absolute command which they had once had overthe great body of the people, was very much decayed. The powerof the church was by that time very nearly reduced through thegreater part of Europe to what arose from her spiritual authority;and even that spiritual authority was much weakened when itceased to be supported by the charity and hospitality of the clergy.The inferior ranks of people no longer looked upon that order, asthey had done before, as the comforters of their distress, and therelievers of their indigence. On the contrary, they were provokedand disgusted by the vanity, luxury, and expense of the richerclergy, who appeared to spend upon their own pleasures what hadalways before been regarded as the patrimony of the poor.

In this situation of things, the sovereigns in the different statesof Europe endeavoured to recover the influence which they hadonce had in the disposal of the great benefices of the church, byprocuring to the deans and chapters of each diocese the



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restoration of their ancient right of electing the bishop, and to themonks of each abbacy that of electing the abbot. The re-establishing of this ancient order was the object of several statutesenacted in England during the course of the fourteenth century,particularly of what is called the Statute of Provisors; and of thePragmatic Sanction established in France in the fifteenth century.In order to render the election valid, it was necessary that thesovereign should both consent to it beforehand, and afterwardsapprove of the person elected; and though the election was stillsupposed to be free, he had, however, all the indirect means whichhis situation necessarily afforded him of influencing the clergy inhis own dominions. Other regulations of a similar tendency wereestablished in other parts of Europe. But the power of the pope inthe collation of the great benefices of the church seems, before theReformation, to have been nowhere so effectually and souniversally restrained as in France and England. The Concordatafterwards, in the sixteenth century, gave to the kings of Francethe absolute right of presenting to all the great, or what are calledthe consistorial, benefices of the Gallican Church.

Since the establishment of the Pragmatic Sanction and of theConcordat, the clergy of France have in general shown less respectto the decrees of the papal court than the clergy of any otherCatholic country. In all the disputes which their sovereign has hadwith the pope, they have almost constantly taken party with theformer. This independency of the clergy of France upon the courtof Rome seems to be principally founded upon the PragmaticSanction and the Concordat. In the earlier periods of themonarchy, the clergy of France appear to have been as muchdevoted to the pope as those of any other country. When Robert,



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the second prince of the Capetian race, was most unjustlyexcommunicated by the court of Rome, his own servants, it is said,threw the victuals which came from his table to the dogs, andrefused to taste anything themselves which little been polluted bythe contact of a person in his situation. They were taught to do so,it may very safely be presumed, by the clergy of his owndominions.

The claim of collating to the great benefices of the church, aclaim in defence of which the court of Rome had frequentlyshaken, and sometimes overturned the thrones of some of thegreatest sovereigns in Christendom, was in this manner eitherrestrained or modified, or given up altogether, in many differentparts of Europe, even before the time of the Reformation. As theclergy had now less influence over the people, so the state hadmore influence over the clergy. The clergy, therefore, had bothless power and less inclination to disturb the state.

The authority of the Church of Rome was in this state ofdeclension when the disputes which gave birth to the Reformationbegan in Germany, and soon spread themselves through everypart of Europe.

The new doctrines were everywhere received with a highdegree of popular favour. They were propagated with all thatenthusiastic zeal which commonly animates the spirit of partywhen it attacks established authority. The teachers of thosedoctrines, though perhaps in other respects not more learned thanmany of the divines who defended the established church, seem ingeneral to have been better acquainted with ecclesiastical history,and with the origin and progress of that system of opinions uponwhich the authority of the church was established, and they had



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thereby some advantage in almost every dispute. The austerity oftheir manners gave them authority with the common people, whocontrasted the strict regularity of their conduct with the disorderlylives of the greater part of their own clergy. They possessed, too, ina much higher degree than their adversaries all the arts ofpopularity and of gaining proselytes, arts which the lofty anddignified sons of the church had long neglected as being to themin a great measure useless. The reason of the new doctrinesrecommended them to some, their novelty to many; the hatredand contempt of the established clergy to a still greater number;but the zealous, passionate, and fanatical, though frequentlycoarse and rustic, eloquence with which they were almosteverywhere inculcated, recommended them to by far the greatestnumber.

The success of the new doctrines was almost everywhere sogreat that the princes who at that time happened to be on badterms with the court of Rome were by means of them easilyenabled, in their own dominions, to overturn the church, which,having lost the respect and veneration of the inferior ranks ofpeople, could make scarce any resistance. The court of Rome haddisobliged some of the smaller princes in the northern parts ofGermany, whom it had probably considered as too insignificant tobe worth the managing. They universally, therefore, establishedthe Reformation in their own dominions. The tyranny of ChristianII and of Troll, Archbishop of Upsala, enabled Gustavus Vasa toexpel them both from Sweden. The pope favoured the tyrant andthe archbishop, and Gustavus Vasa found no difficulty inestablishing the Reformation in Sweden. Christian II wasafterwards deposed from the throne of Denmark, where his



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conduct had rendered him as odious as in Sweden. The pope,however, was still disposed to favour him, and Frederick ofHolstein, who had mounted the throne in his stead, revengedhimself by following the example of Gustavus Vasa. Themagistrates of Berne and Zurich, who had no particular quarrelwith the pope, established with great ease the Reformation in theirrespective cantons, where just before some of the clergy had, by animposture somewhat grosser than ordinary, rendered the wholeorder both odious and contemptible.

In this critical situation of its affairs, the papal court was atsufficient pains to cultivate the friendship of the powerfulsovereigns of France and Spain, of whom the latter was at thattime Emperor of Germany. With their assistance it was enabled,though not without great difficulty and much bloodshed, either tosuppress altogether or to obstruct very much the progress of theReformation in their dominions. It was well enough inclined, too,to be complaisant to the King of England. But from thecircumstances of the times, it could not be so without givingoffence to a still greater sovereign, Charles V, King of Spain andEmperor of Germany. Henry VIII accordingly, though he did notembrace himself the greater part of the doctrines of theReformation, was yet enabled, by their general prevalence, tosuppress all the monasteries, and to abolish the authority of theChurch of Rome in his dominions. That he should go so far,though he went no further, gave some satisfaction to the patronsof the Reformation, who having got possession of the governmentin the reign of his son and successor, completed without anydifficulty the work which Henry VIII had begun.

In some countries, as in Scotland, where the government was



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weak, unpopular, and not very firmly established, the Reformationwas strong enough to overturn, not only the church, but the statelikewise for attempting to support the church.

Among the followers of the Reformation dispersed in all thedifferent countries of Europe, there was no general tribunalwhich, like that of the court of Rome, or an œcumenical council,could settle all disputes among them, and with irresistibleauthority 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 nocommon judge to appeal to, the dispute could never be decided;and many such disputes arose among them. Those concerning thegovernment of the church, and the right of conferringecclesiastical benefices, were perhaps the most interesting to thepeace and welfare of civil society. They gave birth accordingly tothe two principal parties of sects among the followers of theReformation, the Lutheran and Calvinistic sects, the only sectsamong them of which the doctrine and discipline have ever yetbeen established by law in any part of Europe.

The followers of Luther, together with what is called theChurch of England, preserved more or less of the episcopalgovernment, established subordination among the clergy, gave thesovereign the disposal of all the bishoprics and other consistorialbenefices within his dominions, and thereby rendered him the realhead of the church; and without depriving the bishop of the rightof collating to the smaller benefices within his diocese, they, evento those benefices, not only admitted, but favoured the right ofpresentation both in the sovereign and in all other lay-patrons.This system of church government was from the beginning



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favourable to peace and good order, and to submission to the civilsovereign. It has never, accordingly, been the occasion of anytumult or civil commotion in any country in which it has oncebeen established. The Church of England in particular has alwaysvalued herself, with great reason, upon the unexceptionableloyalty of her principles. Under such a government the clergynaturally endeavour to recommend themselves to the sovereign, tothe court, and to the nobility and gentry of the country, by whoseinfluence they chiefly expect to obtain preferment. They pay courtto those patrons sometimes, no doubt, by the vilest flattery andassentation, but frequently, too, by cultivating all those arts whichbest deserve, and which are therefore most likely to gain them theesteem of people of rank and fortune; by their knowledge in all thedifferent branches of useful and ornamental learning, by thedecent liberality of their manners, by the social good humour oftheir conversation, and by their avowed contempt of those absurdand hypocritical austerities which fanatics inculcate and pretendto practise, in order to draw upon themselves the veneration, andupon the greater part of men of rank and fortune, who avow thatthey do not practise them, the abhorrence of the common people.Such a clergy, however, while they pay their court in this mannerto the higher ranks of life, are very apt to neglect altogether themeans 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 ofdefending, effectually and to the conviction of such hearers, theirown sober and moderate doctrines against the most ignorantenthusiast who chooses to attack them.

The followers of Zwingli, or more properly those of Calvin, on



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the contrary, bestowed upon the people of each parish, wheneverthe church became vacant, the right of electing their own pastor,and established at the same time the most perfect equality amongthe clergy. The former part of this institution, as long as itremained in vigour, seems to have been productive of nothing butdisorder and confusion, and to have tended equally to corrupt themorals both of the clergy and of the people. The latter part seemsnever to have had any effects but what were perfectly agreeable.

As long as the people of each parish preserved the right ofelecting their own pastors, they acted almost always under theinfluence of the clergy, and generally of the most factious andfanatical of the order. The clergy, in order to preserve theirinfluence in those popular elections, became, or affected tobecome, many of them, fanatics themselves, encouragedfanaticism among the people, and gave the preference almostalways to the most fanatical candidate. So small a matter as theappointment of a parish priest occasioned almost always a violentcontest, not only in one parish, but in all the neighbouringparishes, who seldom failed to take part in the quarrel. When theparish happened to be situated in a great city, it divided all theinhabitants into two parties; and when that city happened eitherto constitute itself a little republic, or to be the head and capital ofa little republic, as is the case with many of the considerable citiesin Switzerland and Holland, every paltry dispute of this kind, overand above exasperating the animosity of all their other factions,threatened to leave behind it both a new schism in the church, anda new faction in the state. In those small republics, therefore, themagistrate very soon found it necessary, for the sake of preservingthe public peace, to assume to himself the right of presenting to all



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vacant benefices. In Scotland, the most extensive country in whichthis Presbyterian form of church government has ever beenestablished, the rights of patronage were in effect abolished by theact which established Presbytery in the beginning of the reign ofWilliam III. That act at least put it in the power of certain classesof people in each parish to purchase, for a very small price, theright of electing their own pastor. The constitution which this actestablished was allowed to subsist for about two-and-twenty years,but was abolished by the 10th of Queen Anne, c. 12, on account ofthe confusions and disorders which this more popular mode of,election had almost everywhere occasioned. In so extensive acountry as Scotland, however, a tumult in a remote parish was notso likely to give disturbance to government as in a smaller state.The 10th of Queen Anne restored the rights of patronage. Butthough in Scotland the law gives the benefice without anyexception to the person presented by the patron, yet the churchrequires sometimes (for she has not in this respect been veryuniform in her decisions) a certain concurrence of the peoplebefore she will confer upon the presentee what is called the cure ofsouls, or the ecclesiastical jurisdiction in the parish. Shesometimes at least, from an affected concern for the peace of theparish, 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, thisconcurrence, and the popular arts which they cultivate in order toenable them upon such occasions to tamper more effectually, areperhaps the causes which principally keep up whatever remains ofthe old fanatical spirit, either in the clergy or in the people ofScotland.



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The equality which the Presbyterian form of churchgovernment establishes among the clergy, consists, first, in theequality of authority or ecclesiastical jurisdiction; and, secondly, inthe equality of benefice. In all Presbyterian churches the equalityof authority is perfect: that of benefice is not so. The difference,however, between one benefice and another is seldom soconsiderable as commonly to tempt the possessor even of thesmall one to pay court to his patron by the vile arts of flattery andassentation in order to get a better. In all the Presbyterianchurches, where the rights of patronage are thoroughlyestablished, it is by nobler and better arts that the establishedclergy in general endeavour to gain the favour of their superiors;by their learning, by the irreproachable regularity of their life, andby the faithful and diligent discharge of their duty. Their patronseven frequently complain of the independency of their spirit,which they are apt to construe into ingratitude for past favours,but which at worst, perhaps, is seldom any more than thatindifference which naturally arises from the consciousness that nofurther favours of the kind are ever to be expected. There is scarceperhaps to be found anywhere in Europe a more learned, decent,independent, and respectable set of men than the greater part ofthe Presbyterian clergy of Holland, Geneva, Switzerland, andScotland.

Where the church benefices are all nearly equal, none of themcan be very great, and this mediocrity of benefice, though it mayno doubt be carried, too far, has, however, some very agreeableeffects. Nothing but the most exemplary morals can give dignity toa man of small fortune. The vices of levity and vanity necessarilyrender him ridiculous, and are, besides, almost as ruinous to him



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as they are to the common people. In his own conduct, therefore,he is obliged to follow that system of morals which the commonpeople respect the most. He gains their esteem and affection bythat plan of life which his own interest and situation would leadhim to follow. The common people look upon him with thatkindness with which we naturally regard one who approachessomewhat to our own condition, but who, we think, ought to be ina higher. Their kindness naturally provokes his kindness. Hebecomes careful to instruct them, and attentive to assist andrelieve them. He does not even despise the prejudices of peoplewho are disposed to be so favourable to him, and never treatsthem with those contemptuous and arrogant airs which we sooften meet with in the proud dignitaries of opulent and well-endowed churches. The Presbyterian clergy, accordingly, havemore influence over the minds of the common people thanperhaps the clergy of any other established church. It isaccordingly in Presbyterian countries only that we ever find thecommon people converted, without persecution, completely, andalmost to a man, to the established church.

In countries where church benefices are the greater part ofthem very moderate, a chair in a university is generally a betterestablishment than a church benefice. The universities have, inthis case, the picking and choosing of their members from all thechurchmen of the country, who, in every country, constitute by farthe most numerous class of men of letters. Where churchbenefices, on the contrary, are many of them very considerable,the church naturally draws from the universities the greater partof their eminent men of letters, who generally find some patronwho does himself honour by procuring them church preferment.



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In the former situation we are likely to find the universities filledwith the most eminent men of letters that are to be found in thecountry. In the latter we are likely to find few eminent men amongthem, and those few among the youngest members of the society,who are likely, too, to be drained away from it before they canhave acquired experience and knowledge enough to be of muchuse to it. It is observed by Mr. de Voltaire, that Father Porrée, aJesuit of no great eminence in the republic of letters, was the onlyprofessor they had ever had in France whose works were worththe reading. In a country which has produced so many eminentmen of letters, it must appear somewhat singular that scarce oneof them should have been a professor in a university. The famousGassendi was, in the beginning of his life, a professor in theUniversity of Aix. Upon the first dawning of his genius, it wasrepresented to him that by going into the church he could easilyfind a much more quiet and comfortable subsistence, as well as abetter situation for pursuing his studies; and he immediatelyfollowed the advice. The observation of Mr. de Voltaire may beapplied, I believe, not only to France, but to all other RomanCatholic countries. We very rarely find, in any of them, an eminentman of letters who is a professor in a university, except, perhaps,in the professions of law and physic; professions from which thechurch is not so likely to draw them. After the Church of Rome,that of England is by far the richest and best endowed church inChristendom. In England, accordingly, the church is continuallydraining the universities of all their best and ablest members; andan old college tutor, who is known and distinguished in Europe asan eminent man of letters, is as rarely to be found there as in anyRoman Catholic country. In Geneva, on the contrary, in the



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Protestant cantons of Switzerland, in the Protestant countries ofGermany, in Holland, in Scotland, in Sweden, and Denmark, themost eminent men of letters whom those countries have produced,have, not all indeed, but the far greater part of them, beenprofessors in universities. In those countries the universities arecontinually draining the church of all its most eminent men ofletters.

It may, perhaps, be worth while to remark that, if we expect thepoets, a few orators, and a few historians, the far greater part ofthe other eminent men of letters, both of Greece and Rome,appear to have been either public or private teachers; generallyeither of philosophy or of rhetoric. This remark will be found tohold true from the days of Lysias and Isocrates, of Plato andAristotle, down to those of Plutarch and Epictetus, of Suetoniusand Quintilian. To impose upon any man the necessity of teaching,year after year, any particular branch of science, seems, in reality,to be the most effectual method for rendering him completelymaster of it himself. By being obliged to go every year over thesame ground, if he is good for anything, he necessarily becomes, ina few years, well acquainted with every part of it: and if upon anyparticular point he should form too hasty an opinion one year,when he comes in the course of his lectures to reconsider the samesubject the year thereafter, he is very likely to correct it. As to be ateacher of science is certainly the natural employment of a mereman of letters, so is it likewise, perhaps, the education which ismost likely to render him a man of solid learning and knowledge.The mediocity of church benefices naturally tends to draw thegreater 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



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public, and, at the same time, to give them the best education,perhaps, they are capable of receiving. It tends to render theirlearning both as solid as possible, and as useful as possible.

The revenue of every established church, such parts of itexcepted as may arise from particular lands or manors, is abranch, it ought to be observed, of the general revenue of the statewhich is thus diverted to a purpose very different from the defenceof the state.

The tithe, for example, is a real land-tax, which puts it out of thepower of the proprietors of land to contribute so largely towardsthe defence of the state as they otherwise might be able to do. Therent of land, however, is, according to some, the sole fund, and,according to others, the principal fund, from which, in all greatmonarchies, the exigencies of the state must be ultimatelysupplied. The more of this fund that is given to the church, theless, it is evident, can be spared to the state. It may be laid down asa certain maxim that, all other things being supposed equal, thericher the church, the poorer must necessarily be, either thesovereign on the one hand, or the people on the other; and, in allcases, the less able must the state be to defend itself. In severalProtestant countries, particularly in all the Protestant cantons ofSwitzerland, the revenue which anciently belonged to the RomanCatholic Church, the tithes and church lands, has been found afund sufficient, not only to afford competent salaries to theestablished clergy, but to defray, with little or no addition, all theother expenses of the state. The magistrates of the powerfulcanton of Berne, in particular, have accumulated out of thesavings from this fund a very large sum, supposed to amount toseveral millions, part of which is deposited in a public treasure,



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and part is placed at interest in what are called the public funds ofthe different indebted nations of Europe; chiefly in those of Franceand Great Britain.

What may be the amount of the whole expense which thechurch, either of Berne, or of any other Protestant canton, coststhe state, I do not pretend to know. By a very exact account itappears that, in 1755, the whole revenue of the clergy of theChurch of Scotland, including their glebe or church lands, and therent of their manses or dwelling-houses, estimated according to areasonable valuation, amounted only to £68,514 1s. 51/12d. This verymoderate revenue affords a decent subsistence to nine hundredand forty-four ministers.

The whole expense of the church, including what isoccasionally laid out for the building and reparation of churches,and of the manses of ministers, cannot well be supposed to exceedeighty or eighty-five thousand pounds a year. The most opulentchurch in Christendom does not maintain better the uniformity offaith, the fervour of devotion, the spirit of order, regularity, andaustere morals in the great body of the people, than this verypoorly endowed Church of Scotland. All the good effects, both civiland religious, which an established church can be supposed toproduce, are produced by it as completely as by any other. Thegreater part of the Protestant churches of Switzerland, which ingeneral are not better endowed than the Church of Scotland,produce those effects in a still higher degree. In the greater part ofthe Protestant cantons there is not a single person to be foundwho does not profess himself to be of the established church. If heprofesses himself to be of any other, indeed, the law obliges him toleave the canton. But so severe, or rather indeed so oppressive a



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law, could never have been executed in such free countries hadnot the diligence of the clergy beforehand converted to theestablished church the whole body of the people, with theexception of, perhaps, a few individuals only. In some parts ofSwitzerland, accordingly, where, from the accidental union of aProtestant and Roman Catholic country, the conversion has notbeen so complete, both religions are not only tolerated butestablished by law.

The proper performance of every service seems to require thatits pay or recompense should be, as exactly as possible,proportioned to the nature of the service. If any service is verymuch underpaid, it is very apt to suffer by the meanness andincapacity of the greater part of those who are employed in it. If itis very much overpaid, it is apt to suffer, perhaps, still more bytheir negligence and idleness. A man of a large revenue, whatevermay be his profession, thinks he ought to live like other men oflarge revenues, and to spend a great part of his time in festivity, invanity, and in dissipation. But in a clergyman this train of life notonly consumes the time which ought to be employed in the dutiesof his function, but in the eyes of the common people destroysalmost entirely that sanctity of character which can alone enablehim to perform those duties with proper weight and authority.



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PART 4

Of the Expense of Supporting the Dignity of the Sovereign

Over and above the expenses necessary for enabling the sovereignto perform his several duties, a certain expense is requisite for thesupport of his dignity. This expense varies both with the differentperiods of improvement, and with the different forms ofgovernment.

In an opulent and improved society, where all the differentorders of people are growing every day more expensive in theirhouses, in their furniture, in their tables, in their dress, and intheir equipage, it cannot well be expected that the sovereignshould alone hold out against the fashion. He naturally, therefore,or rather necessarily, becomes more expensive in all thosedifferent articles too. His dignity even seems to require that heshould become so.

As in point of dignity a monarch is more raised above hissubjects than the chief magistrate of any republic is ever supposedto be above his fellow-citizens, so a greater expense is necessaryfor supporting that higher dignity. We naturally expect moresplendour in the court of a king than in the mansion-house of adoge or burgomaster.

CONCLUSIONThe expense of defending the society, and that of supporting thedignity of the chief magistrate, are both laid out for the generalbenefit of the whole society. It is reasonable, therefore, that theyshould be defrayed by the general contribution of the whole



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society, all the different members contributing, as nearly aspossible, in proportion to their respective abilities.

The expense of the administration of justice, too, may, nodoubt, be considered as laid out for the benefit of the wholesociety. There is no impropriety, therefore, in its being defrayedby the general contribution of the whole society. The persons,however, who gave occasion to this expense are those who, bytheir injustice in one way or another, make it necessary to seekredress or protection from the courts of justice. The persons againmost immediately benefited by this expense are those whom thecourts of justice either restore to their rights or maintain in theirrights. The expense of the administration of justice, therefore, mayvery properly be defrayed by the particular contribution of one orother, or both, of those two different sets of persons, according asdifferent occasions may require, that is, by the fees of court. Itcannot be necessary to have recourse to the general contributionof the whole society, except for the conviction of those criminalswho have not themselves any estate or fund sufficient for payingthose fees.

Those local or provincial expenses of which the benefit is localor provincial (what is laid out, for example, upon the police of aparticular town or district) ought to be defrayed by a local orprovincial revenue, and ought to be no burden upon the generalrevenue of the society. It is unjust that the whole society shouldcontribute towards an expense of which the benefit is confined toa 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 contribution of



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the whole society. This expense, however, is most immediately anddirectly beneficial to those who travel or carry goods from oneplace to another, and to those who consume such goods. Theturnpike tolls in England, and the duties called peages in othercountries, lay it altogether upon those two different sets of people,and thereby discharge the general revenue of the society from avery considerable burden.

The expense of the institutions for education and religiousinstruction is likewise, no doubt, beneficial to the whole society,and may, therefore, without injustice, be defrayed by the generalcontribution of the whole society. This expense, however, mightperhaps with equal propriety, and even with some advantage, bedefrayed altogether by those who receive the immediate benefit ofsuch education and instruction, or by the voluntary contribution ofthose who think they have occasion for either the one or the other.

When the institutions or public works which are beneficial tothe whole society either cannot be maintained altogether, or arenot maintained altogether by the contribution of such particularmembers of the society as are most immediately benefited bythem, the deficiency must in most cases be made up by the generalcontribution of the whole society. The general revenue of thesociety, over and above defraying the expense of defending thesociety, and of supporting the dignity of the chief magistrate, mustmake up for the deficiency of many particular branches ofrevenue. The sources of this general or public revenue I shallendeavour to explain in the following chapter.



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Chapter II

Of the Sources of the General or Public Revenue ofthe Society

he revenue which must defray, not only the expense ofdefending the society and of supporting the dignity of thechief magistrate, but all the other necessary expenses of

government for which the constitution of the state has notprovided any particular revenue, may be drawn either, first, fromsome fund which peculiarly belongs to the sovereign orcommonwealth, and which is independent of the revenue of thepeople; or, secondly, from the revenue of the people.

PART 1

Of the Funds or Sources of Revenue which may peculiarlybelong to the Sovereign or Commonwealth

The funds or sources of revenue which may peculiarly belong tothe sovereign or commonwealth must consist either in stock or inland.

The sovereign, like any other owner of stock, may derive arevenue 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. Itarises principally from the milk and increase of his own herds andflocks, of which he himself superintends the management, and is

T



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the principal shepherd or herdsman of his own horde or tribe. Itis, however, in this earliest and rudest state of civil governmentonly that profit has ever made the principal part of the publicrevenue of a monarchial state.

Small republics have sometimes derived a considerablerevenue from the profit of mercantile projects. The republic ofHamburg is said to do so from the profits of a public wine cellarand apothecary’s shop.1 The state cannot be very great of whichthe sovereign has leisure to carry on the trade of a wine merchantor apothecary. The profit of a public bank has been a source ofrevenue to more considerable states. It has been so not only toHamburg, but to Venice and Amsterdam. A revenue of this kindhas even by some people been thought not below the attention ofso great an empire as that of Great Britain. Reckoning theordinary dividend of the Bank of England at five and a half percent and its capital at ten millions seven hundred and eightythousand pounds, the net annual profit, after paying the expenseof management, must amount, it is said, to five hundred andninety-two thousand nine hundred pounds. Government, it is

1See Mémoires concernant les droits et impositions en Europe, vol. i, p. 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 informations 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.



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pretended, could borrow this capital at three per cent interest, andby taking the management of the bank into its own hands, mightmake a clear profit of two hundred and sixty-nine thousand fivehundred pounds a year. The orderly, vigilant, and parsimoniousadministration of such aristocracies as those of Venice andAmsterdam is extremely proper, it appears from experience, forthe management of a mercantile project of this kind. But whethersuch a government as that of England—which, whatever may beits virtues, has never been famous for good economy; which, intime of peace, has generally conducted itself with the slothful andnegligent profusion that is perhaps natural to monarchies; and intime of war has constantly acted with all the thoughtlessextravagance that democracies are apt to fall into—could be safelytrusted with the management of such a project, must at least begood deal more doubtful.

The post office is properly a mercantile project. Thegovernment advances the expense of establishing the differentoffices, 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 beensuccessfully managed by, I believe, every sort of government. Thecapital to be advanced is not very considerable. There is nomystery in the business. The returns are not only certain, butimmediate.

Princes, however, have frequently engaged in many othermercantile projects, and have been willing, like private persons, tomend their fortunes by becoming adventurers in the commonbranches of trade. They have scarce ever succeeded. Theprofusion with which the affairs of princes are always managed



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renders it almost impossible that they should. The agents of aprince regard the wealth of their master as inexhaustible; arecareless at what price they buy; are careless at what price theysell; are careless at what expense they transport his goods fromone place to another. Those agents frequently live with theprofusion of princes, and sometimes too, in spite of that profusion,and by a proper method of making up their accounts, acquire thefortunes of princes. It was thus, as we are told by Machiavel, thatthe agents of Lorenzo of Medicis, not a prince of mean abilities,carried on his trade. The republic of Florence was several timesobliged to pay the debt into which their extravagance had involvedhim. He found it convenient, accordingly, to give up the businessof merchant, the business to which his family had originally owedtheir fortune, and in the latter part of his life to employ both whatremained of that fortune, and the revenue of the state of which hehad the disposal, in projects and expenses more suitable to hisstation.

No two characters seem more inconsistent than those of traderand sovereign. If the trading spirit of the English East IndiaCompany renders them very bad sovereigns, the spirit ofsovereignty seems to have rendered them equally bad traders.While they were traders only they managed their tradesuccessfully, and were able to pay from their profits a moderatedividend to the proprietors of their stock. Since they becamesovereigns, with a revenue which, it is said, was originally morethan three millions sterling, they have been obliged to begextraordinary assistance of government in order to avoidimmediate bankruptcy. In their former situation, their servants inIndia considered themselves as the clerks of merchants: in their



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present situation, those servants consider themselves as theministers of sovereigns.

A state may sometimes derive some part of its public revenuefrom the interest of money, as well as from the profits of stock. If ithas amassed a treasure, it may lend a part of that treasure eitherto foreign states, or to its own subjects.

The canton of Berne derives a considerable revenue by lendinga part of its treasure to foreign states; that is, by placing it in thepublic funds of the different indebted nations of Europe, chiefly inthose of France and England. The security of this revenue mustdepend, first, upon the security of the funds in which it is placed,or upon the good faith of the government which has themanagement of them; and, secondly, upon the certainty orprobability of the continuance of peace with the debtor nation. Inthe case of a war, the very first act of hostility, on the part of thedebtor nation, might be the forfeiture of the funds of its creditor.This policy of lending money to foreign states is, so far as I know,peculiar to the canton of Berne.

The city of Hamburg1 has established a sort of publicpawnshop, which lends money to the subjects of the state uponpledges at six per cent interest. This pawnshop or Lombard, as itis called, affords a revenue, it is pretended, to the state of ahundred and fifty thousand crowns, which, at four and sixpencethe crown, amounts to £33,750 sterling.

The government of Pennsylvania, without amassing anytreasure, invented a method of lending, not money indeed, butwhat is equivalent to money, to its subjects. By advancing to

1See Mémoires concernant les droits, etc., vol. i, p. 73.



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private people at interest, and upon land security to double thevalue, paper bills of credit to be redeemed fifteen years after theirdate, and in the meantime made transferable from hand to handlike bank notes, and declared by act of assembly to be a legaltender in all payments from one inhabitant of the province toanother, it raised a moderate revenue, which went a considerableway towards defraying an annual expense of about £4500, thewhole ordinary expense of that frugal and orderly government.

The success of an expedient of this kind must have dependedupon three different circumstances; first, upon the demand forsome other instrument of commerce besides gold and silvermoney; or upon the demand for such a quantity of consumablestock as could not be had without sending abroad the greater partof their gold and silver money in order to purchase it; secondly,upon the good credit of the government which made use of thisexpedient; and, thirdly, upon the moderation with which it wasused, the whole value of the paper bills of credit never exceedingthat of the gold and silver money which would have beennecessary for carrying on their circulation had there been nopaper bills of credit. The same expedient was upon differentoccasions adopted by several other American colonies: but, fromwant 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, render them unfit to be trusted to as the principal fundsof that sure, steady, and permanent revenue which can alone givesecurity and dignity to government. The government of no greatnation that was advanced beyond the shepherd state seems ever tohave derived the greater part of its public revenue from such



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sources.Land is a fund of a more stable and permanent nature; and the

rent of public lands, accordingly, has been the principal source ofthe public revenue of many a great nation that was muchadvanced beyond the shepherd state. From the produce or rent ofthe public lands, the ancient republics of Greece and Italy derived,for a long time, the greater part of that revenue which defrayedthe necessary expenses of the commonwealth. The rent of thecrown lands constituted for a long time the greater part of therevenue of the ancient sovereigns of Europe.

War and the preparation for war are the two circumstanceswhich in modern times occasion the greater part of the necessaryexpense of all great states. But in the ancient republics of Greeceand Italy every citizen was a soldier, who both served andprepared himself for service at his own expense. Neither of thosetwo circumstances, therefore, could occasion any veryconsiderable expense to the state. The rent of a very moderatelanded estate might be fully sufficient for defraying all the othernecessary expenses of government.

In the ancient monarchies of Europe, the manners and customsof the times sufficiently prepared the great body of the people forwar; and when they took the field, they were, by the condition oftheir feudal tenures, to be maintained either at their own expense,or at that of their immediate lords, without bringing any newcharge upon the sovereign. The other expenses of governmentwere, the greater part of them, very moderate. The administrationof justice, it has been shown, instead of being a cause of expense,was a source of revenue.

The labour of the country people, for three days before and for



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three days after harvest, was thought a fund sufficient for makingand maintaining all the bridges, highways, and other public workswhich the commerce of the country was supposed to require.

In those days the principal expense of the sovereign seems tohave consisted in the maintenance of his own family andhousehold. The officers of his household, accordingly, were thenthe great officers of state. The lord treasurer received his rents.The lord steward and lord chamberlain looked after the expense ofhis family. The care of his stables was committed to the lordconstable and the lord marshal. His houses were all built in theform of castles, and seem to have been the principal fortresseswhich he possessed. The keepers of those houses or castles mightbe considered as a sort of military governors. They seem to havebeen the only military officers whom it was necessary to maintainin time of peace. In these circumstances the rent of a great landedestate might, upon ordinary occasions, very well defray all thenecessary expenses of government.

In the present state of the greater part of the civilisedmonarchies of Europe, the rent of all the lands in the country,managed as they probably would be if they all belonged to oneproprietor, would scarce perhaps amount to the ordinary revenuewhich they levy upon the people even in peaceable times. Theordinary revenue of Great Britain, for example, including not onlywhat is necessary for defraying the current expense of the year,but for paying the interest of the public debts, and for sinking apart of the capital of those debts, amounts to upwards of tenmillions a year.

But the land-tax, at four shillings in the pound, falls short of twomillions a year. This land-tax, as it is called, however, is supposed



1099

to be one-fifth, not only of the rent of all the land, but of that of allthe houses, and of the interest of all the capital stock of GreatBritain, that part of it only excepted which is either let to thepublic, or employed as farming stock in the cultivation of land. Avery considerable part of the produce of this tax arises from therent of houses, and the interest of capital stock. The land-tax of thecity of London, for example, at four shillings in the pound,amounts to £123,399 6s. 7d. That of the city of Westminster, to£63,092 1s. 5d. That of the palaces of Whitehall and St. James’s, to£30,754 6s. 3d. A certain proportion of the land-tax is in the samemanner assessed upon all the other cities and towns corporate inthe kingdom, and arises almost altogether, either from the rent ofhouses, or from what is supposed to be the interest of trading andcapital stock. According to the estimation, therefore, by whichGreat Britain is rated to the land-tax, the whole mass of revenuearising 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 onlyexcepted which is either lent to the public, or employed in thecultivation of land, does not exceed ten millions sterling a year, theordinary revenue which government levies upon the people evenin peaceable times. The estimation by which Great Britain is ratedto the land-tax is, no doubt, taking the whole kingdom at anaverage, very much below the real value; though in severalparticular counties and districts it is said to be nearly equal to thatvalue. The rent of the lands alone, exclusively of that of houses,and of the interest of stock, has by many people been estimated attwenty millions, an estimation made in a great measure atrandom, and which, I apprehend, is as likely to be above as belowthe truth. But if the lands of Great Britain, in the present state of



1100

their cultivation, do not afford a rent of more than twenty millionsa year, they could not well afford the half, most probably not thefourth part of that rent, if they all belonged to a single proprietor,and were put under the negligent, expensive, and oppressivemanagement of his factors and agents. The crown lands of GreatBritain do not at present afford the fourth part of the rent whichcould probably be drawn from them if they were the property ofprivate persons. If the crown lands were more extensive, it isprobable they would be still worse managed.

The revenue which the great body of the people derives fromland is in proportion, not to the rent, but to the produce of theland. The whole annual produce of the land of every country, if weexcept what is reserved for seed, is either annually consumed bythe great body of the people, or exchanged for something else thatis consumed by them. Whatever keeps down the produce of theland below what it would otherwise rise to keeps down therevenue of the great body of the people still more than it does thatof the proprietors of land. The rent of land, that portion of theproduce which belongs to the proprietors, is scarce anywhere inGreat Britain supposed to be more than a third part of the wholeproduce. If the land which in one state of cultivation affords a rentof ten millions sterling a year would in another afford a rent oftwenty millions, the rent being, in both cases, supposed a thirdpart of the produce, the revenue of the proprietors would be lessthan it otherwise might be by ten millions a year only; but therevenue of the great body of the people would be less than itotherwise might be by thirty millions a year, deducting only whatwould be necessary for seed. The population of the country wouldbe less by the number of people which thirty millions a year,



1101

deducting always the seed, could maintain according to theparticular mode of living and expense which might take place inthe different ranks of men among whom the remainder wasdistributed.

Though there is not at present, in Europe, any civilised state ofany kind which derives the greater part of its public revenue fromthe rent of lands which are the property of the state, yet in all thegreat monarchies of Europe there are still many large tracts ofland which belong to the crown. They are generally forest; andsometimes forest where, after travelling several miles, you willscarce find a single tree; a mere waste and loss of country inrespect both of produce and population. In every great monarchyof Europe the sale of the crown lands would produce a very largesum of money, which, if applied to the payment of the publicdebts, would deliver from mortgage a much greater revenue thanany which those lands have ever afforded to the crown. Incountries where lands, improved and cultivated very highly, andyielding at the time of sale as great a rent as can easily be got fromthem, commonly sell at thirty years’ purchase, the unimproved,uncultivated, and low-rented crown lands might well be expectedto sell at forty, fifty, or sixty years’ purchase. The crown mightimmediately enjoy the revenue which this great price wouldredeem from mortgage. In the course of a few years it wouldprobably enjoy another revenue. When the crown lands hadbecome private property, they would, in the course of a few years,become well improved and well cultivated. The increase of theirproduce would increase the population of the country byaugmenting the revenue and consumption of the people. But therevenue which the crown derives from the duties of customs and



1102

excise would necessarily increase with the revenue andconsumption of the people.

The revenue which, in any civilised monarchy, the crownderives from the crown lands, though it appears to cost nothing toindividuals, in reality costs more to the society than perhaps anyother equal revenue which the crown enjoys. It would, in all cases,be for the interest of the society to replace this revenue to thecrown by some other equal revenue, and to divide the landsamong 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 everywhereconsidered as causes of expense, not as sources of revenue—seemto be the only lands which, in a great and civilised monarchy,ought to belong to the crown.

Public stock and public lands, therefore, the two sources ofrevenue which may peculiarly belong to the sovereign orcommonwealth, being both improper and insufficient funds fordefraying the necessary expense of any great and civilised state, itremains that this expense must, the greater part of it, be defrayedby taxes of one kind or another; the people contributing a part oftheir own private revenue in order to make up a public revenue tothe sovereign or commonwealth.



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PART 2

Of Taxes

The private revenue of individuals, it has been shown in the firstbook of this Inquiry, arises ultimately from three different sources:Rent, Profit, and Wages. Every tax must finally be paid from someone or other of those three different sorts of revenue, or from all ofthem indifferently. I shall endeavour to give the best account Ican, first, of those taxes which, it is intended, should fall uponrent; secondly, of those which, it is intended, should fall uponprofit; thirdly, of those which, it is intended, should fall uponwages; and, fourthly, of those which, it is intended, should fallindifferently upon all those three different sources of privaterevenue. The particular consideration of each of these fourdifferent sorts of taxes will divide the second part of the presentchapter into four articles, three of which will require several othersubdivisions. Many of those taxes, it will appear from the followingreview, are not finally paid from the fund, or source of revenue,upon which it was intended they should fall.

Before I enter upon the examination of particular taxes, it isnecessary to premise the four following maxims with regard totaxes in general.

I. The subjects of every state ought to contribute towards thesupport of the government, as nearly as possible, in proportion totheir respective abilities; that is, in proportion to the revenuewhich they respectively enjoy under the protection of the state.The expense of government to the individuals of a great nation islike the expense of management to the joint tenants of a great



1104

estate, who are all obliged to contribute in proportion to theirrespective interests in the estate. In the observation or neglect ofthis maxim consists what is called the equality or inequality oftaxation. Every tax, it must be observed once for all, which fallsfinally upon one only of the three sorts of revenue abovementioned, is necessarily unequal in so far as it does not affect theother two. In the following examination of different taxes I shallseldom take much further notice of this sort of inequality, butshall, in most cases, confine my observations to that inequalitywhich is occasioned by a particular tax falling unequally evenupon that particular sort of private revenue which is affected by it.

II. The tax which each individual is bound to pay ought to becertain, and not arbitrary. The time of payment, the manner ofpayment, the quantity to be paid, ought all to be clear and plain tothe contributor, and to every other person. Where it is otherwise,every person subject to the tax is put more or less in the power ofthe tax-gathered, who can either aggravate the tax upon anyobnoxious contributor, or extort, by the terror of such aggravation,some present or perquisite to himself. The uncertainty of taxationencourages the insolence and favours the corruption of an order ofmen who are naturally unpopular, even where they are neitherinsolent nor corrupt. The certainty of what each individual oughtto pay is, in taxation, a matter of so great importance that a veryconsiderable degree of inequality, it appears, I believe, from theexperience of all nations, is not near so great an evil as a verysmall degree of uncertainty.

III. Every tax ought to be levied at the time, or in the manner, inwhich it is most likely to be convenient for the contributor to payit. A tax upon the rent of land or of houses, payable at the same

adam smith: the wealth of nations - hawramani

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